After two years of negotiations, Australia and Hong Kong signed two agreements on 26 March 2019: the Australia-Hong Kong Free Trade Agreement (AHFTA), and a new Investment Agreement (IA), replacing an initial one signed in 1993, which was the basis of the claims made in the unsuccessful challenge of Australia’s plain packaging laws in 2012-2015. Both jurisdictions have been active in FTA negotiations. This is the fourth trade deal signed by the Hong Kong government in 18 months, and Australia now has FTAs with 7 of its top 8 export markets (an FTA with the eighth, the EU, is currently undergoing negotiation). The AHFTA and IA will now need to be ratified domestically, whereby processes have already begun in both countries.
Australia is currently Hong Kong’s 7th-largest services trading partner, with trade in services between the two countries amounting to US$6.5 billion in 2017. The AHFTA explicitly covers increasingly important issues to the two jurisdictions, and it marks a step forward for services. The agreement addresses trade in goods, trade facilitation, technical barriers to trade, sanitary and phytosanitary measures, trade in services (including professional services and education cooperation), financial services, telecommunications, movement of natural persons, e-commerce, data localization, government procurement, IP, competition policy and other topics. It also covers Australia’s rail and transport industries, potentially opening these industries up for Hong Kong businesses. Until now these industries have been covered by only one FTA, that between Australia and New Zealand.
At a glance
Trade in goods
- Origin self-declaration regime. Government issued-certificates of origin (COO) will not be required and the importer, exporter, or authorized representative will have to declare a set of minimum data requirements (for e.g., HS classification, origin criterion, and business details) without any prescribed format. This trade facilitative measure is in line with developments with other FTAs in the region, and marks a shift away from the more time-consuming COO regime.
- Free flow of data. An e-commerce chapter also allows for the free flow of data between Australia and Hong Kong, and neither party shall require businesses to locate computing facilities in the party’s area as a condition for conducting business.
- Consumer protection. The Chapter also provides for the maintenance of consumer protection laws to prevent fraudulent and deceptive commercial practices that cause harm or potential harm to consumers engaged in online commercial activities.
- Personal data protection. In line with increasingly rigorous international privacy standards for online users, the FTA also calls for parties to maintain legal frameworks that the protection of the personal information.
- No customs duties on electronic transmissions. The FTA also affirms the World Trade Organizations moratorium on e-commerce, whereby neither party should impose customs duties on electronic transmissions, including content transmitted electronically, between a person of a party and a person of the other party.
- The new Investment Agreement contains modern provisions on non-discriminatory treatment of investments and comprehensive protection of investments including fair and equitable treatment of investments; physical protection and security of investments; compensation for expropriation of investments; compensation for investment losses owing to armed conflict or civil strife; free transfers of investments and returns; an investor-Party dispute settlement mechanism; and Party-Party dispute settlement mechanism.