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Trade and Industry Department The Government of the Hong Kong Special Administrative Region
Brand Hong Kong - Asia world city

THE EUROPEAN UNION AND HONG KONG
SOME IMPORTANT FACTS

OVERVIEW

Hong Kong is a free port. We pursue the policy of free trade and do not maintain barriers on trade. We allow the free movement of goods and capital. No tariff is charged on import or export of goods.

Hong Kong has been a Special Administrative Region of the People’s Republic of China since 1 July 1997. The "One Country, Two Systems" principle provides the Hong Kong Special Administrative Region (HKSAR) with a high degree of autonomy in economic, trade, financial and monetary matters. This is guaranteed by the Basic Law, under which Hong Kong continues to practise capitalist economic and trade systems, and may conclude international trade agreements using the name of "Hong Kong, China". Hong Kong remains a separate customs territory, with its own customs border. Tariff preferences and other similar arrangements made between Hong Kong and its trading partners continue to be applicable exclusively to the HKSAR.

In 1986, Hong Kong became a separate contracting party to the General Agreement on Tariffs and Trade (GATT). Hong Kong was one of the founding members of the World Trade Organization (WTO) when it was established on 1 January 1995. Hong Kong also became a member of the Customs Cooperation Council (subsequently renamed as the World Customs Organization) in 1987 and the Asia-Pacific Economic Cooperation (APEC) in 1991. After 1 July 1997, Hong Kong's status in these and other international organisations remains unchanged. In May 1999, Hong Kong concluded a Customs Cooperation Agreement with the European Union (EU) using the name of "Hong Kong, China". The Agreement underlines the strong and growing ties between Hong Kong and the EU.

Hong Kong has three Economic and Trade Offices (ETOs) in the EU, viz. Berlin, Brussels and London. The ETOs represent Hong Kong on economic and trade matters in Europe, and help foster the trade and commercial ties between Hong Kong and the EU as well as other trading partners in Europe.

HONG KONG'S ECONOMY IN 2016

The Hong Kong economy recorded a moderate growth in 2016. Gross Domestic Product (GDP) increased by 2% in real terms in 2016. The value of Hong Kong's global merchandise trade amounted to €884 billion at current market prices, equivalent to 305% of Hong Kong's GDP. The value of imports was €467 billion while exports valued €418 billion. In 2016, Hong Kong was the world's 7th largest trading entity in goods - the 7th largest importer and the 6th largest exporter.

The services sector is important to the economy of Hong Kong. It contributed 93% to GDP in 2015 and accounted for 88% of the total employment in 2016. In 2016, Hong Kong was the world’s 17th largest commercial services trading entity - the 16th largest services importer and the 15th largest services exporter. Total trade in services at current market prices amounted to €157 billion, equivalent to about 54% of Hong Kong's GDP in 2016.

FACT 1 :

THE EU* AND HONG KONG ARE IMPORTANT TRADING PARTNERS

  • Hong Kong was the EU's 14th largest merchandise trading partner in 2016.
  • The EU was Hong Kong's second largest merchandise trading partner**  in 2016 after the Mainland of China.
  • Total merchandise trade between Hong Kong and the EU amounted to over €69 billion, representing 7.9% of Hong Kong's global merchandise trade in 2016.
  • Germany, the United Kingdom and the Netherlands were Hong Kong's top three merchandise trading partners among all the EU Member States in 2016. They represented 20%, 16% and 13% of Hong Kong's total merchandise trade with the EU respectively. Details on Hong Kong's merchandise trade with the EU are in the Table.

FACT 2 :

HONG KONG IS AN IMPORTANT MARKET FOR EU GOODS

  • The EU was Hong Kong's third largest supplier of goods in 2016 after the Mainland of China and Taiwan. In 2016, 6.7% of Hong Kong's imports, amounting to over €31 billion, were sourced from the EU.
  • Germany, Italy and the United Kingdom were Hong Kong's top three suppliers of goods among all the EU Member States in 2016. They took up 19%, 18% and 17% share of Hong Kong's imports from the EU respectively. Details are in the Table.
  • Hong Kong is a major export market for EU products. All EU exports enter Hong Kong at zero tariff. Hong Kong's major imports from the EU in 2016 were pearls and precious stones, clothing and clothing accessories, non-electric engines and motors, travel goods and handbags, jewellery, as well as telecommunications equipment.
  • The EU was the largest supplier of goods to the HKSAR Government in 2016 and accounted for about 24% in value (over €72 million) of all contracts awarded***.

FACT 3 :

HONG KONG IS AN IMPORTANT ENTREPOT FOR SINO-EU TRADE

  • Hong Kong is an important entrepot for trade between the Mainland of China and the EU. In 2016, nearly €10 billion of the Mainland's imports from the EU routed through Hong Kong. On the other hand, re-exports of Mainland-origin goods to the EU through Hong Kong exceeded €33 billion in 2016.

FACT 4 :

HONG KONG IS AN IMPORTANT LOCATION FOR EU INTERESTS

  • EU enterprises benefit from the HKSAR Government's policy of providing an efficient business environment and supporting infrastructure, including excellent world-wide telecommunications, efficient port and airport facilities, a stable currency free from exchange controls, a low tax regime and an established legal and judicial system.
  • As at June 2016, there were 442 regional headquarters, 717 regional offices and 948 local offices in Hong Kong representing their parent companies located in the EU.
  • The EU is well represented in various sectors of the Hong Kong economy. Major enterprises with EU interests include such names as Adidas, Agence France-Presse, Air France, Ashurst, Atos, BASF, Bayer, BBC Worldwide, Bonhams, British Airways, BT, CMA CGM, CMS Hasche Sigle, Compass Group, Deutsche Post DHL, Elvinger Hoss & Prussen, Ericsson, Eversheds, Fiskars, Football Club Barcelona, Godiva, H&M, Hapag-Lloyd, Heineken, Henkel, IKEA, Inditex (Zara), Kering, Loyens & Loeff, LVMH, Maersk, Marks & Spencer, Norton Rose, Orange, Philips Electronics, SAP, Schneider Electric, Shell, Siemens, TMF Group, TV5 Monde, University College of Estate Management, Volkswagen, White Cube and Yoox Net-A-Porter Group.
  • Hong Kong is one of the world's major financial centres. As at 31 December 2016, there were 156 licensed banks in Hong Kong, of which 30 were incorporated in the EU. These included ABN AMRO Bank N.V., Barclays Bank PLC, Commerzbank AG, Deutsche Bank AG and others. In addition, there were two restricted licence banks incorporated in the EU and 7 EU banks maintaining representative offices in Hong Kong.
  • In the insurance sector, EU enterprises ranked first in number amongst overseas insurers operating in Hong Kong in 2016. Of the 160 insurance companies authorised in Hong Kong, 27 were incorporated in the EU. These EU insurance companies included Allianz Global Corporate & Specialty SE, AXA, Assicurazioni Generali Società per Azioni, Lloyd's and others.
  • As at 31 December 2016, 165 EU-based enterprises were licensed or registered in Hong Kong to carry on regulated activities under the Securities and Futures Ordinance.
  • The EU Member States also derive considerable benefits from their air traffic rights in Hong Kong. As at 31 December 2016, EU-based airlines with landing rights in Hong Kong included AeroLogic GmbH, Air France, Austrian Airlines, British Airways, Cargolux Airlines International, Cargolux Italia, Finnair, KLM Royal Dutch Airlines, Lufthansa Cargo, Lufthansa German Airlines, Scandinavian Airlines, SW Italia, ASL Airlines Belgium and Virgin Atlantic Airways.
  • Hong Kong welcomes investments from the EU and offers an environment in which there is free flow of capital and return on investment without exchange controls.
  • The EU was the third largest source of external investment in Hong Kong at end-2015. The position of Hong Kong's inward direct investment from the EU amounted to €138 billion, accounting for 9% of the total. Among the Member States, the Netherlands was the largest investor (€92 billion and 66% of the EU total), followed by the United Kingdom (€30 billion and 22% of the EU total) and France (€8 billion and 6% of the EU total).
  • Hong Kong has signed Investment Promotion and Protection Agreements with the following trading partners in the EU: Austria, the Belgo-Luxembourg Economic Union, Denmark, Finland, France, Germany, Italy, the Netherlands, Sweden and the United Kingdom. Please click here for more information.
  • As at the end of 2016, there were about 29 930 EU citizens residing in Hong Kong.

FACT 5 :

THE EU IS AN IMPORTANT MARKET FOR HONG KONG GOODS

  • In 2016, the EU was Hong Kong's fourth largest market of goods after the Mainland of China, the USA and Singapore. Hong Kong's domestic exports to the EU amounted to €0.3 billion, accounting for 5.2% of Hong Kong's domestic exports in 2016.
  • The United Kingdom, France and the Netherlands were the top three markets for Hong Kong products among the EU Member States in 2016. They accounted for 41%, 14% and 12% respectively of Hong Kong's domestic exports to the EU. Details are in the Table.
  • Hong Kong's major domestic exports to the EU in 2016 were jewellery, edible products and preparations, printed matter as well as miscellaneous chemical products.

FACT 6 :

HONG KONG PRACTISES FREE TRADE

  • Hong Kong is a staunch supporter of the multilateral trading system and adheres to the WTO/GATT principles of non-discrimination and most-favoured-nation treatment. Hong Kong takes seriously its rights and obligations as a Member of the WTO. Hong Kong's free trade policy applies to both merchandise trade as well as trade in services.
  • Hong Kong was ranked the world's freest economy in the Cato Institute's Economic Freedom of the World: 2016 Annual Report, and the Heritage Foundation's 2017 Index of Economic Freedom.
  • Hong Kong does not levy any tariffs. Only four groups of commodities**** are subject to excise duties, whether they are imported or manufactured locally. In 2016, about 1.1% in value of imports into Hong Kong were subject to excise duties.
  • Hong Kong does not maintain any barriers on trade.
  • Imports from the EU are free to compete with locally made products and imports from Hong Kong's other trading partners.
  • Hong Kong does not subsidise its exports.
  • Hong Kong treats foreign and locally-owned enterprises on the same footing.

FACT 7 :

HONG KONG RESPECTS INTELLECTUAL PROPERTY RIGHTS

  • Hong Kong has an established legal framework for the protection and registration of intellectual property (IP) rights including patents, trade marks, copyright and registered designs. We update our IP laws from time to time to meet our prevailing economic needs. We are reforming our local patent system with a view to launching it in 2019 the earliest. We are also preparing for the implementation of the Madrid Protocol concerning international registration of marks in 2019.
  • The Hong Kong Customs has a strong and dedicated team comprising 270 officers to enforce criminal sanctions against IP rights infringements. Another 3 700 officers are responsible for intelligence analysis and interception of contraband, including pirated and counterfeit goods at entry and exit points. The vigorous and sustained enforcement efforts have brought infringement situation in Hong Kong under firm control.

FACT 8 :

HONG KONG'S LABOUR FORCE IS PROTECTED BY LEGISLATION

  • Hong Kong's labour force enjoys rights and benefits that are protected by a comprehensive set of labour legislation and an effective labour inspection system. This has enabled Hong Kong to apply 41 international labour conventions which prescribe internationally recognized standards on various labour matters.

Notes :

  1. Average exchange rate in 2016 : €1 = HKD8.59
  2. Statistics in this fact sheet are sourced from the Government of the Hong Kong Special Administrative Region (www.gov.hk), Eurostat, and the WTO.
  3. Webpages of Hong Kong Economic and Trade Offices :
    Berlin : http://www.hketoberlin.gov.hk/
    Brussels : http://www.hongkong-eu.net/
    London : http://www.hketolondon.gov.hk/

 

TABLE

HONG KONG'S MERCHANDISE TRADE WITH THE EU AND INDIVIDUAL MEMBER STATES IN 2016
  Value of
Total Trade

(in million €)
Value of
Imports

(in million €)
Value of Domestic Exports
(in million €)
Value of
Re-exports

(in million €)
World 884,358 466,634 4,991 412,732
The EU 69,578
(7.87%)
31,086
(6.66%)
257
(5.16%)
38,234
(9.26%)
Ranking Member States        
1 Germany 13,689
(1.55%)
5,922
(1.27%)
26
(0.53%)
7,740
(1.88%)
2 The United Kingdom 11,041
(1.25%)
5,210
(1.12%)
104
(2.09%)
5,727
(1.39%)
3 The Netherlands 9,090
(1.03%)
2,411
(0.52%)
32
(0.64%)
6,648
(1.61%)
4 France 8,867
(1.00%)
4,824
(1.03%)
35
(0.70%)
4,008
(0.97%)
5 Italy 8,545
(0.97%)
5,524
(1.18%)
29
(0.57%)
2,992
(0.72%)
6 Belgium 5,095
(0.58%)
2,940
(0.63%)
5
(0.10%)
2,150
(0.52%)
7 Spain 2,447
(0.28%)
853
(0.18%)
6
(0.12%)
1,588
(0.38%)
8 Hungary 1,805
(0.20%)
250
(0.05%)
2.3
(0.05%)
1,552
(0.38%)
9 Poland 1,487
(0.17%)
313
(0.07%)
1.2
(0.02%)
1,173
(0.28%)
10 Sweden 1,236
(0.14%)
408
(0.09%)
2
(0.04%)
826
(0.20%)
11 Austria 907
(0.10%)
352
(0.08%)
2.2
(0.04%)
553
(0.13%)
12 Ireland 892
(0.10%)
642
(0.14%)
1.5
(0.03%)
248
(0.06%)
13 Denmark 869
(0.10%)
467
(0.10%)
3.1
(0.06%)
399
(0.10%)
14 The Czech Republic 807
(0.09%)
156
(0.03%)
0.5
(0.01%)
651
(0.16%)
15 Finland 440
(0.05%)
114
(0.02%)
0.7
(0.01%)
325
(0.08%)
16 Romania 433
(0.05%)
35
(0.01%)
0.6
(0.01%)
397
(0.10%)
17 Portugal 397
(0.04%)
116
(0.02%)
1.1
(0.02%)
280
(0.07%)
18 Slovakia 301
(0.03%)
26
(0.01%)
0.1
(0.002%)
274
(0.07%)
19 Malta 227
(0.03%)
203
(0.04%)
0.6
(0.01%)
23
(0.01%)
20 Greece 188
(0.02%)
55
(0.01%)
0.5
(0.01%)
133
(0.03%)
21 Luxembourg 178
(0.02%)
89
(0.02%)
0.2
(0.004%)
89
(0.02%)
22 Bulgaria 126
(0.01%)
46.9
(0.01%)
0.11
(0.002%)
79
(0.02%)
23 Slovenia 124
(0.01%)
57
(0.01%)
2.6
(0.05%)
64
(0.02%)
24 Estonia 121
(0.01%)
17
(0.004%)
0.2
(0.003%)
104
(0.03%)
25 Lithuania 110
(0.01%)
23
(0.01%)
0.3
(0.01%)
87
(0.02%)
26 Latvia 72
(0.01%)
12.3
(0.003%)
0.2
(0.004%)
60
(0.02%)
27 Croatia 49
(0.01%)
6
(0.001%)
0.04
(0.001%)
43
(0.01%)
28 Cyprus 34
(0.004%)
13
(0.003%)
0.12
(0.002%)
21
(0.01%)

Notes :

  1. Figures in brackets represent the percentage share among all trading partners of Hong Kong.
  2. The ranking is based on total trade value.
  3. Due to rounding, the figures may not add up to the total.

 

* At present, the EU comprises 28 Member States: Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.

** The ranking was arrived at by taking the EU as a single entity while all the other trading partners were considered on a per country / economy basis. The EU is viewed as a single entity given it is a unique economic and political union of 28 EU Member States. For example, the EU has developed into a single market with all its Member States implementing a common commercial policy towards economies outside the EU.

*** The figures refer to the value of contracts awarded by the Government Logistics Department only.

**** These commodities are hydrocarbon oil (motor spirit, aircraft spirit, and light diesel oil other than Euro V diesel), liquor with alcoholic strength more than 30 percent by volume, methyl alcohol (other than denatured methyl alcohol) and tobacco (other than smokeless tobacco).

Prepared by:

Trade and Industry Department
The Government of the Hong Kong Special Administrative Region

Trade and Industry Tower
3 Concorde Road, Kowloon City
Hong Kong
Telephone: (852) 2398 5354
Website: www.tid.gov.hk
August 2017

While every effort is made to ensure the accuracy of the above information, the Department cannot guarantee this to be so and will not be held liable for any reliance placed on the same.