CANBERRA: Australia will pursue a free-trade agreement with Hong Kong that could secure significant access for service industries to our largest offshore business base in east Asia. Such a deal could also, for the first time, allow Australian businesses to operate in the finance capital of the region without having to establish on-the-ground operations in Hong Kong. Trade Minister Steve Ciobo will call for public submissions this week on the FTA proposal to allow relaxed regulatory barriers for Australian firms. The federal government is pushing for a guarantee that a zero tariff for Australian goods and services and exports would be retained.
The proposed deal would also give Australian businesses access to Hong Kong’s government procurement market for the first time. An FTA with Hong Kong — the world’s ninth-largest trading zone as a special administrative region of China — would allow better access and conditions for Australian services exports, such as education and financial technology, and for professionals such as lawyers and accountants. In the last quarter of last year, service exports outstripped metal exports, including iron ore, in terms of value. Mr Ciobo said a deal, if successful, would provide a “significant footprint” for Australian services in the region as the government pursued bilateral FTA deals with Indonesia, Britain and the EU. “With Asia’s emerging middle class projected to grow from 600 million today to 3 billion by 2035, the potential for services exports is significant,” he said. Mr Ciobo said a free-trade deal with Hong Kong also would integrate the Australian economy with Asia. “A strong relationship with Hong Kong is in Australia’s long-term strategic interests and concluding an FTA would strengthen our relationship with one of our most significant trading partners,” he said. “Hong Kong is an important trade and investment partner for Australia, in its own right and as a global hub for the movement of capital and goods between the mainland and the rest of the world. “An FTA with Hong Kong would complement our FTA with China and further integrate the Australian economy with Asia.”
Hong Kong would be seeking a level playing field on foreign investment thresholds that apply to Australia’s other FTAs with China, Japan and South Korea. It would also push for complete tariff elimination, with duties still being applied to jewellery, spectacles and footwear. “This would be a very modern FTA, focused on services access,” Mr Ciobo said. “We’re already seeing signs that services exports will be a key driver in Australia’s economy, helping ensure our record-breaking 26 years of growth continues.’’ With Hong Kong’s tariffs already at zero, the focus of an FTA would be to lock in regulatory settings and openness for services to ensure certainty for Australian business. Hong Kong was Australia’s eighth-largest export market and 12th-largest trading partner in 2015-16, with total two-way trade in goods and services worth $15.3 billion. It is also Australia’s sixth-largest source of foreign investment, with a stock of $85.4bn at the end of 2015, and the eighth-largest destination for Australian investment, with a stock of $50.7bn at the end of 2015. More than 600 Australian businesses have Hong Kong-based operations.
