HK sticks to mainland's coat-tails while Asia looks to free-trade deals
As talk of establishing a free-trade area incorporating some of the fastest growing Asian economies intensifies, Hong Kong has quietly prospered through its own exclusive free-trade deal with the mainland.
Other than signing a free-trade deal with New Zealand this year, Hong Kong has done little to open up trade further since forging the Closer Economic Partnership Arrangement (Cepa) with the mainland to help lift the local economy after the severe acute respiratory syndrome outbreak in 2003.
Bilateral trade between Hong Kong and the mainland reached more than US$194 billion in 2008.
'Hong Kong has not been an active player in free-trade agreement negotiations,' said Pascal Lamy, WTO director general. 'Hong Kong's economic future rests largely on its relationship with the mainland.'
The World Trade Organisation is conducting its sixth review of Hong Kong's trade policies and practices from yesterday until tomorrow, based on reports by the WTO Secretariat and the government.
'Hong Kong will continue to prosper if China is able to sustain the pace of its economic development,' Lamy said. 'Through its Cepa with [mainland] China, one could argue that Hong Kong has been able to secure a firm position in the economy of its most important partner.'
Although Hong Kong's economy is driven by service-oriented industries, the city has benefited from the mainland's efforts over the past decade to cement its place as a top global economic engine. Beijing's trade deals with Asean recently formed an economic bloc of 1.9 billion people with a total gross domestic product of nearly US$6 trillion and trade worth about US$4.5 trillion.
'Asian countries find that their neighbours are becoming more prosperous and, as a result, the economic ties to their neighbours have become more important,' he said.
'Prior to the wave of free-trade agreements in this decade and, with the possible exception of [the Association of Southeast Asian Nations], this regionalisation of trade was not accompanied by regionalism - the creation of regional rules and institutions.
'The growth of Asian free-trade agreements can be seen as an attempt to institutionalise the strong links that already exist in trade, services, and investment.
'I also believe that Asian free-trade agreements reflect the need to facilitate production-sharing arrangements - that is, to allow developing Asian countries to participate more actively in international and global supply chains.'
