View the full text of the Investment Agreement and two related ancillary agreements: Products subject to the Product Specific Rules (PSR) are considered originating products when they meet the psrs defined in Annex 3-2 (Product Specific Rules) of the AHKFTA Agreement. Why is this important? Because in 2010, ASEAN and China concluded a free trade agreement (FTA) that excludes Hong Kong and is in fact a deterrent incentive to use Hong Kong as a hub for trade between China and ASEAN. The agreement covers four main areas, namely the reduction of tariffs on traded goods, the removal of restrictions on trade in services, extended stays for business travellers and better investment protection. In terms of reducing trade, most ASEAN countries will eliminate or reduce tariffs on goods from Hong Kong. Under the AHKFTA, Hong Kong and Singapore grant duty-free access and bind their duties to zero upon entry into force of the agreement. Brunei Darussalam, Malaysia, Philippines and Thailand will remove tariffs on 85% of products traded with Hong Kong within ten years and further reduce 10% of customs lines in 14 years. Indonesia and Vietnam will eliminate tariffs on 75% of their products within ten years and will further reduce customs lines by 10% in 14 years. Meanwhile, Cambodia, the former Republic of Laos and Myanmar will remove tariffs on 65% of their products within 15 years and further reduce 20% of customs lines in 20 years. Of this intra-Asian trade, the main avenue could be the China-ASEAN trade route. According to the ASEAN Secretariat, China is by far the largest external trading partner of the ASEAN bloc and accounted for more than 15% of total trade with ASEAN in 2015. ASEAN and Hong Kong will sign the long-awaited free trade and investment agreements, which have been under negotiation for more than four years.

This was announced at the recent ASEAN meeting in Manila by a Philippine government official. So why should Hong Kong deal with the free trade agreement with ASEAN? Indeed, Hong Kong`s persistent role as an important trade node for trade with China depends on the fact that it has a well-crafted agreement that gives Hong Kong effective access to the China-ASEAN Free Trade Agreement. The implementation of AHKFTA will enable Vietnam to further improve its network of competitive trade agreements. It will continue to help the economy shift the export value chain from low-tech manufacturing to the export of high-tech goods such as electronics, machinery, vehicles and medical equipment. Analysts have found that, given the ongoing trade tensions, Hong Kong companies are keen to increase investment opportunities in Southeast Asia, and especially vietnam. At the end of 2019, Hong Kong was the second largest investor in Vietnam. Hong Kong companies have invested more than 1300 projects in Vietnam in key sectors such as textiles and clothing, real estate and investment. Many expect these numbers to improve after the AHKFTA. As a result, the world`s largest and fastest trade route, between China and ASEAN, has largely benefited Singapore at the expense of Hong Kong.

In addition to increasing the number of goods traded, the Free Trade Agreement and the Investment Agreement (AA) will encourage the services sector in ASEAN countries to use Hong Kong`s professional, financial, commercial and legal services. The region will also benefit from increased investment flows, particularly in the real estate, manufacturing and services sectors. Or is Hong Kong perhaps banking on the wonderful duty-free treatment of items from Hong Kong to ASEAN? Here, too, the benefits of this trade would be sparse. Hong Kong is not known for its agriculture, production or natural resources. Vietnam is Hong Kong`s third largest trading partner and ASEAN`s largest export market. In the first five months of 2019, Hong Kong accounted for 30.4% of total FDI investment in Vietnam, or $5.08 billion. . . .