On March 26, Hong Kong and Australia signed a Free Trade Agreement (“FTA”) and an Investment Agreement (“IA”) (together the “Agreements”), which covers trade in goods and services, and investment in areas including intellectual property, government procurement and competition. The Agreements aim to provide traders and investors in Hong Kong with more legal certainty and favourable access to the Australian market, whilst creating more business opportunities and enhance trade and investment flow between the two places. The Agreements have not yet come into force. The impact of the FTA means that goods originating from Hong Kong will be able to enter Australia tariff-free and through streamlined channel.

Other benefits of the FTA include facilitative arrangements for business travel as well as provisions to facilitate access to the other's government procurement markets, effective protection of intellectual property rights and promotion of competition.

Under the IA, Hong Kong investors can enjoy more favourable access to the Australian market as the monetary thresholds for investment screening have been raised. Investors from both places will also benefit from the modern provisions on treatment and protection under the new agreement which replaces the one from 1993.

Key features of the FTA (consisting of 20 chapters) and the IA are summarised on

www.tid.gov.hk/english/ita/fta/hkaufta/index.html

The FTA and IA negotiations commenced in May 2017 between Hong Kong and Australia and were concluded within 18 months in November 2018. The agreements will take effect after the two sides complete their respective internal procedures.

Australia was Hong Kong's seventh largest services trading partner in 2017, with the trade total between the two amounting to HK$44 billion. Australia was Hong Kong's twentieth largest merchandise trading partner in 2018, with trade amounting to HK$54 billion. In relation to investment, Australia ranked eighth among Hong Kong's destinations of outward direct investment, with a stock of HK$134 billion as at the end of 2017. In terms of inward direct investment, it ranked 17th, with a stock of HK$33 billion.

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