Hong Kong can reap the rewards of the world’s biggest free-trade pact even as an outsider, analysts say
- The 15-nation agreement has the potential to help Hong Kong offset economic hammering from trade war and pandemic, according to business leaders, economists
- Some experts feel that even though Hong Kong is not yet an RCEP member, the city can still be benefitted by its potential tax benefits and smoother customs arrangements
Business leaders and economists welcomed the deal for its potential to support Hong Kong’s economic recovery even with the city not among the signatories while expressing hope the financial hub would soon become a member to fully reap the benefits, which include boosting trade with the likes of Japan and South Korea.
In a major coup for China, 15 countries on Sunday signed the Regional Comprehensive Economic Partnership (RCEP), an agreement
The founding nations include Japan, South Korea, Australia, New Zealand and the 10 members of the Association of Southeast Asian Nations (Asean).
In December last year, commerce undersecretary Bernard Chan Pak-li said the government had been “seeking Hong Kong’s accession to RCEP as its first new member economy”.
Lawmaker Felix Chung Kwok-pan, leader of the pro-business Liberal Party, said Hong Kong could extract gains from the pact even before becoming a member, in terms of logistics, trade and supply chains.
“It would be better if Hong Kong is a real member instead … Japan and South Korea are two countries that Hongkongers love to visit, conduct trades and do business with, so it will be better if Hong Kong can be free-trade partners too.”
It is hoped that the agreement will result in a liberalisation of trade and tariff cuts across the Asia-Pacific region, the benefits of which will then flow to Hong Kong.
Wenda Ma, an assistant principal economist at the Hong Kong Trade Development Council, believed that Hong Kong stood to gain from stronger regional cooperation and more unified trade rules.
Small and medium enterprises (SMEs) that have been buckling under the pandemic and associated travel bans have also been supportive of the wide-ranging trade deal.
Hong Kong can benefit because of its position as a financial centre and being one of the important centres for services
“With the US and Europe markets not doing very well, we do need to explore other territories in order to retain our business,” he said.
Terence Chong Tai-leung, an economist from Chinese University, agreed the RCEP offered greater access to Asean markets, but had doubts over what advantages it could offer specifically to Hong Kong, even as a member.
“The RCEP will be more beneficial to export-reliant countries, whereas Hong Kong is more on re-exports, and would only benefit with our re-exports to China, which then deals with Asean, a fast-growing bloc that will be most important in the coming 10 to 20 years,” said Chong.
In 2019, the value of goods re-exported to and from the mainland was HK$3.5 trillion, accounting for roughly 40 per cent of total trade merchandise that year.
The Post has reached out to the Hong Kong government for comment.
US President Donald Trump launched this summer a barrage of sanctions against Chinese and Hong Kong officials and stopped recognising the financial hub as a customs territory separate from mainland China in response to a perceived erosion of freedoms, including from the
.The city was also forced to abide by Washington’s new rules to label its exports as “Made in China”, even though Hong Kong is regarded as a separate trade entity.
The Hong Kong government has since filed to open proceedings under the World Trade Organization’s dispute procedures.
Sufian Jusoh, World Trade Institute fellow, agreed that Hong Kong could request to join the RCEP deal to consolidate the free-trade agreement it has with Asean that took effect last year.
“Hong Kong can benefit because of its position as a financial centre and being one of the important centres for services. With RCEP there will be a higher level of liberalisation of services and investment,” he said.
Julien Chaisse, a trade law professor at City University, also agreed that Hong Kong would “indirectly benefit” from the new trade deal.
He said mid-sized countries most active in global value chains such as Malaysia, Thailand, Vietnam, Korea and Brunei were poised to enjoy the largest gains, while economies already among the world‘s most open, including Singapore and New Zealand, would see the smallest return.