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.

E-Commerce

  • 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.

Investment Agreement

  • 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.
Author

Anne Petterd focuses on technology, telecommunications, customs and export controls, and consumer and commercial law issues. Much of her practice involves online, telecommunications and IT businesses as well as defence and government procurement. She previously worked with the Australian Government Solicitor. She also worked in Baker McKenzie's London office for 18 months and seconded to major telecommunications and information technology service providers. Anne handles projects involving digital economy, cloud computing and large-scale IT supplies in the Asia Pacific. Her work focuses on the retail, telecommunications, defence, government and financial services sectors, and often involves new business models and test regulatory issues on privacy and telecommunications. Anne also advises on customs assessment, compliance and export control requirements as well as related trade and product compliance issues. She regularly works with regulators on these matters.

Author

Jon joins Baker McKenzie from a large retailer where he was an Assistant General Counsel, Customs and International Trade, based in their head office in Oregon. He advised the global business on import and export laws and regulations in the areas of sanctions, customs, free trade agreements, export controls and anti-boycott. He also oversaw customs audits, investigations and litigation globally, and focused on improving supply chain efficiency and managing compliance risk. In this role, he worked extensively in the Asia Pacific region. Earlier in his career, Jon worked in trade teams in the Big Four accounting firms in the U.S. and in Baker McKenzie's Hong Kong office as an Associate between 2010 and 2012. He advised technology, apparel and consumer product companies on regional customs and international trade matters over the years.

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Candice is a Technology, Communications & Commercial Associate in the Sydney office.

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Thomas is a Tax Associate in the Sydney office.