WT/REG400/2  
 
4 November 2020  
(20-7331) Page: 1/14 
Committee on Regional Trade Agreements  Original: English/Spanish  
 
FREE TRADE AGREEMENT BETWEEN HONG  KONG, CHINA AND AUSTRALIA  
(GOODS AND SERVICES ) 
QUESTIONS AND REPLIES  
 The following communication, dated 2 November  2020, is being circulated at the request of 
the delegations of  Hong Kong, China and Australia.  
 
_______________  
 
 
Questions from the delegation of Brazil  
 
1.1.  The Agreement entered into force less than a year after it was signed.  
 Could the Parties please clarify which internal legal and political steps were followed 
in each country after the signature and before the entry into force?  
 
Response from the delegation of Hong Kong, China  
 
 For Hong Kong, China, legislative amendment is required prior to the entry into force of the 
Free Trade Agreement between Hong Kong, China and Australia ( "the Agreement "). The Trade 
Descriptions Ordinance (Cap. 362) was ame nded in order to enable Hong Kong traders to mark or 
label relevant goods as Hong Kong origin in accordance with the rules of origin agreed in the 
Agreement.  
 
Response from the delegation of Australia  
 
 The A -HK FTA was signed by both Parties on 26 March 2019.  In Australia, the Government 
tabled the text of the Agreement in Parliament on 2 April 2019.  It was referred to the Joint Standing 
Committee on Treaties (JSCOT), which considered the proposed FTA and the associated Investment 
Agreement, includi ng through hearings and submissions.  The Committee report, released on 
9 October 2019, recommended binding treaty action in the case of the A -HKFTA and Investment 
Agreement.  Following the passage of enabling legislation through the Australian Parliament, a nd 
completion of the internal procedures in Hong Kong, China, the Agreement entered into force on 
17 January 2020.  
 
Rules of origin  
 
1.2.  Regarding paragraph 3.19, do the Parties still plan on establishing cross -cumulation 
of origin when the Joint Committee of the Agreement meets?  
a. How do the Parties consider that this will impact their bilateral trade, considering 
their other trade agreements in force, such as CPTPP?  
Response from the delegation of Hong Kong, China  
 
 In accordance with Article 3.8 of the Agreement, the Parties will review the Article on 
Accumulation, particularly taking into account new approaches such as cross -accumulation, when 
the Joint Commission of the Agreement meets.  In general, different types of accumulation provision 
of a Free Tr ade Agreement would provide producers with a greater flexibility in terms of sourcing WT/REG400/2  
 
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  inputs and parts for their goods.  Hong Kong, China and Australia do not have further information to 
provide as they have yet to meet under the auspices of the Joint Commi ssion to review Article 3.8 
and consider issues relating to cross -accumulation.  
 
Response from the delegation of Australia  
 
 Article 3.8.3 states that the Parties shall meet within two years after the date of entry into 
force of the agreement to review the  accumulation article.  Any impact on bilateral trade will not be 
ascertained until the review has been undertaken.  
 
b. Additionally, what other aspects of the Rules of origin chapter and annexes do 
they plan to review?  
Response from the delegation of Hong Kon g, China  
 
 The Agreement has come into force since 17 January 2020 for less than a year.  The parties 
will consider at a later time whether other aspects of the ROO Chapter and Annex would need to be 
reviewed taking into account the implementation of the Ag reement.  
 
Response from the delegation of Australia  
 
 Article 3.8.3 provides for a review of the accumulation article.  
 
Technical barriers to trade  
 
1.3.  Regarding paragraph 3.31, why have the Parties decided to exclude Chapter 5 
(Technical Barriers to Trade) from the scope of the agreement`s dispute settlement 
(Chapter 18)?  
Response from the delegation of Hong Kong, China  
 
 The provisions in this chapter that are additional to those under the WTO TBT Agreement are 
mostly on matters relating to strengthening co -operation and enhancing transparency.  The Parties 
agreed that such matters can be effectively dealt with by consultations provided in Article 5.11 o f 
the Agreement.  
 
Response from the delegation of Australia  
 
 Certain provisions of the AHKFTA are excluded from the dispute settlement mechanism, 
including the TBT Chapter. Australia 's usual practice in FTAs is to exclude the TBT chapter from 
dispute sett lement, consistent with its objectives of promoting cooperation and mutual 
understanding, while legal issues are best resolved in the WTO, pursuant to the WTO Agreement on 
Technical Barriers to Trade.  
 
1.4.  Pursuant to paragraph 3.28, has any of the Parties eit her accepted as equivalent 
technical regulations of the other Party or accepted the results of each other's conformity 
assessment procedures? If so, please provide examples.  
Response from the delegation of Hong Kong, China  
 
 Yes. For example, new LPG vess els in Hong Kong, China shall be designed, constructed, heat 
treated, inspected and tested to an internationally recognised standard such as ASME Boiler & 
Pressure Vessel Code Section VIII. The Australian Standard AS1210 (SAA Unfired Pressure Vessel 
Codes)  is accepted as a recogni zed standard in Hong Kong, China 's Code of Practice.  
 
Response from the delegation of Australia  
 
 Not at this time  
 
 
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  1.5.  According to paragraph 3.33, the Parties agreed to share information from post -
market surveillance of food products for food products traded between them.  
 How have  the Parties  implemented  this provision ? 
 
Response from the delegation of Hong Kong, China  
 
 Hong Kong, China and Australia have joined the International Food Safety Authorities Network 
(INFOSAN) platform, which could share information about any issues related to food incidents 
(including post market surveillance results).  
 
Response from t he delegation of Australia  
 
 The Food Products Annex includes specific commitments to facilitate trade in food products. 
The Annex includes commitments for each Party to release perishable goods as quickly as possible 
and initiate discussions to resolve any non -tariff barriers as they arise. To date, no issues have arisen 
between the parties in relation to this annex . 
 
Questions from the delegation of Canada  
 
Government procurement  
 
1.6.  Paragraph 5.21 in Section 5.8 on government procurement states th at both Parties 
commitments under the Agreement largely mirror their commitments under the Revised 
GPA with respect to entities and thresholds, thus leaving the Parties' commitments 
vis-à-vis each other largely unchanged.   
 In light of their shared interes t in the international liberalisation of government 
procurement markets, have or would the Parties consider eventually expanding 
procurement market access beyond existing coverage under the Revised GPA?  
 
Response from the delegation of Hong Kong, China  
 
 The decision to mirror the commitments under the Revised GPA is an outcome of negotiations.  
That said, the Parties can seek to hold further negotiations under Article  13.20.3 of the Free Trade 
Agreement between Hong Kong, China and Australia ( "the Agreement ") with a view to revising 
(a) the thresholds set out in Annex  13-A and (b)  the Threshold Adjustment Formula set out in 
Section  H of Annex  13-A. 
 
Response from the delegation of Australia  
 
 As set out in the side letter to the Agreement regarding government procurement, the parties 
have committed to enter into discussions within two years of entry into force to facilitate engagement 
in each other 's government procurement markets . 
 
1.7.  Article 13.17 states: "Each Party shall ensure that criminal or admi nistrative 
measures exist to address corruption in its government procurement, and that its 
procuring entities have in place policies and procedures to eliminate, to the extent 
possible, any potential conflict of interest on the part of those engaged in or  having 
influence over a procurement."  
 Which measures, if any, have the respective Parties introduced to ensure integrity 
in their procurement practices?  
 
Response from the delegation of Hong Kong, China  
 
 Hong Kong, China 's prevailing government procurement regime is already in full compliance 
with Article 13.17 of the Agreement.  We are committed to providing equal opportunities for domestic 
and foreign suppliers and service providers, participating or competing in government procuremen t. 
This means that contracts for supplying goods or services to the Government of the Hong Kong 
Special Administrative Region (HKSARG) are awarded through open, fair, competitive and 
transparent procedures. Any supplier, contractor or consulting firm who f eels aggrieved may lodge WT/REG400/2  
 
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  a complaint with the procuring entity or the relevant tender board or consultants selection board 
considering that particular tender or consultancy proposal.  
 
 Besides, to uphold the integrity of government procurement, all public officers involved in 
government procurement must declare whether they have any actual, potential or perceived conflict 
of interest upon their taking up of the respective responsibilities in procurement matters and as soon 
as they become aware of such actua l, potential or perceived conflict of interest.  
 
Response from the delegation of Australia  
 
 Australia 's procurement framework ensures integrity in procurement practices through a 
range of measures. These measures have been in place for a number of years a nd as such, following 
the signing of the A -HKFTA on 26 March 2019, and entry into force on 17 January 2020, no new 
measures have needed to be introduced to ensure integrity in procurement practices.  
 
 Measures in the procurement framework that ensure integ rity in procurement practices include 
those captured in paragraphs 6.1 to 6.8 of Australia's Commonwealth Procurement Rules. This 
includes requirements that an official undertaking procurement must act ethically throughout the 
procurement; that entities mu st not seek or benefit from supplier practices that may be dishonest, 
unethical or unsafe; and that an entity must apply timely, equitable and non -discriminatory 
procedures when a complaint is received. Beyond these requirements the Commonwealth 
Procuremen t Rules set out further requirements around accountability and transparency contained 
in paragraphs 7.1 to 7.27 of the Commonwealth Procurement Rules which assist in ensuring integrity 
in procurement practices.  
 
 In Australia, the Department of Finance pr ovides guidance to entities on ethics and probity 
in procurement via its procurement policy website ( https://www.finance.gov.au/government/  
procurement/buying -australian -government/ethics -and-probity -procurement) . This guidance 
includes information in relation to the identification and management of actual, potential and 
perceived conflicts of interest.  
 
 Further, Conflict of Interest Clause s are included in Commonwealth contracts to ensure the 
procuring entity is aware of any actual, perceived or potential conflicts of interest that arise for a 
Supplier during the life of the contract. Both the Commonwealth Contracting Suite, a mandatory 
suite of templates for procurements valued under $200,000, and ClauseBank, a bank pre -drafted 
contract terms that can be used within existing contract templates or in bespoke contracts by 
Commonwealth entities when appropriate, contain standard Conflict of In terest Clauses.  
 
1.8.  Article 13.20.2 of the Agreement states: "The Parties shall endeavour, to the extent 
practicable, to cooperate in such matters as (1) facilitating participation by suppliers in 
government procurement; (2) exchanging experiences and informa tion, such as 
regulatory frameworks, contract establishment and management, best practices and 
statistics; and (3) developing and expanding the use of electronic means in government 
procurement systems."  
 Can the Parties provide examples of efforts current ly underway that serve to 
facilitate or fulfil these commitments?  
 
Response from the delegation of Hong Kong, China  
 
 We have been making continued efforts to work towards the direction set out in Article 13.20.2 
of the Agreement and to foster the cooperat ion between the Parties.   
 
Question s from the delegation  of Ecuador  
 
Export Duties  
 
1.9.  Text of the Agreement. Chapter 2, Article 2.8: "Neither Party shall adopt or maintain 
any duty on the export of a good to the other Party, unless such duty is not in excess of 
that imposed on the like good destined for domestic consumption".  WT/REG400/2  
 
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   According to the above, the limitation would be established by virtue of domestic 
taxes. In that case, if there were two types of taxes (e.g. consumption and value added) 
for the same like good, how would the duty on the export be determined?  
 
Response from the delegation of Hong Kong, China  
 
 Hong Kong, China is a free port and imposes no tariff on both on import and export of goods.  
Neither do we impose any export duties on expor t of goods.  
 
Response from the delegation of Australia  
 
 Any duty on the export of a good to the other Party should not be in excess of that imposed 
on the like good destined for domestic consumption. Australia does not maintain any duties on the 
export of  goods . 
 
Technical barriers to trade  
 
1.10.   Paragraph 3.28. Given that these are additional provisions, which include labelling 
requirements for wine under Annex 5 -A of the Agreement, and that the Parties have 
ratified their commitments under the WTO and TRIPS Agreements, how is this provision 
aligned with the commitments under these Agreements with regard to the prevalence of 
norms?  
Response from the delegation of Hong Kong, China  
 
 Annex 5 -A (Wine) to the Free Trade Agreement between Hong Kong, China and  Australia ( "the 
Agreement ") sets out facilitative arrangement which reflects the ongoing wine labelling practice and 
seeks to keep pace with the long -term harmonization for global wine trade.  They have no impact on 
Parties ' commitments under the TBT and T RIPS Agreements.  
 
Response from the delegation of Australia  
 
 The Wine Annex (Annex 5 -A) includes new commitments to improve transparency of 
regulations and labelling requirements for wine. Traders will be able satisfy wine labelling 
requirements by includ ing information such as product name, country of origin, net contents and 
alcohol content in a single field of vision. Traders will be able to meet any additional wine labelling 
requirements by affixing a supplementary label to the bottle. This will reduce  uncertainty and 
minimise compliance costs for traders. The commitments in the Wine Annex are consistent with 
obligations under the WTO TBT and TRIPS Agreements.  
 
Denial of benefits  
 
Paragraph  4.3. C hapter  7, Article  7.11 
 
1.11.   In the context of denial of benefits procedures, how does a substantial business 
activity influence such a procedure and how would that condition be proven?  
 Are there notification or information exchange requirements to verify the service 
supplier's information under points 1 and 2 of Article 7.11 of the Agreement?  
 
Response from the delegation of Hong Kong, China  
 
 While there are no established and dedicated rules and procedures under the Agreement for 
verifying, reporting and exchanging information with respect to the implementation of the Article, 
there are various different channels of communications between the Parties under this Agreement. 
For example, there are designated contact points to facilitate communication between the two 
Parties on any matter covered by Chapter 7 (Article 7.14). Hong Kong, China will utilise these 
channels as and when necessary.  
 
 
 
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  Response from the delegation of Australia  
 
 As in other FTAs, including CPTPP, 'Denial of Benefits' Article 7.11 includes provis ions that 
allow the Parties to deny, inter alia, shell companies benefits from the FTA (Article 7.11.2 refers). 
The phrase 'substantial business activities' is not defined. It will be a question of fact as to whether 
the business activities of a service su pplier are 'substantial'. There are no information exchange 
requirements specific to this article, but a Party may be able to seek information under broader 
transparency requirements in Chapter 16 of the Agreement. Parties to the agreement are also able 
to cooperate on issues in this Chapter, including on this matter, in accordance with the Cooperation 
Article (Article 7.13).  
 
Electronic Commerce  
 
1.12.   Text of the Agreement. Chapter 11, Article 11.3, paragraph 3. For what types of 
transactions would a method of authentication that meets certain standards or is certified 
by an authority accredited in accordance with the laws be required?  
 What type of standards does the Agreement refer to?  
 
Response from the delegation of Hong Kong, China  
 
 Article 11.3.3 aims to cater for specific statutory requirements specified in local laws and 
regulations. Specifically, in Hong Kong, China, section 6 of the Electronic Transactions Ordinance 
(Cap. 553) (ETO) stipulates the types of electronic signature required for diff erent categories of 
transactions.  Section 6(1) of the ETO provides that, for transactions not involving Government 
entities, a signature requirement under a rule of law can be met by any form of electronic signature 
so long as it is reliable, appropriate a nd agreed by the recipient of the signature, whereas section 
6(1A) provides that, for transactions involving Government entities, a signature requirement under 
a rule of law can be satisfied by digital signature supported by a recognised digital certificat e issued 
by a certification authority recognised under the ETO.  
 
Response from the delegation of Australia  
 
 In the case of Australia, the method of authentication for certain government services may be 
required to meet certain performance standards. Such standards are either set out in legislation or 
imposed by other government agencies as a matter of practice. For example, Australian Government 
(central -level) agencies may only use digital keys and certificates issued by an organisation 
accredited under the Gatekeeper Public Key Infrastructure Framework (PKI Framework). Some state 
(regional -level) governments require that subscribers to an approved electronic lodgement network 
operators for land conveyancing documents must use digital certi ficates which meet PKI Framework 
requirements. More information on the PKI Framework, and the standards and accreditation 
procedures required by the framework, can be accessed at: https://www.dta.gov.au/our -
projects/digital -identity/gatekeeper -public -key-infrastructure -framework.  
 
Questions from the delegation of the European Union  
 
Trade environment  
 
Trade in services and investment  
 
1.13.   Based on statistics presented in the WTO Secretariat's factual presentation, trade 
in commercial services of Hong Kong, Chin a with Australia largely consists of transport 
services and travel services as well as, to a lesser extent, financial services.  
 Could Hong Kong, China provide a breakdown of the main economic activities and 
type of services included under this trade?  
 
Response from the delegation of Hong Kong, China  
 
 Trade in transport services with Australia mainly include passenger and freight transportation 
by air and sea, their related supporting and auxiliary services, and postal and courier services.  In 
2018, in te rms of exports of transport services to Australia, 55% was attributed by air transport, WT/REG400/2  
 
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  42% by sea transport and 3% by others.  As for imports of transport services from Australia, 59% 
was attributed by sea transport and 41% by air transport.  
 
 Travel servi ces cover expenditure on all goods and services acquired by Hong Kong, China 
residents travelling in Australia as well as visitors from Australia travelling in Hong Kong, China; and 
also expenditure on all goods and services acquired by Hong Kong, China re sidents studying in 
Australia and vice versa.  Further breakdowns of statistics for travel services are not available.  
 
 Financial services comprises a host of economic activities including financial assets dealing 
and broking services; asset management, in vestment advisory and related services; underwriting 
new securities; private placements; merger and acquisition services; corporate finance and venture 
capital services; credit, bills transactions and loans; other intermediary and auxiliary services 
associ ated with letters of credit, bankers acceptances, lines of credit, financial leasing and foreign 
exchange transactions; trust and custody services; financial market operational and regulatory 
services; and processing and clearing services of securities tra nsactions.  Further breakdowns of 
statistics for financial services are not available.  
 
1.14.   Given the nature of Hong Kong, China's economy and of the trade in services with 
Australia, could Hong Kong, China elaborate on the expected benefits to service industri es 
of the measures on services contained in the Agreement? More precisely, what are the 
activities and sectors expected to benefit the most from it and, in contrast, the ones that 
will see little change?  
Response from the delegation of Hong Kong, China  
 
 Under the Free Trade Agreement between Hong Kong, China and Australia ( "the Agreement "), 
Hong Kong, China 's service providers enjoy legal certainty in market access and non -discriminatory 
treatment for a c omprehensive range of services in the Australian market under the four modes of 
supply.  Australia made various improvements over its commitments under the WTO (WTO -plus). 
These include professional services, transport services, financial services, telecomm unications 
services, and various business services.  In particular, Australia is committed under the Agreement 
to the liberalisation of the full range of arbitration, conciliation and mediation services and certain 
rail transport services.  
 
 Could Hong Kong , China also explain if any economic impact from the Agreement 
has already materialized since its entry into force in January? Analysis, numbers and 
concrete examples are welcome when answering these questions.  
 
Response from the delegation of Hong Kong, C hina 
 
 The latest trade in services statistics between Hong Kong, China and Australia reflected the 
2018 position.  With the Agreement entered into force in January 2020, we could assess the 
performance of relevant services when the statistics for 2020 beco me available by end -2021.  
 
Provisions on Trade in Services and Investment  
 
Market access  
 
Liberalization commitments  
 
Financial services (paragraphs 4.38 -4.39 & paragraph 4.61  
 
1.15.   Financial services play a key role in the economy of Hong Kong, China.  
a. Could Hong Kong, China elaborate on the expected benefits of the Agreement for 
its financial industry?  
b. Could Hong Kong, China also explain what types of financial activities are 
expected to benefit the most and why?  
 
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  Response from the delegation of Hong Kong, China  
 
 On financial services, apart from market access and non -discriminatory treatment 
commitments as mentioned in Hong Kong, China's reply to 1.2 above, the two Parties also agreed 
to a set of modern and facilitating provisions, including electron ic payment services (Article 8.9), 
transparency in regulation (Article 8.10), and the supply of new financial services (Article 8.12), 
while maintaining the rights of a Party to take prudential measures (Article 8.19) where necessary. 
They will bring mutua l benefits to and facilitate development of the financial services sector of the 
two sides.  
 
Investment  
 
1.16.   Under the new Investment Agreement, Hong Kong investors will benefit from 
higher monetary thresholds for investment screening in Australia.  
 Could the Parties elaborate on the expected impact on bilateral investment flows?  
 
Response from the delegation o f Hong Kong, China  
 
 Under the Agreement, Australia makes legally binding commitments on exempting Hong Kong, 
China investors' investments in a range of sectors from investment screening, with relevant 
monetary thresholds set out in Australia's Schedules t o Annexes I and II of the Agreement (Annex 
I-AU-1 and Annex II -AU-6). Broadly speaking, Australia extends to Hong Kong, China its best 
commitments on investment screening for its other Free Trade Agreement partners, except in 
respect of its most sensitive areas notably agribusinesses, agricultural land, and mining and 
production tenements. These legally binding commitments of Australia are meaningful and important 
investment facilitation measures and are expected to boost investment flows from Hong Kong, Ch ina 
to Australia.  
 
Response from the delegation of Australia  
 
As noted in Paragraph 4.93, the higher monetary thresholds accorded by Australia for 
investment screening applicable to investments by privately -owned Hong Kong investors, in non -
sensitive secto rs and in developed commercial land, are set out in Annexes I and II of Australia's 
Schedules of Commitments (Annex I -AU-1 and Annex II -AU-6) of the A -HKFTA. Note that while 
Australia has agreed to higher monetary screening thresholds for Hong Kong under t he A-HKFTA , 
to ensure appropriate oversight of foreign investment during the COVID -19 pandemic crisis, the 
Australian Government has temporarily reduced all monetary screening thresholds to zero dollars, 
regardless of the investor's country of origin.  
 
 Australia expects that Hong Kong investors benefitting from higher monetary screening 
thresholds in Australia under the A -HKFTA (once the temporary zero dollar threshold measure has 
been lifted) will have a positive impact on bilateral investment flows. Suc h beneficial impact would 
be realised largely through a reduction in regulatory costs for investors falling below the higher 
threshold. The Australian Government aims to maximise investment flows, screening investments 
above relevant thresholds on a case -by-case basis to ensure they are not contrary to the national 
interest.  
 
 Could the Parties disclose if such investments have occurred since entry into force 
of the revised thresholds (i.e.  investments with amount above the previous thresholds)?  
 
Response from the delegation of Australia  
 
 The Australian Bureau of Statistics publishes statistics on the sources of total foreign 
investment in Australia (stocks) and foreign direct investment in Australia (stocks) for transactions 
above $35 million. Updated statistics covering the period since AHKFTA entered into force are not 
yet available.  
 
 
 
 
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  Question s from the delegation of Mexico  
 
Liberalization commitments  
 
1.17.   While paragraph 4.28. states that Hong Kong's sector -specific commitments 
(including the telecommunications sector) under the Agreement build on its GATS 
commitments, it also states that the use of the negative list approach contributes to 
substantially improving the coverage of the commitments under the Agreement, as 
compared t o the GATS.  
 What is this substantial improvement in the coverage of Hong Kong's commitments 
under this Agreement, as compared to its commitments under the GATS ? 
 
Response from the delegation of Hong Kong, China  
 
 Hong Kong, China 's commitments cover a wid e range of services, with WTO -plus commitments 
in various sectors. They include professional services; construction and related engineering services; 
educational services; environmental services; financial services; air transport services; road 
transport s ervices; rail transport services; and recreational, cultural and sporting services.  
 
1.18.   Table 4.1 in paragraph 4.28. shows that Hong Kong's commitments under the 
Agreement will be "improved" (compared to its commitments under the GATS) and will 
be "full" (not subject to limitation(s) under market access or national treatment) for 
Annex I, but "partial" (commitments subject to limitation(s) under market access or 
national treatment) for Annex II.  
 What is this "improvement" in Hong Kong's Annex I com mitments under this 
Agreement, as compared to its commitments under the GATS?  
 
Response from the delegation of Hong Kong, China  
 
 Pursuant to Article 7.7 and Article 12.8 of the Free Trade Agreement between Hong Kong, 
China and Australia ( "the Agreement "), the existing non -confirming measures of a Party are set out 
in Annex I whereas reservations with respect to sectors, subsectors or activities are set out in Annex 
II. For Table 4.1 of the Factual Presentation, those services sectors marked "full" in Annex  I, as we 
understand, refer to services sectors where no existing non -conforming measures are scheduled; 
whereas for those services sectors marked "partial " in Annex II, they refer to services sectors where 
certain reservations have been scheduled by Hong Kong, China.  For the examples of Hong Kong, 
China 's improvements over the GATS, please refer to 1.1 7 above.  
 
1.19.   Paragraph 4.49. states that Australia has listed reservations "for a number of 
existing measures on establishment involving authorization requireme nts for certain 
types of investments". In this regard:  
a. We would like to know in greater detail what these measures are and whether 
they are related to the thresholds that Australia has established in the Foreign 
Acquisitions and Takeovers Act.  
b.  If the answ er to the latter question is yes, we would like know what threshold 
Australia has agreed to and whether there is any difference between that 
threshold and the one that Australia grants to other trading partners 
(particularly CPTPP members); and  
From Australia's perspective,  
 
c. What would be the level of ambition of its commitments under this FTA compared 
to that given to other economies through other FTAs and, in particular, compared 
to the CPTPP?  
d. Would there be significant differences?  WT/REG400/2  
 
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  e. In what sectors or economic activities would these differences be?  
Response from the delegation of Australia  
 
 The goods commitments made by both parties in this FTA are at a very high level of ambition; 
tariff elimination on entry into force. The liberalisation c ommitments referred to in 4.49 made by 
Australia in the A -HKFTA are comparable in ambition to those Australia has made in other more 
recent and ambitious FTAs, notably the CPTPP. Australia has reserved the right to maintain its 
existing foreign investment review process, including the ability to screen investments in sensitive 
sectors. A -HKFTA increases from $266 million to $1,154 million (indexed) the screening threshold 
at which private foreign investments in non -sensitive sectors are considered by the Fo reign 
Investment Review Board (FIRB). This is consistent with the threshold provided currently to 
countries for which the CPTPP has come into force, China, the Republic of Korea and the United 
States. Lower screening thresholds of $15 million and $58 milli on continue to apply to investments 
in agricultural land and agribusiness respectively, and investments in other land will continue to be 
subject to FIRB screening . 
 
1.20.   Table 4.2 in paragraph 4.50. shows that Australia's commitments under the 
Agreement, unlik e those of Hong Kong, will be "similar" (possibly, in specific individual 
cases, with limited improvements and/or limited additional reservations) to its 
commitments under the GATS, but not the "same". They will be "partial" for Annex I, but 
"full" for Ann ex II.  
a. What are the specific cases in which Australia's commitments under the 
Agreement are considered to be "similar" and not the "same" as its commitments 
under the GATS?  
b. What would be the main differences between Australia's commitments and the 
new leve l of ambition of Hong Kong's commitments?  
c. What are the limitations of Australia's commitments in Annex I?  
Response from the delegation of Australia  
 
 The liberalisation commitments referred to in 4.49 made by Australia in the A -HKFTA are 
comparable in ambi tion to those Australia has made in other recent and ambitious FTAs, notably the 
CPTPP. As noted in Table 4.2, commitments Australia is making in some sectors are "similar " to its 
commitments under GATS. This includes sectors in which Australia has not mad e commitments 
under GATS: Audiovisual services; Primary education services; Adult education services; Other 
financial services; Hospital services; Social services; Other health related and social services; and 
Libraries, archives, museums and other cultura l services. Sectors which Australia has partially 
committed under GATS that are subject to Annex II reservations in A HKFTA are also included in this 
grouping: Secondary education services; Higher education services; Other education services; Other 
human h ealth services; Maritime Transport Services; and Air transport services. This grouping also 
includes sectors partially committed under GATS that are subject to existing non -confirming 
measures as described in Annex I entries in A -HKFTA: Telecommunication s ervices; Commission 
agent's services; Wholesale trade services; Retailing services; Other human health services; 
Maritime transport services, Air transport services; and Road Transport Services.  
 
Domestic regulation  
 
1.21.   Paragraph 4.69. states that a review is  foreseen by the Agreement if the results of 
the negotiations on paragraph 4 of Article VI of the GATS enter into effect.  
 What criteria will this review consider?  
 
Response from the delegation of Hong Kong, China  
 
 Article 7.8.12 of the Agreement reads "If the results of the negotiations related to Article  VI(4) 
of GATS, or the results of any similar negotiations undertaken in other multilateral fora in which the 
Parties participate, enter into effect, the Parties sh all jointly review such results and consider bringing 
them into effect, as appropriate, under this Agreement. " Hong Kong, China strives to improve WT/REG400/2  
 
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  transparency of domestic regulations and streamline the procedures of applying for authori zation for 
providin g services, so as to ensure that measures affecting trade in services are transparent and 
administered in a reasonable, objective and impartial manner. We will take due consideration of the 
results of the negotiations in due course.  
 
Response from the dele gation of Australia  
 
 This is a standard feature of FTA articles on Domestic Regulation given the ongoing discussions 
in the Working Party on Domestic Regulation (WPDR), including the CPTPP. Article VI:4 of the GATS 
outlines the objective of negotiations to determine the final disciplines on Domestic Regulation in 
the WTO. If those WPDR negotiations result in disciplines that go further than those in A -HKFTA, the 
Parties will review the outcome.  
 
Telecommunications  
 
1.22.   Paragraph 4.83. states that  Chapter 9 contains additional disciplines on 
telecommunications, which apply to measures adopted or maintained by a Party affecting 
trade in telecommunications services.  
 What are these additional disciplines on telecommunications for the Agreement?  
 
Response from the delegation of Hong Kong, China  
 
On telecommunications, Hong Kong, China and Australia agreed to a set of regulatory 
principles, amongst which enhance transparency in licensing process and requirements (Articles 9.8 
and 9.9), safeguard the acc ess to and use of public telecommunications services/facilities 
(Articles  9.4 and 9.10), ensure the independence and impartiality of telecommunications regulatory 
bodies (Article 9.6), prevent anti -competitive practices (Article 9.13) and allocation and us e of scarce 
telecommunications resources such as spectrum and numbers (Article 9.16).  
 
Response from the delegation of Australia  
 
 As with Telecommunications Chapters in most FTAs, including CPTPP, Chapter 9 covers topics 
such as approaches to regulation; access to and use of public telecommunications services; 
interconnection; telecommunications regulatory body and government ownership; technology 
choice; licensing; transparency; unbundling of network elements; treatment by major suppliers; 
competitive safeguards; universal services; and allocation and use of scarce resources. Disciplines 
on international mobile roaming are contained in Article 9.17. When compared to CPTPP, A -HKFTA 
has an expanded discipline on international submarine cable syst ems. 
 
Education services  
 
1.23.   Paragraph 4.87. states that in Annex 7 -B, the Parties agree to strengthen their 
cooperation in education services. They identify areas like quality assurance processes; 
recognition of qualifications; online education, distance edu cation and blended learning 
models; as well as any other area of cooperation in education which may be mutually 
determined. They further identify different ways to achieve such encouraged cooperation.  
 Mexico would welcome additional information on such s ervices and, in particular, on 
ways to achieve cooperation.  
 
[Paragraph 3 of Annex 7 -B sets out the cooperation mechanism, which states as follows - 
 
 "3. The Parties shall encourage, as appropriate, cooperation between their respective 
government agencies , educational institutions, organisations and other entities in the areas referred 
to in paragraph 2. This may be achieved through:  
 
(a) development of collaborative training, research and development initiatives, technology 
transfer and joint ventures between appropriate entities;  
 
(b) development of programmes which can be jointly delivered by educational institutions;  
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  (c) exchange of teaching staff, administrators, researchers and students by educational 
institutions;  
 
(d) academic credit t ransfer and mutual recognition of academic and vocational education 
and training qualifications between educational institutions; and  
 
(e) exchange of information on:  
 
(i) scholarships, awards, fellowships and other study opportunities in the Area of 
each Party;  
 
(ii) education systems and standards (including quality assurance arrangements);  
 
(iii) recognition of qualifications by multilateral and regional fora; and  
 
(iv) any other form of information exchange which may be mutually determined." ] 
 
Investment  
 
1.24.   In paragraph  4.92.:  
a. What is meant by performance requirements?  
b. What is the scope of such requirements?  
Response from the delegation of Hong Kong, China  
 
 Article 12.6 of the Agreement sets out disciplines on the application of performance 
require ments to covered investments. Such performance requirements are set out in Article 12.6.1 
and Article 12.6.2. The disciplines (with details set out in the various paragraphs of Article 12.6) 
include, for example, neither Party should impose or enforce any requirement such as "export a 
given level of percentage of goods or services " or "achieve a given level or percentage of domestic 
content ", in connection with the establishment, acquisition, expansion, management, conduct, 
operation, or sale or other dispo sition of a covered investment.  
 
Response from the delegation of Australia  
 
 As in other FTAs, such as the CPTPP, 'performance requirements' in Article 12.6 refers to the 
commitment of the Parties to not impose certain requirements in connection with the e stablishment, 
acquisition, expansion, management, conduct, operation, or sale or other disposition of an 
investment, and not to condition receipt of an advantage on certain requirements. The performance 
requirements covered in Article 12.6 include trade -related investment measures, such as local 
content requirements, and export and import requirements, in some instances extending to services 
as well as goods. Technology transfer requirements are prohibited also, except where they fall under 
exceptions relat ing to TRIPS consistent measures and competition law (see paragraphs 4 a) and b)) . 
 
Questions from the delegation the Separate Customs Territory of Taiwan, Penghu, Kinmen 
and Matsu  
 
General provisions of the Agreement  
 
Electronic commerce  
 
1.25.   Paragraph 5.48: Section B specifically governs movement of information and 
location of computing facilities for financial services (Article 11.15).  
a. Could you please elaborate on the aforementioned discipline governing 
movement of inf ormation and location of computing facilities for financial 
services?  
 Section B of Chapter 11 of A -HKFTA contains rules on movement of information and the 
location of computing facilities for financial services. These rules provide that Parties:  WT/REG400/2  
 
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  • allow business to transfer information across borders (Article 11.15.1) ; 
• ensure that business are not required to store data locally, preventing the need to establish 
unnecessary local computing facilities – provided that local financial regulators have 
immediate, direct and ongoing access to the financial services data stored outside of that 
territory (Article 11.15.2); and  
• can regulate to achieve a legitimate public policy objective, provided that such measures 
do not constitute a means of arbitrary or un justifiable discrimination, or are a disguised 
restriction on trade (Article 11.15.5) . 
 
b. What obligations go beyond the Financial Services Chapter in the CPTPP?  
 The A -HKFTA Electronic Commerce Chapter provides more ambitious data flows and 
localisation com mitments for financial services data than the rules contained in the CPTPP Financial 
Services Chapter.  
 
 In relation to commitments on data flows, Section B (Transfer of Information) of Annex 11 -B 
(Specific Commitments) to Chapter 11 (Financial Services) o f the CPTPP requires Parties to allow 
financial institutions to transfer information across borders for data processing if this processing is 
required in the financial institution 's ordinary course of business – though a Party may require the 
financial ins titution to obtain prior authorisation from a relevant regulator to designate a particular 
enterprise as a recipient of this information.  
 
 In contrast to Section B of Chapter 11 of A -HKFTA, the CPTPP Financial Services Chapter does 
not contain a separate discipline on local data storage requirement for financial services data.  
 
Question s from the delegation of Thailand  
 
Rules of origin  
 
1.26.   Paragraph  3.15 : According to the disciplines on rules of origin and origin procedures 
set out in Chapter 3 (Article 3.17: Basis of a Declaration of Origin), the Declaration of 
Origin under the A -HKFTA does not need to be certified by an authorized body or 
Government department, does it ? 
 The Declaration of Origin under the Free Trade Agreement between Hong Kong , China and 
Australia ( "the Agreement ") does not need to be certified by an authorized body or Government 
department.  
 
1.27.   Paragraph  3.19 : Referring to Sub -Para graph  3.19 stating that Hong Kong, China and 
Australia agree to meet within two years after the entr y into force of the Agreement  to 
review Article 3.8, particularly taking into account new approaches such as 
cross -cumulation.  Could Hong Kong, China and Australia further  clarify  the requirements 
of the  third -party who would be qualified to cross -cumulati on? Is it necessary that the 
third – party must have FTA with either Hong Kong, China or Australia in order to be 
qualified to cross -cumulation?  
 Hong Kong, China and Australia do not have further information to provide as they have yet 
to meet under the a uspices of the Joint Commission to review Article 3.8 and consider issues relating 
to cross -accumulation.  
 
Business services  
 
1.28.   Paragraph  4.30 : According to Hong Kong, China 's Annex II, Hong Kong, China only 
has commitments in mode 1 and mode 2 in legal service, could Hong Kong, China further 
elaborate its main concerns of not committing mode 3 in legal services when concluding 
the Agreement but to supplement its commitments after the entry into force of this 
Agreement instead?  
 
 
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  Response from the delega tion Hong Kong, China  
 
 Hong Kong, China has made Modes 1 and 2 commitments on certain legal services (Australian 
law, private international law and public international law) under the Agreement.  According to the 
side instruments of the Agreement, the two sides will meet within one year of the date of entry into 
force of the Agreement with the intention of supplementing commitments made by Hong Kong, 
China on legal services with additional substantive commitments on Mode 3.  
 
MFN and horiz ontal commitments  
 
1.29.   Paragraph  4.49  and Paragraph 4.59 : As Australia made reservations to adopt and 
to add any non -conforming measures at the regional level of government in both ANNEX  I 
and Section B of its schedule, has Australia made any amendment to its schedule up until 
now? If any, do those added non -conforming measures have any impact on the level of 
commitments of Australia under this Agreement?  
Response from the delegation of Australia  
 
 In A-HKFTA Australia lists individual non -conforming measures a t the regional level of 
government and also reserves the right to maintain and to add to its schedules any measures at the 
regional level of government which do not confirm with National Treatment, Local Presence, Most -
favoured Nation, Performance Requirem ents and Senior Management and Boards of Directors that 
existed at 1 January 2005, but were not listed in the Schedule at the date of entry into force of the 
Agreement.  
 
 Australia has not made any amendments to its services and investment market access 
schedules under A -HKFTA to date.  
 
 Australia also reserves the right to adopt or maintain any measure at the central or regional 
level of government which would otherwise be in breach of the Market Access obligation, except for 
the sectors and subsectors, an d subject to the terms, limitations and conditions, listed in 
Appendix  II.1 to its Schedule.  
 
Competition  
 
1.30.   Paragraph  5.42 : If there is cross -border case on competition related matter, how 
Hong Kong, China and Australia are able to provide concrete coordina tion particularly the 
issue of cross -border enforcement?  
Response from the delegation of Hong Kong, China  
 
 Under Chapter 15 (Competition Policy), Hong Kong, China and Australia agreed to promote 
competition, and to encourage cooperation and information exchange between their competition 
authorities. For Hong Kong, China, the principles and obligations provided in Chapter 15 are in line 
with our prevailing competition regime and the Competition Ordinance.  
 
Response from the delegation of Austr alia 
 
 Pursuant to the A -HKFTA, Australia and Hong Kong, China can cooperate as appropriate, on 
issues of competition law enforcement, including coordination on cross -border enforcement matters 
(Article 15.5). What form this cooperation takes will depend on the laws, regulations, policies and 
available resources and any cooperation arrangements our competition authorities have in place at 
the time.  
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