Free Trade Agreement between Hong Kong, China and the Association of Southeast Asian Nations

Overview

The Association of Southeast Asian Nations (ASEAN)1 was Hong Kong's 2nd2 largest trading partner in merchandise trade in 2024 and the 4th largest in services trade in 2022. Total merchandise trade between Hong Kong and ASEAN amounted to HK$1,289.6 billion in 2024 and total services trade between the two sides was HK$111.4 billion in 2022.

As at end 2023, ASEAN ranked 3rd among Hong Kong's destinations of outward direct investment, with a stock of HK$616.4 billion. It ranked 6th among Hong Kong's sources of inward direct investment, with a stock of HK$452.8 billion.

Factsheet on Hong Kong's commercial relationship with ASEAN

Background

Hong Kong and ASEAN commenced negotiations of a Free Trade Agreement (FTA) and an Investment Agreement in July 2014. After ten rounds of negotiations, Hong Kong and ASEAN announced the conclusion of the negotiations in September 2017; and signed the Agreements on 12 November 2017.3 The Agreements have extended Hong Kong's FTA and Investment Agreement network to cover all major economies in Southeast Asia.

The Agreements are comprehensive in scope, encompassing trade in goods, trade in services, investment, economic and technical co-operation, dispute settlement mechanism and other related areas. The Agreements bring legal certainty, better market access and fair and equitable treatment in trade and investment, thus creating new business opportunities and further enhancing trade and investment flows between Hong Kong and ASEAN.

The Agreements entered into force in full on 12 February 2021. For individual date of entry into force of the FTA and the Investment Agreement for the Parties, please refer to the notes below which set out the key features of the Agreements.

Pursuant to Article 17 of Chapter 3 of the FTA, Hong Kong and ASEAN signed the First Protocol to Amend the FTA (Protocol) in 2024 in order to update the Product Specific Rules (PSR) of origin under the FTA. It enhances the coverage of the PSR from around 200 tariff lines to almost 600.

1
ASEAN comprises Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam.
2
Both ASEAN and the European Union are counted as single entities in the rankings in this paragraph.
3
The signing ceremony of the Agreements was held on 12 November 2017 in the Philippines, while the official date of the FTA by which all 11 signatories have completed their internal procedures for signing the FTA is 28 March 2018.
4
Hong Kong and ASEAN are working towards the completion of the necessary internal procedures to bring about the early implementation of the Protocol.

Key Outcomes

The FTA (consisting of 14 chapters) and the Investment Agreement cover many areas of importance to Hong Kong and ASEAN. Key features are summarised below.

Tariff Measures

  • The ASEAN Member States (AMS) have agreed to eliminate/reduce their customs duties on goods originating from Hong Kong. Tariff reduction commitments of each AMS and Hong Kong are set out in the Schedules of Tariff Commitments at Annex 2-1 of the FTA.
  • Broadly speaking, for goods originating from Hong Kong, individual AMS has made the following commitments:
    • Singapore commits to binding all its customs duties at zero, with effect from the date on which the FTA enters into force for Singapore;
    • Brunei Darussalam, Malaysia, the Philippines and Thailand will eliminate customs duties of about 85% of their tariff lines within 10 years and reduce customs duties of about another 10% of their tariff lines within 14 years;
    • Indonesia and Viet Nam will eliminate customs duties of about 75% of their tariff lines within 10 years and reduce customs duties of about another 10% of their tariff lines within 14 years; and
    • Cambodia, Laos and Myanmar will eliminate customs duties of about 65% of their tariff lines within 15 years and reduce customs duties of about another 20% of their tariff lines within 20 years.
  • AMS' tariff reduction commitments cover different kinds of commodities, including jewellery, articles of apparel and clothing accessories, watches and clocks, toys, etc. Details of tariff reduction commitments of each AMS in specific industry can be found in Trade in Goods: Tariff Reduction Commitments by Commodity.
  • Hong Kong commits to granting tariff free access to all products originating from AMS when the FTA takes effect.

Rules of Origin

  • Hong Kong exporters who comply with the relevant preferential origin rules and fulfil the relevant requirements set out in Chapter 3 (Rules of Origin) of the FTA can benefit from the preferential tariff treatment for exports to AMS.
  • Hong Kong exporters can claim preferential tariff treatment from AMS by applying for a certificate of origin (CO). The CO shall be issued by the Trade and Industry Department or by a Government Approved Certification Organisation (GACO) of Hong Kong. To help Hong Kong exporters make good use of the preferential tariff treatment under the FTA, trade circulars have been issued to inform the trade of the relevant preferential rules of origin and the related requirements. The circulars can be accessed at here.
  • Imports from AMS are not required to be accompanied by a CO in order for the goods to enjoy the tariff-free treatment.

Customs Procedures and Trade Facilitation

  • Chapter 4 (Customs Procedures and Trade Facilitation) of the FTA promotes mutual co-operation in the administration of custom matters. It seeks to ensure that the customs procedures and practices applying to goods traded between Hong Kong and ASEAN are predictable, consistent, transparent and trade facilitating.

Sanitary and Phytosanitary Measures and Standards, Technical Regulations and Conformity Assessment Procedures

  • Hong Kong and ASEAN will strengthen co-operation in sanitary and phytosanitary measures5 and technical barriers to trade6.

Trade Remedies7

  • Hong Kong and ASEAN affirm their rights and obligations on trade remedies under the relevant World Trade Organization (WTO) Agreements.
5
Sanitary and phytosanitary measures are any measures applied (a) to protect human or animal life or health from risks arising from additives, contaminants, toxins or disease-causing organisms in their food; (b) to protect human life or health from plant- or animal-carried diseases or pests; (c) to protect animal or plant life or health from pests, diseases, disease-carrying organisms or disease-causing organisms; and (d) to prevent or limit other damage from the entry, establishment or spread of pests.
6
Technical barriers to trade include technical regulations, standards and conformity assessment procedures that may directly or indirectly affect trade in goods.
7
Trade remedy measures refer to anti-dumping, countervailing and safeguard measures. Imposition of these measures by the importing economy could result in additional duties (being one of the usual forms) on top of tariffs and other charges or other import restrictions on certain imports.


View full text of Chapters and Annexes relating to Trade in Goods:

Chapter 2:
Chapter 3*:
* The First Protocol to Amend the FTA (to be implemented8)
8
Hong Kong and ASEAN are working towards the completion of the necessary internal procedures to bring about the early implementation of the Protocol. With the entry into force of the Protocol, Annex 3-2 will be replaced by the Appendix of the Protocol and Annex 3-3 will be deleted.
Chapter 4:
Chapter 5:
Chapter 6:
Chapter 7:
  • The FTA, covering a comprehensive range of service sectors, will provide better business opportunities and legal certainty in market access for services and service providers of Hong Kong and AMS.
  • Among the various service sectors in which Hong Kong and AMS have made commitments, services and service providers of both sides will enjoy the following benefits in each other's market, subject to listed specific exceptions:
    • service providers of one party being treated no less favourably than service providers of the other party in similar circumstances;
    • removal or reduction of restrictions on foreign capital participation, the number of service providers or operations, the value of service transactions, the number of persons employed, and the types of legal entity or joint venture requirements; and
    • business visitors, intra-corporate transferees, contractual services suppliers and independent specialists/experts/professionals of Hong Kong will be granted temporary entry into relevant AMS in accordance with the commitments of individual AMS. Similarly, business visitors and intra-corporate transferees of AMS will be granted temporary entry into Hong Kong.
  • AMS' commitments encompass sectors where Hong Kong has strengths for further development, such as professional services, business services, telecommunications services, construction and related engineering services, educational services, financial services, tourism and travel related services, transport services and arbitration services. Commitments of AMS can be found in their Schedules of Specific Commitments and they are also extracted and set out in the by-sector summary tables. Hong Kong also makes commitments to AMS on a wide range of service sectors.
  • The FTA includes other general obligations to facilitate trade in services. There are rules under the FTA which require all parties to maintain transparent and fair domestic regulations. The FTA also provides a regular review mechanism which paves the way for future negotiations of improvements to market access commitments and progressive liberalisation.

View full text of the Chapter and Annex relating to Trade in Services:

Chapter 8:
  • In addition to the FTA, Hong Kong and ASEAN have signed an Investment Agreement. The Investment Agreement complements the FTA, in particular its chapter on Trade in Services, which contains provisions on, among others, the treatment of investments in services sectors.
  • Apart from investment promotion and facilitation, the Investment Agreement provides Hong Kong and ASEAN investors with non-discriminatory treatment of investments in non-services sectors and protection of investments in all sectors, in respect of their investments in the other party. Such protection includes requiring each party to:
    • provide fair and equitable treatment of investments;
    • provide full protection and security of investments;
    • provide compensation according to the agreed standard in case of expropriation of investments and in a freely usable currency as determined by the International Monetary Fund;
    • provide non-discriminatory treatment in compensation for investment losses or damages owing to war, armed conflict, civil strife, or similar events; and
    • permit free transfer of investments and returns.
  • Under the Investment Agreement, Hong Kong and ASEAN have also agreed on a Work Programme to further discuss a few issues, including the mechanism for settling investment disputes between an investor and the host party.
  • The Investment Agreement is an important tool to further strengthen the already strong investment ties between Hong Kong and AMS. With the protection and guarantees it provides, the Investment Agreement should further enhance investors' confidence and boost investment flows between Hong Kong and AMS, benefiting both sides' economies.

View full text of the Investment Agreement and two related side agreements:

Investment Agreement
Side agreement with Brunei Darussalam, Malaysia and Singapore
Side agreement with Singapore

  • The FTA comprises a chapter on economic and technical co-operation (ECOTECH) which aims to enhance the benefits of the FTA through capacity building programmes and technical assistance.
  • The ECOTECH Chapter of the FTA is implemented through an ECOTECH Work Programme. Both sides agreed to conduct ECOTECH activities in 14 priority areas, namely:
    • customs co-operation;
    • professional services;
    • small and medium enterprises co-operation;
    • trade facilitation/logistics;
    • e-commerce co-operation;
    • sanitary and phytosanitary co-operation;
    • standards, technical regulations, and conformity assessment procedures co-operation;
    • intellectual property co-operation;
    • digital technology to facilitate trade;
    • promotion and facilitation of investment;
    • competition;
    • government procurement;
    • digital transformation; and
    • sustainable economic development.

View full text of the Chapter and side instrument relating to ECOTECH:

List of the completed ECOTECH projects:

  Project Title Priority Area Proponent
1 Integrating SMEs in Eco-Friendly Packaging to the Global Value Chain Small and Medium Enterprises Co-operation Ministry of Commerce, Thailand
2 AEO Expert Mission and Seminar on Benefits for Authorized Economic Operator (AEO) under Mutual Recognition Customs Co-operation Customs and Excise Department, HKSARG
3 Innovative Products Practices for Food Processing in Myanmar Small and Medium Enterprises Co-operation Ministry of Planning, Finance and Industry, Myanmar
4 Capacity building for the Front Line Officers and MSMEs of Cambodia, Lao PDR and Myanmar to implement ASEAN-Hong Kong FTA Tariff and Rules of Origin Trade Facilitation / Logistics Ministry of Commerce, Myanmar
5 The Workshop on the Strengthening Capacity for Professional Services Particularly the Accountancy Services Professional Services Ministry of Industry and Commerce, Laos
6 Strengthening E-commerce Cooperation to Promote Business to Business and Business to Consumers under AHKFTA: a Case Study of ASEAN Countries and Hong Kong Special Administrative Region of the People’s Republic of China E-commerce Co-operation Ministry of Industry and Commerce, Laos
7 Workshops on Online Dispute Resolution (ODR): Professional Services Department of Justice, HKSARG
8 Capacity Building and Export Promotion for ASEAN Start-ups at HKTDC Electronics Fair (Autumn Edition) 2023 Small and Medium Enterprises Co-operation Hong Kong Trade Development Council
9 Networking Promotion for ASEAN ICT stakeholders at the InnoEX 2024 E-commerce Co-operation Hong Kong Trade Development Council
10 Online Workshop on Understanding Trade in Professional Services and Developing Mutual Recognition Arrangements (MRAs) between ASEAN and Hong Kong, China Professional Services Department of Trade and Industry, the Philippines
11 Development of AHKFTA Guidebook for Business Trade Facilitation / Logistics ASEAN Secretariat
12 Enhance the Participation of MSMEs to Conduct Cross-border Paperless Trade E-commerce Co-operation Ministry of Industry and Trade, Viet Nam
13 Transposition of the AHKFTA PSR from HS 2012 to HS 2017 and subsequently to HS 2022 Trade Facilitation / Logistics ASEAN Secretariat
14 Hong Kong, China - CLMV Online Investment Forum Promotion and Facilitation of Investment Ministry of Investment and Foreign Economic Relations, Myanmar
15 Training on Conformity Assessment - Requirements for Bodies Certifying Products, Processes and Services (ISO/IEC 17065:2012) for Myanmar Standards, Technical Regulations, and Conformity Assessment Procedures Co-operation Ministry of Science and Technology, Myanmar  
16 Upskilling Micro, Small and Medium Enterprises (MSMEs) on Digital Technology and Trade in the ASEAN Region and Hong Kong, China Digital Technology to Facilitate Trade Department of Trade and Industry, the Philippines
17 ASEAN BUILD Program: Elevating the “Regional Mindset” of ASEAN Creative, Technological, and Innovative (ACTIVE) Start-ups and Micro, Small, and Medium Enterprises (MSMEs) for Inclusive Regional Cooperation and International Commercialization related to Intellectual Property Assets Intellectual Property Co-operation Department of Trade and Industry, the Philippines
18 Workshop on Promoting IP Commercialisation in a Knowledge-based Economy Intellectual Property Co-operation Intellectual Property Department, HKSARG
19 Capacity Development on Textile & Garment Industry and Its Sustainability for SMEs of CLMV Countries Small and Medium Enterprises Co-operation Ministry of Industry, Thailand
20 Capacity Building to Increase MSMEs Competitiveness on Jewelry Design Small and Medium Enterprises Co-operation Ministry of Industry, Indonesia
21 ASEAN Workshop on Unlocking Trade Mark Value - Pioneering with Brand Licensing Intellectual Property Co-operation Intellectual Property Department, HKSARG
  • Apart from reaffirming the rights and obligations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights, both sides have also agreed to promote and strengthen co-operation in the area of intellectual property rights in order to enhance their economic and trade relations.

View full text of the Chapter relating to Intellectual Property:

Chapter 10:
  • The two sides have agreed to establish a transparent mechanism for consultations and settlement of possible disputes.
  • An arbitral tribunal may be established if the consultations fail to resolve the disputes.

View full text of the Chapter and Annex relating to Consultations and Dispute Settlement:

Chapter 13:
2025-05-12
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