ASEAN-Hong Kong, China Free Trade Area (AHKFTA)

is a trade agreement among the 10 Member States of the Association of Southeast Asian Nations (ASEAN) and Hong Kong, China. The ASEAN Economic Ministers and the Secretary for Commerce and Economic Development of Hong Kong, China signed the ASEAN-Hong Kong, China Free Trade Agreement and the ASEAN-Hong Kong, China Investment Agreement (AHKIA) on 12 November 2017 on the sidelines of the 31st ASEAN Summit in Manila, Philippines.

What are the objectives of the AHKFTA?

▪ Progressively liberalize and facilitate trade in goods among the Parties through, inter alia, progressive elimination of tariffs and non-tariff barriers in substantially all trade in goods among the Parties

▪ Progressively liberalize and facilitate trade in services among the Parties with substantial sectoral coverage

▪ Promote and enhance investment opportunities

▪ Strengthen, diversify, and enhance trade, investment, and economic links among the Parties

▪ Provide special and differential treatment to ASEAN Member States (AMSs), especially to the newer AMSs, to facilitate their more effective economic integration

When is the entry into force of the Agreement?

The AHKFTA entered into force on 11 June 2019, for Hong Kong, China and five ASEAN Member States, namely, Lao PDR, Myanmar, Singapore, Thailand and Viet Nam. The AHKFTA entered into force for Malaysia on 13 October 2019; the Philippines on 12 May 2020; Indonesia on 04 July 2020; Brunei Darussalam on 20 October 2020 and Cambodia on 12 February 2021.

What is the coverage of the Agreement?

The AHKFTA contains 14 chapters covering broad areas of market access liberalization, trade facilitation, rules to promote confidence in trade, and cooperation aimed at facilitating trade in goods and services in the region. The AHKFTA is ASEAN’s sixth free trade agreement with external partners, after

China (ASEANChina FTA),

Korea (ASEAN-Korea FTA),

Japan (ASEAN-Japan Economic Partnership Agreement),

India (ASEAN-India FTA), and

Australia and New Zealand (ASEAN-Australia-New Zealand FTA).

What are the tariff commitments of Parties under the Trade in Goods Agreement (TIG)?

Tariff reduction commitments under the Trade in Goods (TIG) Chapter cover different kinds of commodities, including jewelry, articles of apparel and clothing accessories, watches and clocks, and toys.

▪ Hong Kong, China and Singapore will grant tariff-free access and will bind their customs duties at zero upon entry into force of the agreement.

▪ Brunei, Malaysia, the Philippines and Thailand will eliminate customs duties on 85% of products traded with Hong Kong, China within 10 years and reduce the tariffs on another 10% of tariff lines within 14 years.

 ▪ Indonesia and Viet Nam will eliminate customs duties for 75% of their products within ten years, and reduce the tariffs on another 10% of tariff lines within 14 years.

▪ Cambodia, Lao PDR and Myanmar will eliminate customs duties for 65% of their products within 15 years and reduce the tariffs on another 20% of tariff lines within 20 years.

Economic Community (AEC) is the end goal of economic integration as espoused in the ASEAN Vision 2020, which is based on a convergence of interests of ASEAN Member States (AMS) to deepen and broaden integration through existing and new initiatives with clear timelines. The AEC remains part of the ASEAN community realization procedure comprised of three pillars that work in tandem, namely:

i) the ASEAN Political-Security Community;

ii) the ASEAN Economic Community; and

iii) the ASEAN Socio-Cultural Community At the 12th ASEAN Summit in January 2007, Leaders signed the Cebu Declaration on the Acceleration of the Establishment of an ASEAN Community by 2015. In particular, the Leaders agreed to hasten the establishment of the AEC by 2015 and to transform ASEAN into a region characterized by the free movement of goods, services, investment, skilled labour, and freer flow of capital.

What is the ASEAN Economic Community Blueprint?

The AEC Blueprint serves as a coherent master plan in guiding the establishment of the AEC. It identifies the characteristics and elements of the AEC with clear targets and timelines for implementation of various measures as well as pre-agreed flexibilities to accommodate the interests of all AMS. The implementation of the first AEC Blueprint (2015-2018), adopted in 2007, has been substantively achieved in eliminating tariffs and facilitating free trade; advancing the services trade liberalization agenda; liberalizing investment; streamlining and harmonizing capital market regulatory frameworks and platforms; facilitating skilled labour mobility; promoting the development of regional frameworks in competition policy, consumer protection and intellectual property rights; promoting connectivity; narrowing the development gap; and strengthening the ASEAN’s relationship with its external parties. Moreover, as the ASEAN recognizes that regional economic integration is a dynamic, ongoing process as economies as well as domestic external environments are constantly evolving, it has developed the AEC Blueprint 2025. The AEC Blueprint 2025, adopted by the ASEAN Leaders at the 27th ASEAN Summit on 22 November 2015 in Kuala Lumpur, Malaysia, is built upon the AEC Blueprint 2015 and will provide broad directions through strategic measures to guide the next phase of ASEAN economic integration from 2016 to 2025. The AEC Blueprint 2025 forms part of ASEAN 2025: Forging Ahead Together.

What are the key characteristics of AEC 2025?

1. A Highly Integrated and Cohesive Economy;

2. A Competitive, Innovative, and Dynamic ASEAN;

3. Enhanced Connectivity and Sectoral Cooperation;

4. A Resilient, Inclusive, People-Oriented, and People-Centered ASEAN; and

5. A Global ASEAN.

What are the six elements of ASEAN as a highly integrated and cohesive economy?

1. Trade in goods;

2. Trade in services;

3. Investment environment;

4. Financial integration, financial inclusion and financial stability;

5. Facilitating movement of skilled labour and business visitors; and

6. Enhancing participation of global value chain.

What are the nine elements of ASEAN as an innovative and dynamic ASEAN?

1. Effective competition policy;

2. Consumer protection;

3. Strengthening intellectual property rights cooperation;

4. Productivity-driven growth, innovation, research and development, and technology commercialisation;

5. Taxation cooperation;

6. Good governance;

7. Effective, efficient, coherent and responsive regulation, and good regulating practice;

8. Sustainable economic development; and

9. Global megatrends and emerging trade-related issues.

What are the nine elements of ASEAN as an enhanced connectivity and sectoral cooperation?

1. Transport;

2. Information and communication technology;

3. E-commerce;

4. Energy;

5. Food agriculture and forestry;

6. Tourism;

7. Healthcare;

8. Minerals; and

9. Sciences and technology.

What are the five elements of ASEAN as a resilient, inclusive, people-oriented, and People-Centered ASEAN?

1. Strengthening the role of micro, Small, and medium Enterprises;

2. Strengthening the role of the private Sector;

3. Public-private partnership;

4. Narrowing the Development Gap; and

5. Contribution of Stakeholders on regional integration Efforts.

What are the two approaches for the ASEAN to be fully integrated into the global economy?

1. ASEAN is continuing to make steady progress towards integrating the region into the global economy through FTAs and comprehensive economic partnership agreements (CEPs) with Hong Kong, China, China, Japan, Republic of Korea, India, Australia and New Zealand. Negotiations to conclude the Regional Comprehensive Economic Partnership (RCEP) is also ongoing; and

2. Building on the gains from ASEAN’s global engagement and its economic integration initiatives, ASEAN shall work towards further integrating the AEC into the global economy.

What is the status of tariff reduction and/or elimination within ASEAN?

Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand have eliminated intra-ASEAN import duties on 99.65 percent of their tariff lines. Cambodia, Lao PDR, Myanmar, and Viet Nam have reduced their import duties to 0-5 percent on 98.86 percent of their tariff lines. Today, focus is given to addressing non-tariff measures that could have non-tariff barrier effects on the region's trade and business activities.