Hong Kong's Chief Executive C Y Leung said he looked forward to the successful conclusion of negotiations on the proposed Hong Kong-Association of Southeast Asian Nations free trade agreement "in the coming year," during his speech to the ASEAN Leadership Forum in Kuala Lumpur on April 26.

With the support of the Chinese Government, Hong Kong secured ASEAN's consent to commence formal negotiations for a Hong Kong-ASEAN FTA, which began in July last year. "The third round of negotiations concluded last month in Hong Kong," Leung reported. "All is progressing smoothly."

The FTA is expected to cover the elimination and/or reduction of tariffs and non-tariff barriers; preferential rules of origin; the liberalization of trade in services; and the liberalization, promotion, and protection of investment. It is also proposed that it would include a dispute settlement mechanism.

ASEAN (whose ten member countries are Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) is Hong Kong's second-largest goods trading partner and fourth largest service trading partner. Hong Kong is also ASEAN's eighth-largest trading partner in terms of goods. In 2014, the total value of merchandise trade between the two sides exceeded USD106bn, up 10 percent over the previous year.

ASEAN is also the sixth major source of inward direct investment into Hong Kong and the fifth major destination of outward direct investment from Hong Kong. "With the FTA in place," Leung added, "I'm confident that Hong Kong can supercharge its 'super-connector' role between Mainland China and ASEAN."

He said that ASEAN businesses that "set up manufacturing operations in Hong Kong, produce goods that meet CEPA (Mainland and Hong Kong Closer Economic Partnership Arrangement) origin rules," can have their "products enter the Mainland tariff-free." Or, he said, companies can "simply partner with a Hong Kong company to take advantage of all that CEPA can offer to your products and services."

Source: Tax News

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