Hong Kong's first FTA with Europe now in effect

The first free trade agreement between Hong Kong and the European Free Trade Association member states of Iceland, Liechtenstein, Norway and Switzerland came into force yesterday.

According to the EFTA signed on June 21, 2011, that the part of the agreement involving Hong Kong and Iceland, Liechtenstein and Switzerland will enter into force on October 1, while the part involving Hong Kong and Norway will take effect this November 1.

The treaty covers a wide range of areas such as trade in services and goods, investments and other trade-related issues such as the protection of intellectual property rights. It could serve as a catalyst to enhance the bilateral trade and investment ties between the two sides.

EFTA states will eliminate tariffs on all industrial products, including fish and certain marine products originating in Hong Kong. Processed agricultural products of Hong Kong origin will also enjoy tariff concessions when imported into EFTA countries. For products originating in the EFTA states, Hong Kong commits to granting its current tariff-free regime.

Hong Kong service providers will enjoy better business opportunities and legal certainty in market access, and non-discriminatory treatment in the EFTA countries’ markets.

Those sectors encompass areas in which Hong Kong has traditional strengths, such as telecommunications, financial services, logistics including maritime transport services, audiovisual services, and various professional and business services. They also include areas identified with potential for further development in Hong Kong such as educational, environmental and medical services, innovation and technology, cultural and creative industries, and testing and certification services.

In terms of market access, there will be no restrictions on foreign capital, the number of service providers or operations, the value of their transactions, the number of persons employed, types of legal entity or joint venture requirements for service sectors in EFTA markets.

For service sectors where requirements have to be in place for regulatory or other reasons, the requirements will not become more restrictive than the level agreed in the agreement. Hong Kong service providers in a wide range of sectors will be treated no less favourably than their counterparts in the EFTA states as well as other economies under similar circumstances.

The FTA provides investors in non-service sectors with legal certainty on national treatment, facilitates their temporary entry into and stay in the EFTA nations to facilitate mutual investment flows and expand related economic activities.

It also provides them with safeguards on the movement of capital and other aspects. These provisions complement the agreement's provisions on trade in services.

Some business people, including intra-corporate transferees and Hong Kong independent professionals, will be granted temporary entry into the relevant EFTA countries, according to the individual states' commitments to facilitate their movement.