WT/REG397/2  
 
10 March  2020 
(20-1853) Page: 1/4 
Committee on Regional Trade Agreements  Original: English  
 
FREE TRADE AGREEMENT  BETWEEN HONG KONG, CHINA  AND GEORGIA  
(GOODS AND SERVICES ) 
QUESTIONS AND REPLIE S 
 The following communication, dated 10 March  2020, is being circulated at the request of the 
delegations of  Hong Kong, China and Georgia . 
 
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Questions from the delegation of Canada  
 
Chapter 10  
 
Commercial presence  
 
1.1.  Footnote 7 states: "It is understood that nothing in this Chapter shall be construed 
to impose any obligation with respect to investment protection matters, such as 
protection against expropriation, full protection and security and other investment 
protect ion matters."  
Why is this footnote necessary? Can you explain the intersection between an 
"investment protection matters" and certain obligations of this chapter? Would the 
footnote limit the substantive obligations included in the Chapter, such as Article 3 
(National Treatment)?  
 
 The footnote enhances clarity of the Establishment Chapter by recording the Parties ' mutual 
understanding that the provisions in the Chapter do not cover investment protection matters and 
nothing in the Chapter shall be co nstrued to impose any obligation with respect to investment 
protection matters.  
 
1.2.  Article 2 (2) (Scope and Coverage) states: "For greater certainty, in case of conflict, 
the bilateral agreement concerning promotion and protection of investment to be entered  
into between the Parties shall prevail"  
 Does this provision suggest that there currently is or will be negotiations between 
Hong Kong China and Georgia for a bilateral investment agreement?  
 
 Hong Kong, China and Georgia are keen to strengthen investment  ties to further boost bilateral 
investment flows, including through exploring the possibility of forging an investment promotion and 
protection agreement.  
 
General Provisions of the Agreement  
 
Environment  
 
1.3.  Paragraph 5.27 of the factual presentation states that : "The Parties have agreed to 
review the impact of the implementation of the Agreement on the environment as 
appropriate at any time after the entry into force of the Agreement (Article 13.5)."  WT/REG397/2  
 
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  a. Which body would conduct the review?  
 The Agreement sets out that the Hong Kong, China - Georgia Joint Commission (JC) shall 
consider, amongst other things, matters relating to the implementation of the Agreement. Therefore, 
details of the review (including which body to conduct the review) wi ll be considered by the JC.  
 
1.4.  Can the Parties please provide further details regarding the review process? In 
particular:  
a. Could the Parties indicate whether they have a specific timeline for review?  
b. Does the review process envision public participation?  
c. What are the expected or potential outcomes of the review? For example, could 
the review process lead to recommendations on how to improve the chapter's 
operation/effectiveness?  
d. Will the completed review be made publicly available?  
 The JC will consider all r elevant details of the review, including whether and when a review 
will be conducted; whether there will be any public participation in the review process; possible 
outcomes and recommendations of the review; and whether the review will be made publicly 
available.  
 
1.5.  Paragraph 5.27 of the factual presentation states that : "The Parties shall not have 
recourse to arbitration under chapter 16 (Dispute Settlement) for matters arising under 
Chapter 13 (Article  13.7)."  
 Which mechanism do Parties envisage for the resolution of disputes that could arise 
under this chapter?  
 
 The Parties would resolve any dispute arises under Chapter 13 through cooperation and 
consultations.  
 
Questions from the delegation of the European Union  
 
1.6.  Given that Hong Kong, China's exports of goods almost entirely consist of re -export 
of goo ds that are only transiting via the city, and based on the rule of origin stipulated in 
Chapter 3 of the agreement, what will be the share of Hong Kong, China's exports to 
actually benefit from the zero tariffs?  
 Based on the 2019 trade figures, domestic e xports accounted for 11.7% of the total exports 
from Hong Kong, China to Georgia, all of which will benefit from the zero tariffs.  
 
1.7.  What are the most recent available figures on the value of Hong Kong, China's FDI 
flows/stock to Georgia and of Hong Kong, China's exports of services to Georgia (the data 
are absent from the WTO presentation)? What would be the estimated share of such flows 
being granted national treatment under the agreement? Same question with Georgia 
flows to Hong Kong, China. Also, what w ould be the main reasons/obstacles for 
Hong  Kong, China's FDI and exports services to not be granted national treatment under 
the agreement?  
 The data on value of Hong Kong, China's FDI flows/stock to Georgia and of Hong Kong, China's 
exports of services t o Georgia are not available due to insignificant data. We are unable to estimate 
the share of such flows being granted national treatment under the Agreement.   
 
 The most recent available figures of FDI inflows from Hong Kong, China to Georgia is of 2018,  
which estimates to 4.8 million USD. As regards the services, currently Georgia does not have the 
statistics for services by countries and customs territories and that is the reason of not inclusion of 
that data to the WTO presentation.  WT/REG397/2  
 
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   Hong Kong, China's  FDI flows to Georgia in 2018 are distributed in 3 sectors: mining, real 
estate and financial sector. For all of these sectors WTO commitments have not been changed, since 
national treatment commitment was already there in Georgia's WTO Schedule of Specifi c 
Commitments.  
 
Question from the delegation of  Japan  
 
Provisions on Trade in Services  
 
Liberalization commitments  
 
Transport services  
 
1.8.  Section 4.4.2.2.3 of the factual presentation states that : "It has removed its GATS 
commitment in the subsector F. Road transport services (e) Freight transportation 
services suggesting reduced commitments in transport services in the Agreement than 
under the GATS". However, Japan understands that Georgia has mor e commitment in 
Freight transportation Services (CPC7123) under Hong Kong -Georgia FTA, than Georgia's 
commitment of CPC7123 under GATS. Please clarify the meanings of 4.33 in the report.  
 Japan's  understanding is correct. Georgia has not reduced commitment s in transport services, 
moreover, it has further liberali zed Mode 3 of the (e) Freight transportation services under the 
F. Road transport services. In addition, numeration order under the F. Road transport services was 
aligned to the services sectoral cl assification list (W/120) and therefore, mentioned sub -sector is 
listed as "(b) Freight transportation services " in the Hong Kong , China -Georgia FTA.  
 
Questions from the delegation of Thailand  
 
Provision s on Trade in Services  
 
MFN and horizontal commitments  
 
1.9.  Paragraph 4.17: Under the GATS, Hong Kong, China has no horizontal limitations. 
Under the Agreement it has listed horizontal commitments on the movement of natural 
persons as well as a horizontal reservation irrespective of the possibility tha t it might be 
covered by the GATS or not, on all sectors, all modes of supply, market access and national 
treatment with respect to (a) the provision of public law enforcement, ambulance 
services, correctional services and fire -fighting services; and (b) t he following, to the 
extent that they are social services established for a public purpose: i.) health; 
ii) education; iii.) housing; iv.) training; v.) transport; vi.) public utilities; vii.) social 
security; and viii.) social welfare.  
 As there are no s uch horizontal limitations in Hong Kong, China 's GATS commitments 
while there are horizontal commitments under the Agreement, what is the intention of 
Hong Kong, China on the application of the reservations to its GATS commitment? Does 
this mean that Hong Kong, China has taken a step back on its commitment? Please clarify.  
 
 The GATS and the Agreement are separate agreements, with different rights and obligations. 
The said reservation on a schedule of the latter is not intended to modify rights and obligat ions of 
Hong Kong, China under the GATS. As a matter of fact, Article 2 (Relation to Other Agreements) of 
Chapter 1 of the Agreement states clearly that "[t]he Parties confirm their rights and obligations 
under the WTO Agreement and the other agreements ne gotiated thereunder to which both Parties 
are party, and any other international agreement to which both Parties are party".  
 
Transport service s 
 
1.10.   Paragraph 4.33: It has removed its GATS commitment in the subsector F. Road 
transport services (e) Freight tra nsportation services suggesting reduced commitments 
in transport services in the Agreement than under the GATS.  
 WT/REG397/2  
 
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   As Georgia has reduced its commitment in transport services in the Agreement, 
could Georgia provide the reasons of removing its GATS commitme nt in the subsector F? 
Moreover, does Georgia plan to amend its GATS commitment in this subsector as well? 
Please elaborate.  
 
 Georgia has not reduced commitments in transport services, moreover, it has further 
liberali zed Mode 3 of the (e) Freight transp ortation services under the F. Road transport services. In 
addition, numeration order under the F. Road transport services was aligned to the services sectoral 
classification list (W/120) and therefore, mentioned sub -sector is listed as "(b) Freight transp ortation 
services " in the Hong Kong , China -Georgia FTA.  
 
General Provision s of the  Agreement  
 
Environment  
 
1.11.   Paragraph 5.27: On the rules or prohibitions/ measures for the protection of 
sanitation and the environment, how can investors be attracted to invest in environmental 
goods and service?  
 While in general one of the key objectives of the Agreement is to enhance trade and 
investment flows between the two Parties, it should be noted that under Chapter 13 of the 
Agreement the Parties agree that it is inappropriate to weaken or reduce the protections afforded in 
its environmental laws, regulations, policies and practices in or der to encourage trade and 
investment.  
 
1.12.   Paragraph 5.27: If there is disputes relevant to trade and environmental issues 
between the Parties, is there any procedure for the settlement process?  
 The Parties would resolve any dispute arises under Chapter 13 t hrough cooperation and 
consultations.  
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