The long-awaited commencement of the Hong Kong ASEAN will take partial effect from 11 June as Hong Kong, Myanmar, Singapore and Thailand begin to honour their commitments under the FTA. The dates of entry into force for the remaining seven ASEAN member states will be announced as they commit to ratification.
The partial agreement comes at a time when the impact on trade has been impaired by a slowing global economy and the ongoing US-China trade spat. In the first quarter of 2019, Hong Kong recorded sluggish growth of 0.5%, its lowest quarterly growth figure since 2009.
From the outset, Singapore will bind all its customs duties at zero. Myanmar and Thailand will instead incrementally eliminate and reduce their customs duties on goods originating from Hong Kong. The tariff reductions will affect various Hong Kong commodities, including jewellery, articles of apparel and clothing accessories, watches, clocks and toys.
To enjoy the preferential treatment for exporting Hong Kong goods to Myanmar, Singapore and Thailand, Hong Kong traders will need to comply with the relevant preferential rules of origin and fulfil the related requirements.
Meanwhile, Hong Kong service providers will enjoy better business opportunities and legal certainty in market access for a range of services including, professional services, business services, telecommunication services, construction and related engineering services, educational services, financial services, tourism and travel related services, transport services and arbitration services.
ASEAN comprises 10 member states, namely Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Hong Kong and ASEAN signed the FTA and an Investment Agreement (IA) at the end of 2017. Up to now, among the remaining seven ASEAN member states, Vietnam has ratified the FTA, but not the IA. As such, as far as Vietnam is concerned, the FTA will not be implemented for the time being. The other six ASEAN member states have not yet ratified the FTA.
ASEAN was Hong Kong’s second largest trading partner in merchandise trade in 2018 and the fourth largest in services trade in 2017. Total merchandise trade between Hong Kong and ASEAN amounted to HK$1,070bn in 2018 and total services trade between the two sides was HK$127bn in 2017, according to Hong Kong’s Trade and Industry Department.
As at end 2017, ASEAN ranked fourth among Hong Kong’s destinations of outward direct investment, with a stock of HK$435bn. It ranked sixth among Hong Kong’s sources of inward direct investment, with a stock of HK$628b.