MANILA: ASEAN ministers inked free trade and investment pacts with Hong Kong on Sunday (Nov 12) on the sidelines of the 31st ASEAN summit.
The trade agreement - a much-anticipated culmination of nearly three years’ worth of negotiations - is aimed at eliminating or reducing tariffs, liberalising trade and services, and establishing rules to promote confidence in trade. The investment agreement will cover the protection, promotion and facilitation of investment.
The agreements are expected to come into effect by January 2019 and "strengthen economic relations between ASEAN as an integrated market and Hong Kong as one of the world’s leading trade and investment powerhouses", and stimulate economic development in the region, ASEAN ministers said in a joint statement.
The deals are expected to benefit Hong Kong - a separate jurisdiction from China - after the city was not included in a free trade agreement (FTA) between ASEAN and China in 2010.
Hong Kong’s commerce and development secretary Edward Yau said on Sunday at the signing ceremony: “In the face of protectionist sentiments in other parts of the world, these two agreements are in fact a loud and clear vote from all of us here for freer and more open trade."
ASEAN ministers noted the growing economic relations between ASEAN and Hong Kong: Hong Kong was ASEAN’s sixth largest trading partner in 2016, while ASEAN as a bloc was Hong Kong’s second largest trading partner.
Based on ASEAN statistics, merchandise trade between Singapore and Hong Kong in 2016 was valued at US$93.3 billion (S$127 billion), a 1.3 per cent increase from US$92.1 billion in 2015. Total foreign direct investment flows from Hong Kong to ASEAN amounted to US$9.9 billion, up from US$4.1 billion in 2015.
RCEP MAKES PROGRESS
Meanwhile, at the Preparatory Regional Comprehensive Economic Partnership (RCEP) Ministerial Meeting, which was held on the sidelines of the summit, Philippine Trade and Industry Secretary Ramon Lopez reported progress has been made.
RCEP is an FTA under negotiation among the 10 ASEAN countries and partners which the organisation has existing agreements with. These countries are China, South Korea, Japan, Australia, New Zealand and India.
Speaking at the Marriot Hotel, Mr Lopez said: “We note the milestones and breakthroughs reached, especially those that yielded substantial outcomes like the conclusion of chapters on the economical and technical cooperation in small and medium enterprises."
RCEP is of “tremendous importance” to ASEAN economies, he said, adding that intense effort has to be put into providing a concrete and tangible roadmap that leaders will endorse, therefore laying the foundation for a binding agreement.
At the previous summit in April, Singapore Prime Minister Lee Hsien Loong said that with ASEAN already having separate FTAs with each of these existing partners, Singapore is of the opinion that there needs to be something more in the RCEP for the package to be “substantial, meaningful” and one that has balance, and benefits for all participants.