Hong Kong plays catch up after Asean pact neglect
Hong Kong has neglected economic ties with the Asean region in favour of cross-border links with mainland China, but last year's announcement of free-trade agreement talks with the 10-member bloc is a belated step in the right direction, say business leaders.
"Most of the business community pays more attention to China. Hong Kong being in the centre of Asia, we should work internationally, not only with [the mainland]," said Jonathan Choi, the Chinese General Chamber of Commerce's honorary president.
Choi had lobbied for the trade pact and says Hong Kong should more actively engage Asean.
Formal discussions are scheduled to start later this year. They will focus on reducing tariff barriers, streamlining investment rules to make it easier for companies to operate in Asean countries, and dispute settlement procedures.
Details include allowing overseas firms to operate independently rather than through joint ventures, and mutual recognition of professional qualifications.
The Asean bloc is Hong Kong's second-largest trading partner and the fourth-largest export market. Last year, Hong Kong's exports to Asean topped US$30 billion, an annualised growth of 8.4 per cent since 2003, according to the Hong Kong Trade Development Council. Hong Kong ports handle 10 per cent of mainland China's exports to Asean countries.
In 2010, an FTA between mainland China and Asean was enacted after eight years of preparation. This prompted concerns Hong Kong's ports would lose out to mainland competitors. The fears were proven misplaced as Hong Kong ports' lower running costs outweighed Asean import duties.
But in the medium term, an FTA made sense as it would "bring down thresholds to market access", said Dickson Ho, HKTDC's economist for Asia and emerging markets.
"With the global growth engine moving eastwards, it is our strategic goal to strengthen trade and economic partnerships with Asean. Hong Kong and Asean share the common aspiration of enhancing bilateral co-operation and regional economic integration," said Victor Ma, a spokesman for the Trade and Industry Department, the ministry leading the FTA talks.
Ma said he expected the talks to last two to three years.
Some observers are less optimistic. "Having missed the bandwagon with China negotiations, we are going to find it very hard to command the attention of Asean officials," said David Dodwell, the executive director of the Hong Kong-Apec Trade Policy Group.
Hong Kong could have signed an FTA with Asean alongside mainland China but was too focused on WTO talks and did not pay enough attention to bilateral and regional pacts, said Dodwell.