After several years in the making, the Australian government has now referred the Australia - Hong Kong Free Trade Agreement (A-HKFTA) to the Australian Parliamentary Joint Standing Committee on Treaties (JSCOT) for review.
This stage of the process typically comes just ahead of the Australian parliament passing the necessary legislation to implement such agreements into municipal law, so let's take a look at what exactly the deal involves and how it might affect trade.
Foundations of the A-HKFTA
Australia and Hong Kong began negotiations for an FTA in May 2017, but the agreement and its associated Investment Agreement were eventually signed on March 26th 2019.
Hong Kong is one of Australia's most significant trading partners and became its twelfth largest trading partner overall in 2018, as well as its sixth largest source of foreign investment.
More than 600 Australian companies have a presence in Hong Kong and it represents an ideal location for those keen to expand further into Asia.
Once this deal is completely done, Australia will have FTAs with seven of its top eight export markets for goods and services.
Prime minister Scott Morrison said the agreement will mark a new chapter and a significant milestone in Australia's mutually beneficial relationship with Hong Kong.
"Australian farmers, businesses, service suppliers and investors are the big winners from the certainty this agreement will bring," he added.
What comes next?
Under the conditions of the domestic treaty-making process, an inquiry by JSCOT must now be held. This treaties committee is required to examine "matters arising from treaties and related National Interest Analysis and proposed treaty actions presented or deemed to be presented to the parliament".
Essentially, JSCOT must decide whether or not implementation of the A-HKFTA is in Australia's best national interests.
However, little concern has been raised that the organisation will rule against the FTA, with the general consensus being that this is simply a formality and that JSCOT will form a positive view of it.
Benefits of the A-HKFTA
Currently, Hong Kong does not apply tariffs to goods being imported from Australia, but it has always technically had the right to do so under World Trade Organisation rules.
Now, the A-HKFTA has ensured reciprocal elimination of import tariffs, meaning exporters do not have to fear the end of duty-free goods entry.
There will also be a streamlining of labelling requirements for products including wine thanks to a commitment to boost the transparency of regulations, as well as a mechanism to facilitate rapid resolution should issues occur and goods be delayed at the border.
Meanwhile, for the first time with any trading partner, Hong Kong has committed to unhindered cross-border data flows, boosting its reputation as a key location for e-commerce and helping Australian businesses gain a foothold in the East Asian region.
A statement from the Australian Department of Foreign Affairs and Trade said: "A-HKFTA, together with the Investment Agreement, is a statement from two committed APEC economies about the enduring value each accords the development and maintenance of contemporary trade rules. The agreements lock in openness to each other's markets and leverage our deep historical links."
The FTA complements the existing China-Australia Free Trade Agreement and other such deals in Asia, including bilateral examples in Japan and regional initiatives with ASEAN nations.
No firm dates have yet been issued as to when the A-HKFTA will become a fully ratified reality, but with the deadline for consultation with the JSCOT now having passed, it is anticipated that this will occur sooner rather than later.
If you're in Australia, Hong Kong or any other part of the world and would like further information concerning how FTAs might affect your business, feel free to contact MIC for information tailored especially for your needs.