Jurisdiction - Hong Kong
Hong Kong – Interest In Joining ASEAN-China Free Trade Area.

14 June, 2012


Legal News & Analysis – Hong Kong – International Trade


In early March 2012, Dr. Jonathan Choi Koon-shum, a Member of the National Committee of the Chinese People‘s Political Consultative Party (CPPCC) and the Chairman of the Chinese General Chamber of Commerce (Hong Kong), submitted a proposal regarding Hong Kong’s possible accession to the ASEANChina Free Trade Area (ACFTA) during the 5th Session of the 11th CPPPC. This follows a number of closed door meetings over the past several months among officials from Hong Kong, Mainland China and ASEAN on the accession issue. The topic last surfaced in the public sphere during the Preparatory Meeting of the ASEAN-China FTA Joint Committee (ACFTA-JC) in October 2011, where senior officials from the Hong Kong Trade and Industry Department (HKTID) delivered a presentation on Hong Kong’s interest in joining the ACFTA. ASEAN’s Secretary-General has reportedly called for consultants to study the implications of accession under the auspices of the Asian Development Bank (ADB). According to sources, the ASEAN Economic Ministers (AEM) could make a final decision on Hong Kong’s accession to the ACFTA during the 44th AEM Meeting in August 2012.
Hong Kong’s accession to the ACFTA could result in a number of benefits for both Hong Kong and ASEAN members. Given its strategic position as a business and financial center for the region, Hong Kong could enhance its role as trade facilitator between Mainland China and ASEAN countries by joining the ACFTA. In particular, Hong Kong’s accession would allow for the further development of the re-export trade between Hong Kong and ASEAN, which increased at an average annual rate of 8 percent from 2006-2010 and reached 10.2 percent growth in 2011. According to HKTID, Hong Kong’s accession would also benefit ASEAN members by virtue of Hong Kong being, inter alia: (i) a free port and logistics hub; (ii) a leader in international financial services; and (iii) a top recipient and provider of foreign direct investment (FDI). Support for Hong Kong’s accession to the ACFTA was expressed by Chinese Vice-Premier Li Keqiang on behalf of the Chinese central government during his visit to Hong Kong in August 2011.  
The biggest hurdle to Hong Kong’s accession to ACFTA is likely to be the lack of an open accession clause under the Framework Agreement on China-ASEAN Comprehensive Economic Cooperation (“Framework Agreement”) signed and agreed upon at the 6th China-ASEAN Summit in November 2002. As a result, the process by which Hong Kong would accede to the Agreement, should the parties support such an action, is not predetermined. Moreover, some ASEAN Members have reportedly raised some interesting views regarding Hong Kong’s potential accession. During the September 2011 Davos meeting in Dalian, China, 
for example, former Singaporean Foreign Minister George Yeo commented that the manner in which Hong Kong joins the ACFTA could hamper the accession process. He opined that accession would be a more likely outcome should Hong Kong join ACFTA as one part of China rather than as a different political entity, i.e., a “Separate Customs Territory.” Some analysts contend that this rhetoric indicates Singapore’s hesitation regarding Hong Kong’s interest in acceding to the ACFTA, as Hong Kong and Singapore are strong competitors in financial services. Singapore has strived to establish a leading role in financial services within ASEAN by leading the call to launch the ASEAN Exchanges (The ASEAN Exchanges, a collaboration of seven stock exchanges in ASEAN, is comprised of Bursa Malaysia, Hanoi Stock Exchange, Ho Chi Minh Stock Exchange, Indonesia Stock Exchange, The Philippine Stock Exchange Inc., Singapore Exchange, and The Stock Exchange of Thailand)  in April 2011 with five other ASEAN members, namely Thailand, Malaysia, Vietnam, Indonesia, and the Philippines. If Hong Kong accedes to the ACFTA, Singapore’s current strong position in the financial services sector may be challenged.



For further information, please contact:


Samuel Scoles, White & Case


Tong Yu, White & Case


Christopher Corr, White & Case

Patrick Ma, White & Case


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