HK and Macao to start FTA Negotiations

Hong Kong has begun a consultation on the areas to be covered in a proposed Closer Economic Partnership Arrangement (CEPA) trade treaty with Macao.

“Establishing the Hong Kong-Macao CEPA would further enhance economic co-operation and development of the two places,” a spokesperson of the Government of Hong Kong said. “At present, Hong Kong and Macao have each entered into a separate CEPA with Mainland China. After the establishment of the HK-Macao CEPA, the three places may build upon those CEPAs to establish a new, common platform to advance the further liberalization and facilitation of trade and investment in the ‘Greater China’ region.”

Hong Kong and Macao do not apply any tariffs on imports. Under the new CEPA negotiations, Hong Kong and Macao will seek to bind the existing tariff-free regimes, providing legal certainty on the tariff-free movement of goods between the two jurisdictions.

Also, as both Hong Kong and Macao are free ports and impose no tariffs, their CEPA need not cover preferential rules of origin, as in the case of Hong Kong’s other trade agreements. Both sides will seek to minimize non-tariff barriers and avoid imposing trade remedy measures, including anti-dumping, safeguards, and countervailing measures, in order to further reduce obstacles to trade between the Hong Kong and Macao.

It is worth mentioning that while Macao was only the 19th largest trading partner with Hong Kong in terms of goods in 2014, bilateral trade in goods between the two economies grew by an average of 22% annually between 2010 and 2014. Also, Macao is the 11th largest source of foreign direct investment (FDI) into Hong Kong and the 11th largest recipient of FDI from Hong Kong.

Filed under: HK as a Financial Centre, International Business Environment