Hong Kong seeks FTA and DTA with Australia; welcomes China FTA
Floor traders work during afternoon trading at the Hong Kong Stock Exchange in this November 6, 2013 file photo. Hong Kong is working night and day to launch an initiative that will let global investors trade Chinese stocks from the city for the first time and secure the former British colony’s position among the world’s pre-eminent share markets.
With Australia getting ready for the formal approval process of Free Trade Agreement with China, Hong Kong has upped the ante, and urged Australia to expedite its proposal for an FTA and double taxation avoidance agreement.
The matter was raised by Hong Kong’s Chief Secretary for Administration, Carrie Lam, who recently visited Australia.
“The message on the FTA so far has been to wait until the agreement with China has been completed. Now that has been signed in June, it is timely for me to legitimately raise it again with the government, -because it can only benefit both sides,” Lam said, while welcoming the FTA with China.
Rising Aussie exports
Speaking in Sydney on Sep. 18, she noted that, “last year, Hong Kong-Australia bilateral trade in goods and services was worth more than US$6.1billion (AU$8.5 billion). That is up 5.4 percent over the previous year. The increase was contributed largely by a 9 percent increase in Australian merchandise exports to Hong Kong.”
The top Hong Kong official sounded upbeat about the prospects of an FTA with Australia, “Australia-Hong Kong FTA would facilitate further free flow of goods, services, investment, and people between the two places, bringing about significant economic and strategic benefits. We hope to see positive progress in this matter.”
Australian businesses also look at Hong Kong as a destination for investment opportunities, particularly in Mainland China. It is Australia’s sixth-largest source of investment and owns a total investment of AU$ 77 billion.
Beneficial for service sector
Lam told The Australian that she has secured the support of the state governments of NSW and Victoria for talks on FTA and DTA. The FTA was mooted in 2003 by Hong Kong’s first chief executive Tung Chee-hwa, and it used to be raised by his successors and other senior HK officials during bilateral visits.
According to Lam, a double-taxation treaty would offer not just tax savings, but also certainty, and added that Australia will not face any loss in revenue because Hong Kong does not manufacture or sell a lot of goods to Australia.
Hong Kong’s GDP per head is about 81 percent of Australia and it is the 15th biggest export market. For Australia, there are definite gains if an FTA with HK is signed, added the report. Hong Kong is a free port and therefore tariff-free. Professional services are the core of its economy and an FTA would boost Australia’s own services sector. Already 550 Australian companies are operating in HK with more than a 1000 running their representative offices there. Hong Kong already operates an FTA and DTA with New Zealand.
