Hong Kong explores free trade agreements with UAE and Gulf
The National | 11 September 2024
Hong Kong explores free trade agreements with UAE and Gulf
by Sarmad Khan
Hong Kong is exploring free trade agreements with the UAE and the broader Gulf region to boost its trade and investment ties with economies in the region, senior government officials have said.
The options for pacts being considered also include investment protection treaties as well as economic co-operation deals and avoidance of double taxation agreements, Dr Patrick Lau, deputy executive director of Hong Kong Trade Development Council, told The National at the Belt and Road Summit in Hong Kong.
“The government of Hong Kong is actively exploring all forms of agreements and tracking trade arrangements to further enhance this relationship … an FTA, an investment protection agreement, or a double tax avoidance arrangement,” he said.
“All these tools will further enhance relations but the precise arrangement, I think, I will have to defer to the government, but definitely, all of this will be welcomed.”
The rate of trade growth between the Emirates and Hong Kong was the second fastest among the UAE’s major trading partners, rising in excess of 40 per cent last year, Mr Lau said.
The UAE is actively seeking trade, investment and economic co-operation treaties with nations across the world as it pursues its national economic goal of Dh4 trillion ($1.1 trillion) in foreign trade by 2031.
The country is pushing to diversify its economic base and has signed a series of comprehensive economic partnership agreements with fast-growing economies in Asia, the Middle East and Africa, which have helped boost the UAE’s non-oil foreign trade over the past few years.
The UAE’s Cepa programme is expected to grow the country’s exports by 33 per cent and contribute more than Dh153 billion to gross domestic product by 2031. The UAE, which aims to sign 26 Cepas, has already signed deals with India, Turkey, Israel, Indonesia, Cambodia and Georgia, while talks are under way with Serbia, Vietnam, the Philippines, New Zealand and Ecuador.
The GCC, as a trading bloc, is also pursuing free trade agreements with major economies.
Trade and investment relations between China, the world’s second-largest economy, and the GCC, which is home to a third of the world’s proven oil reserve, is expected to receive a major boost, as the two sides edge closer to signing an FTA.
The UK is also in talks with the GCC for an FTA, while a free trade treaty between the Gulf economies and Turkey is expected to create a $2.4 trillion trade opportunity.
Hong Kong Special Administrative Region of China is a gateway for the UAE as well as its Gulf peers to expand trade and investment ties with the city, mainland China and South-East Asia markets in the broader Asean region.
In 2021, Hong Kong opened its first economic and trade office in Dubai and has now set up a consulting office in Riyadh, Saudi Arabia, through which it is “actively reaching out to all GCC countries”, Mr Lau said.
“We are definitely seeing strong momentum across all GCC countries, for Hong Kong and with China in terms of deepening the trade and investment relations,” he said.
“This signifies enormous potential of deepening of friendship … [and] we are [heading] in the right direction for this, and we believe this friendship will be mutually beneficial.”
Hong Kong is also striving to expand the reach of its trade and investment offices to the wider Middle East region. It is set to open Invest Hong Kong Consulting offices in Egypt and Turkey, Belt and Road Commissioner Nicholas Ho said.
“For Hong Kong at the moment, Middle East is a strong focus … a key market for us, and that is why as Hong Kong government, we are committed to put more boots on the ground,” Mr Ho told The National.
“We are committed to build long-term relationships because we know that’s what you need to build flourishing long-term business opportunities.”
In March, Hong Kong and Bahrain signed an Investment Promotion and Protection Agreement (IPPA) to boost investor confidence and increase flow of investments between the two jurisdictions. The deal followed a similar pact signed with Turkey in October last year.
“We’re exploring multiple channels to lower the threshold of cross investments with Middle East [economies]. We won’t focus on one strategy. We’ll have multi strategies to do that,” Mr Ho said.
Hong Kong, a major trading and financial hub in Asia, is also facilitating trade and investment deals through China’s Belt and Road Initiative.
Launched in 2013, the initiative has evolved to become the largest infrastructure endeavour undertaken by a single country. With more than 150 countries and 30 international organisations signing BRI pacts, the value of investments in trade and infrastructure projects in BRI countries has risen to more than $1 trillion.
Hong Kong, China’s most open and international city, is perfectly positioned to play a vital role in realising the goal of the BRI, Hong Kong SAR chief executive John Lee told delegates at the Belt and Road Summit on Wednesday.
“Thanks to the unique ‘one country, two systems’ principle, Hong Kong is the only world city that enjoys both the China advantage and the global advantage”, he said.
“As a super-connector and super value-adder, we provide world-class infrastructure and professional services support that facilitate trade and enhance projects.”
In the decade through to the end of the last year, Hong Kong’s external trade with BRI economies, excluding the mainland China, has surged by almost 60 per cent – 3.8 times the growth rate of the city’s trade with the rest of the global economies.
In 2023, BRI economies accounted for more than 43 per cent of Hong Kong’s external trade, in value, with the rest of the world minus China mainland, which compares with less than one-third in 2013, Mr Lee said in his keynote address.
“These figures reflect the enormous potential, and promise, of the Belt and Road,” he said.
The UAE, whose non-oil foreign trade hit a record Dh1.4 trillion in the first six months of this year, is also a major contributor to the Belt and Road Initiative. The two countries are co-operating for the BRI, which encompasses about 30 per cent of the world’s GDP, according to state news agency Wam.
About 88 per cent of the UAE’s imports originate from countries actively involved in the initiative, while 94 per cent of the UAE’s non-oil exports go towards those countries.
The non-oil foreign trade between the UAE and Hong Kong grew to $16.2 billion in the first 11 months of last year, Mr Lau of HKTDC said in January.
