Hong Kong, ASEAN Nations Sign Free Trade Deal

by Mary Swire, Tax-News.com, Hong Kong

13 November 2017

Hong Kong has signed a new free trade agreement (FTA) with the Association of Southeast Asian Nations (ASEAN), which is expected to become effective from January 2019.

Following 10 rounds of talks over three years starting in July 2014, negotiations were concluded in September 2017 and the final agreements were signed in Manila on November 12 during the 31st annual ASEAN Summit.

The FTA consists of 14 chapters. It includes provisions to eliminate or reduce tariffs (tax barriers to trade), liberalize market access, and promote confidence in trade.

Provisions include:

• A commitment from Singapore to bind all its customs duties on goods imported from Hong Kong at zero percent;
• A commitment from Brunei, Malaysia, the Philippines, and Thailand to eliminate customs duties of around 85 percent of their tariff lines within 10 years and reduce customs duties of about another 10 percent of their tariff lines within 14 years;
• A commitment from Indonesia and Vietnam to eliminate customs duties of about 75 percent of their tariff lines within 10 years and reduce customs duties of about another 10 percent of their tariff lines within 14 years; and
• A commitment from Cambodia, Laos and Myanmar will eliminate customs duties of about 65 percent of their tariff lines within 15 years and reduce customs duties of about another 20 percent of their tariff lines within 20 years.

Trade between Hong Kong and ASEAN was valued at USD93.3bn in 2016, according to ASEAN data, a 1.3 percent increase from USD92.1bn in 2015. Total foreign direct investment flows from Hong Kong to ASEAN amounted to USD9.9bn in 2016, a 141 percent increase from the previous year. As of 2016, ASEAN was Hong Kong's second-largest partner in merchandise trade.

The FTA is the sixth agreement between ASEAN and external partners, after deals with China, Korea, Japan, India, and Australia-New Zealand.

TAGS: tax | investment | free trade agreement (FTA) | Brunei | India | tariffs | Australia | China | Laos | Philippines | Singapore | Thailand | agreements | Cambodia | Hong Kong | Indonesia | Korea, South | Malaysia | New Zealand | trade | Japan | Vietnam

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