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Hong Kong's First FTA With Europe Takes Effect

by Mary Swire,, Hong Kong

02 October 2012

The free trade agreement (FTA) signed on June 21, 2011 between Hong Kong and the European Free Trade Association (EFTA) member states - Iceland, Liechtenstein, Norway and Switzerland - will enter into force from October 1, 2012.

Hong Kong’s Trade & Industry Department has announced that the part of the agreement involving Hong Kong and Iceland, Liechtenstein and Switzerland will enter into force on October 1, while the part involving Hong Kong and Norway will be effective from November 1 this year.

The treaty is Hong Kong's first FTA with European economies, and covers a wide range of areas including trade in services and goods, as well as investment and other trade-related issues, such as the protection of intellectual property rights. It is hoped that it will serve as a catalyst to enhance the bilateral trade and investment ties between the two sides.

Under the agreement, the EFTA States will eliminate tariffs on all industrial products, as well as fish and certain marine products, originating in Hong Kong. Processed agricultural products of Hong Kong origin will also enjoy tariff concessions when imported into the EFTA countries. For products originating in the EFTA states, Hong Kong commits to granting its current tariff-free regime.

Furthermore, in a wide range of service sectors, Hong Kong service providers will enjoy better business opportunities and legal certainty in market access as well as non-discriminatory treatment in the EFTA countries’ markets.

Those sectors encompass areas in which Hong Kong has traditional strengths, such as telecommunications, financial services, logistics including maritime transport services, audiovisual services, and various professional and business services. They also include areas identified with potential for further development in Hong Kong – for example, educational, environmental and medical services, innovation and technology, cultural and creative industries, and testing and certification services.

In terms of market access, there will not be any restrictions on foreign capital, the number of service providers or operations, the value of their transactions, the number of persons employed, types of legal entity or joint venture requirements for service sectors in EFTA markets.

For those service sectors where such requirements have to be in place for regulatory or other reasons, the requirements will not become more restrictive than the level agreed in the agreement. Hong Kong service providers in a wide range of sectors will be treated no less favourably than their counterparts in the EFTA states as well as other economies under similar circumstances.

To facilitate mutual investment flows and expand related economic activities, the FTA provides investors in non-service sectors with legal certainty on national treatment, facilitates their temporary entry into and stay in the EFTA nations, and provides them with safeguards on the movement of capital and other aspects. These provisions complement the agreement's provisions on trade in services.

Some business people, including intra-corporate transferees and Hong Kong independent professionals, will be granted temporary entry into the relevant EFTA countries, according to the individual states' commitments to facilitate their movement.

TAGS: individuals | tax | investment | business | marine | free trade agreement (FTA) | Iceland | legal services | intellectual property | financial services | employees | tariffs | Liechtenstein | Norway | agreements | professionals | Hong Kong | Switzerland | import duty | trade | services

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