Bridging Australia Hong Kong - Free Trade Agreement
- Steve Ciobo, Minister for Trade, Tourism and Investment
Three weeks after launch (16 May), the Australia-Hong Kong Free Trade Agreement (FTA) negotiations have now begun. This negotiation is the latest component of the Turnbull Government’s strategy and commitment to delivering more and better paying jobs for Australians.
My Hong Kong counterpart, Gregory So Kamleung, and I announced the FTA negotiations in Hong Kong on 16 May, promising an ambitious FTA concluded swiftly. This agreement has significant potential – it is an opportunity to build a true 21st-century agreement that recognizes the strengths and complementarities of our two sophisticated, services-based economies.
Australia and Hong Kong are natural partners, with shared interest in promoting greater economic ties in our region, the fastest growing in the world. Australian business is already capitalising on Hong Kong’s position as a gateway between China and the world. The city is Australia’s leading business base in East Asia, with over 600 Australian businesses operating in-market, with our second largest chamber of commerce overseas, AustCham Hong Kong, helping build business connections between our economies. This new trade agreement will allow even more Australian exporters and investors to take advantage of the opportunities in Hong Kong.
In our FTA with Hong Kong we will be seeking guaranteed access and improved business conditions for Australian exporters, putting them on a level playing field with local businesses. Hong Kong is our eighth largest export market, with Australia’s total goods and services exports valued at $11.3 billion last financial year. We will build on our strong bilateral investment relationship, which has grown by almost 10 per cent to over $136 billion Australian in the past decade.
This agreement will also be an opportunity to build on our strengths as world leaders in the digital economy. Trade in digital services demands trading conditions that provide businesses with certainty about how they manage information and about how their digital products will be treated. This certainty can only be delivered by an agreement that understands the new frontiers of the trading world and addresses them head-on.
As a wealthy consumer market and a gateway to Asia, Hong Kong showcases quality Australian products to the world. Australia will seek to lock in Hong Kong’s zero tariff regime, providing certainty for Australian business that Hong Kong’s open market will remain that way.
I am particularly excited about what this FTA can do to maximise services exports and support Australia’s continued transition to a broader-based economy. Hong Kong is already our seventh largest services export market, and our services exports grew at over 13 per cent between 2014-15 and 2015-16. With Asia’s emerging middle class projected to grow from 600 million today to 3 billion by 2035, the potential for services exports is significant. This FTA presents an opportunity to capitalise on this growth and increase our services exports to Hong Kong, including in architecture and design, education, finance, legal and health services, creating more export opportunities for Australian businesses, which means more and higher-paying jobs.
An Australia-Hong Kong FTA could also improve conditions for two-way investment. Australia is already an important destination for Hong Kong investment in a broad range of sectors, including infrastructure, agribusiness, resources and energy, healthcare, and tourism. As our fifth largest source of total foreign investment, worth $100.9 billion in 2016, Hong Kong’s investment in Australia provides capital to finance exciting initiatives, and has the potential to generate skilled employment in regional Australia. As a hub for investment outflows, Hong Kong will remain a priority market for attracting foreign investment to Australia. An FTA could provide more certainty for the Australian investments in Hong Kong, worth $52.9 billion in 2016.
Now is the time to pursue a high-quality FTA in our mutual best interests that enables business to maximise potential. Concluding this FTA will strengthen our relationship with one of our most significant trading partners and complement the China-Australia Free Trade Agreement, further integrating our economy with Asia. Building on our strong trading relationship, our complementary economic strengths and our shared commitment to open trade, this FTA has the potential to increase prosperity by creating new Australian jobs and driving economic growth. We look forward to progressing this exciting new initiative.