Free Trade Agreement between Hong Kong, China and Peru

Overview

Peru is an important trading partner of Hong Kong in Latin America. It ranked fifth among Hong Kong's merchandise trading partners in Latin America in 2023, with bilateral merchandise trade amounting to HK$5.2 billion.

The bilateral merchandise and services trade between Hong Kong and Peru grew at an average annual rate of 4% (from 2019 to 2023) and 16.3% (from 2018 to 2022) respectively.

Factsheet on Hong Kong's commercial relationship with Peru

Background

Hong Kong and Peru commenced Free Trade Agreement (FTA) negotiations in January 2023. The negotiations were concluded in July 2024. The FTA was signed on 15 November 2024 in Lima, Peru.

The FTA is comprehensive in scope and the commitments therein are of high quality, encompassing trade in goods, trade in services (including e-commerce), investment, intellectual property, competition, cooperation, dispute settlement and other related areas. The FTA will provide a transparent, consistent and predictable regime for trade, as well as a favourable platform for Hong Kong's traders and investors to expand their businesses in Peru and through Peru to the Latin American markets.

The FTA will enter into force after Hong Kong and Peru have completed their respective internal procedures. The effective date of the FTA will be announced in due course.

Key Outcomes

Key features of the FTA (consisting of 20 chapters) are summarised below.

Tariff Measures

  • Tariff commitments of Hong Kong and Peru are set out in Chapter 2 (Trade in Goods) and the tariff schedules at Annex 2-B.
  • Peru committed to eliminate tariffs on 98.3% of its tariff lines for Hong Kong's originating goods exported to Peru, amongst which tariff elimination concerning 91.3% of the tariff lines would take immediate effect upon the entry into force of the FTA, while tariffs of 7% of the tariff lines would be phased out gradually.
  • 0.6% of Peru's tariff lines, comprising agricultural products such as dairy products, rice and sugar etc., will be subject to partial tariff elimination upon the entry into force of the FTA.
  • While the remaining 1.1% will continue to be subject to customs duties, such products will be subject to negotiation for liberalisation in the fifth year from the date of entry into force of the FTA.
  • Hong Kong commits to binding our existing zero import tariff regime for all goods originating from Peru.

Rules of Origin

  • To enjoy preferential tariff treatment for exports to the Peruvian market, Hong Kong exporters have to comply with the relevant preferential origin rules and fulfil other relevant requirements set out in Chapter 3 (Rules of Origin and Origin Procedures) of the FTA.
  • To qualify for preferential tariff treatment from Peru, Hong Kong exporters should apply for and provide the importers with a certificate of origin (CO) issued by the Trade and Industry Department or a Government Approved Certification Organization (GACO) of Hong Kong.
  • Imports from Peru to Hong Kong are not required to be accompanied by a CO in order for the goods to enjoy zero tariff treatment.

Customs Procedures and Trade Facilitation

  • Chapter 4 (Customs Procedures and Trade Facilitation) covers commitments of Hong Kong and Peru on customs matters. It seeks to ensure that customs procedures and practices applying to goods traded between Hong Kong and Peru are predictable, consistent, transparent and trade facilitating.

Technical Barriers to Trade1 and Sanitary and Phytosanitary Measures2

Trade Remedies3

  • Chapter 7 (Trade Remedies) includes disciplines additional to the relevant WTO Agreements by strengthening the notification and consultation in countervailing and global safeguard measures. Transitional safeguard investigations can be initiated if an originating good from the other Party is being imported in such increased quantities that constitute a cause of serious injury or threat thereof to the domestic industry of the importing party.
  • Hong Kong and Peru agree to maintain their rights and obligations under the relevant WTO Agreements in respect of anti-dumping measures.
1
Technical barriers to trade include technical regulations, standards and conformity assessment procedures that may directly or indirectly affect trade in goods.
2
Sanitary and phytosanitary measures are any measures applied (i) to protect human or animal life or health from risks arising from additives, contaminants, toxins or disease-causing organisms in their food; (ii) to protect human life or health from plant- or animal-carried diseases or pests; (iii) to protect animal or plant life or health from pests, diseases, disease-carrying organisms or disease-causing organisms; and (iv) to prevent or limit other damage from the entry, establishment or spread of pests.
3
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 the Chapters and Annexes relating to Trade in Goods:

Chapter 2:
Chapter 3:
Chapter 4:
Chapter 5:
Chapter 6:
Chapter 7:
  • Hong Kong and Peru service providers will enjoy better business opportunities and legal certainty in market access in a comprehensive range of service sectors.
  • Among the various service sectors in which Hong Kong and Peru have made specific commitments, their services and service providers will enjoy the following benefits in each other's market:
    • access to the market of the other party including the right to establish business to provide services;
    • being treated no less favourably than local service providers under like circumstances;
    • automatically enjoy any additional liberalisation measures which the other party offers to other economies under its future FTAs; and
    • business visitors (BV), intra-corporate transferees (ICT) (including spouses of ICT), investors and technicians of Hong Kong will be granted temporary entry into Peru. Similarly, BV, ICT (including their dependants) and installers or servicers of Peru will be granted temporary entry into Hong Kong,
    subject to specified conditions or exceptions where applicable.
  • Peru's commitments encompass sectors where Hong Kong has traditional strengths or has potential for development. These include professional services, computer and related services, research and development services, financial services, transport services and various business services. Hong Kong also makes commitments to Peru on a wide range of service sectors.
  • The two sides have also agreed to provide each other forward looking Most-Favoured-Nation treatment which enables services and service suppliers of one side to enjoy the other side's additional service commitments, if any, in their future FTAs, except for sectors specifically reserved in their respective schedules.
  • Apart from market access commitments, the two sides have agreed on other obligations to facilitate trade in services. They include tariff-free undertaking for all electronic transmissions and other facilitation measures for e-commerce; improvement of transparency of domestic regulations and streamlining of application procedures for authorisation; provision of dedicated disciplines on financial services; and a side letter on professional services.

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

Chapter 8:
Chapter 9:
Chapter 10:
Temporary Entry for Business Persons
Annex 10-A:
(Specific Commitments on Temporary Entry for Business Persons)
Schedule of Hong Kong, China
Schedule of Peru
 
Chapter 11:
  • The Agreement provides investors of the two sides with legal certainty on non-discriminatory treatment as compared with a party's own investors, as well as other safeguards, in respect of their investments in non-services sectors. The provisions will help facilitate mutual investment flows and expand related economic activities between Hong Kong and Peru.
  • With a view to further enhancing bilateral investment flows, Hong Kong and Peru have agreed to negotiate a separate Investment Promotion and Protection Agreement to complement the FTA.

View full text of the Chapter and Annexes relating to Investment:

Chapter 12:
  • Apart from affirming the rights and obligations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights, the two sides have agreed to promote and strengthen cooperation in the area of intellectual property rights in order to enhance the benefits from trade and investment.

View full text of the Chapter and Annex relating to Intellectual Property:

Chapter 13:
  • The two sides have agreed to promote competition, and to encourage cooperation and information exchange between their competition authorities.

View full text of the Chapter relating to Competition:

Chapter 14:
  • The FTA contains provisions to facilitate economic and trade cooperation with the aim of enhancing the benefits of the FTA and promoting a favourable environment for the development of small and medium enterprises.

View full text of the Chapter relating to Cooperation:

Chapter 15:
  • The two sides have agreed to establish an effective, efficient and transparent mechanism to provide for consultations and settlements of disputes arising under the FTA.
  • A panel may be established if the consultations fail to resolve the disputes.
  • Apart from arbitration, mediation is also provided for as a means of dispute resolution.

View full text of the Chapter relating to Dispute Settlement:

Chapter 18:
2025-03-21
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