The New Zealand-Hong Kong Closer Economic Partnership agreement has been signed and its text made public for the first time. We briefly summarise its import.
The New Zealand-Hong Kong, China Closer Economic Partnership agreement (the CEP) was signed on 29 March 2010 by Trade Minister Tim Groser, who heralded it as a significant achievement that further strengthens economic links between New Zealand and the Asia Pacific region. The CEP is expected to enter into force in late 2010, following completion of the requisite domestic implementation procedures. Included among its key outcomes are:
commitments aimed at facilitating the movement of business people engaged in trade and investment and ensuring transparent application procedures for the temporary entry of business people, and
facilitation of bilateral trade through 48 hour customs clearance of New Zealand exports.
Greater certainty and transparency for goods and services suppliers exporting to Hong Kong is perhaps the primary outcome of the CEP for New Zealand. New Zealand can now be confident that zero-tariff entry on all goods exported to Hong Kong will continue. This being Hong Kong’s first FTA with any state other than mainland China, it puts New Zealand in the position of providing its exporters with a head start over competitors in accessing the Hong Kong market, an important stepping stone to mainland China.
Long term security for New Zealand service exporters is promoted through inclusion in the CEP of most favoured nation (MFN) treatment, by which Hong Kong is required to pass on any preferential treatment provided to future FTA partners in sectors covered by the CEP. In terms of trade in services, Hong Kong has made commitments to New Zealand going beyond its existing WTO General Agreement on Trade in Services (GATS) thresholds, including commitments in a number of new services sectors, among them private education, business services, environmental services and logistics.
Concluded contemporaneously was a side agreement to negotiate an investment protocol within two years of entry into force of the CEP. In the meantime, the more limited disciplines and protection provided to investors in both Hong Kong and New Zealand by the New Zealand – Hong Kong Agreement for the Promotion and Protection of Investments (IPPA) will continue. The Parties have agreed that the Protocol on Investment will build on and be broader in scope than the IPPA. New Zealand presently has a firm investment agreement with China, included as Chapter 11 to the NZ-China FTA. It remains to be seen whether New Zealand can extend this protection to Hong Kong.