Hong Kong and Australia sign deals to open up bilateral free trade and services

Hong Kong and Australia on Tuesday signed deals to open up bilateral free trade and services, allowing the city prized access to the country’s rail and professional industries. Secretary for Commerce and Economic Development Edward Yau Tang-wah and Australian trade minister Simon Birmingham signed the free-trade agreement and an investment agreement in Sydney. The accord covers a wide range of areas such as goods, trade in services, investment, intellectual property, government procurement and competition. It is the fourth trade deal the Hong Kong government has signed in the past 18 months, bringing its total of free-trade agreements to eight. “It offers both economies the best to each other,” Yau said in an interview. “It demonstrates the commitment to freer trade, tearing down trade barriers and enhancing mutual benefits in investments, trade and commerce.” Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor described the free-trade agreement as “very substantive”. “This is the fourth FTA that we signed since we took office on July 1, 2017, and the eighth since the [1997] handover. We will continue to open up more markets and sign more bilateral and multilateral trade agreements,” she said. Hong Kong workers caught in crossfire of US-China trade war Lam added that she would be travelling to Hainan on Wednesday to meet leaders from the Asean countries at the annual Boao Forum. The city’s FTA with the Association of Southeast Asian Nations was signed in November 2017 but has yet to take effect. Australian Prime Minister Scott Morrison said the agreements marked a new chapter in Australia’s close and mutually beneficial relationship with Hong Kong. “Australian farmers, businesses, service suppliers and investors are the big winners from the certainty this agreement will bring,” he said. Hong Kong has been seeking to open up more overseas trade, with the need for greater options increasing since the first shot of the US-China trade war was fired last year. The city, which is a free port, has found itself caught in the crossfire of the trade dispute, in which the two economic superpowers have levied heavy tariffs on one other. Although Washington and Beijing are working towards a settlement, Hong Kong’s exports have been hurt, falling 0.4 per cent in January year on year, after a 5.8 per cent decrease in December. “The [latest] two sets of agreements are important at a time when a stormy trade environment prevails,” Yau said. “They provide transparency and predictability for trade and investment, giving a boost of confidence to our rules-based trading system.” Under the agreements, about 140 service sectors will benefit from specific commitments by Australia, a 40 per cent increase on the number the country has committed to as part of the World Trade Organisation. Export forecasts slashed as trade body warns of volatile start to year A highlight of the pact is Australia liberalising a full range of its arbitration, conciliation and mediation services and certain rail transport services, which the country has never offered to its other free-trade agreement partners, other than New Zealand. Yau said the move would benefit Hong Kong, which was seeking to go global with its arbitration and mediation expertise. He added the city’s rail service provider, the MTR Corporation, would have wider access to the Australian market. The two sets of agreements are important at a time when a stormy trade environment prevails Edward Yau, Hong Kong commerce chief An MTR Corp spokesman said the company welcomed the signing of the Hong Kong-Australia free-trade agreement, saying it would strengthen bilateral commercial and business ties and provide a stable environment for development of its railway businesses in Melbourne and Sydney. Yau said the trade deal involved more services; Australia was Hong Kong’s seventh-largest services trading partner in 2017, with trade between the two amounting to HK$44 billion (US$5.6 billion). Chan’s budget offers boost for businesses looking abroad for new markets Jacinta Reddan, CEO of the Australian Chamber of Commerce in Hong Kong, welcomed the trade deals, saying they offered certainty to bilateral trade relations. “While we welcome the free-trade agreement between these two important trading partners, Austcham HK will continue to press for a double taxation agreement, which we believe would bring greater material benefit to two-way trade and investment flows.” A double taxation agreement is a deal between two countries that seeks to avoid or mitigate the double taxation of personal and business income. Australia has signed a double taxation agreement with more than 40 countries, but the chamber believed Hong Kong should be included as Hong Kong has the greatest concentration of Australian businesses. The free-trade deal will take effect once approved by the Australian parliament. Additional reporting by Tony Cheung