Beyond free trade: Australia seeks closer ties with Hong Kong under new envoy

DTA, FTA – Aussies hope to get out their signature pen with Hong Kong soon.


Diplomacy is often seen as an arena of bargaining and confrontation among states striving to maximise their gains with ‘commoners’ having minimal involvement from a high politics perspective. Such a twentieth-century perception is more than often proved to be over-simplistic and outdated. In an open society, experienced diplomats and negotiators would know the importance of transparent communications with constituents back home, and the process is never easy. Australia’s Michaela Browning is no stranger to it. As a long-time business champion, the new Consul General from Canberra is eager to set a good start of her tenure with a “modern and ambitious” free trade agreement (FTA) between the two economies.

The appointment of Ms Browning, which commended on 24 April this year, speaks for itself as to how seriously Canberra takes the FTA with Hong Kong which is still under negotiation. She most recently served as Head of Investment, Australian Trade and Investment Commission (Austrade). Before that, she was also a Trade Negotiator at the Doha Development Round and for the free trade agreements Australia negotiated with the USA and Singapore.

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“It makes sense for Hong Kong to engage with Australia to lock in the freedom and access we already provide to each other,” Ms Browning asserts in an interview with Harbour Times, applauding Chief Executive Carrie Lam who helped initiate the agreement during her visit to Australia in 2015. Australia is hoping to secure a guarantee on Hong Kong’s zero tariff arrangement for Australian goods while Hong Kong wants Australia to reduce its 2.5% average import fee.

According to Ms Browning, Hong Kong is where Australia has the biggest presence in Asia. About 100,000 Australians live in Hong Kong and almost the same number in reversed. More than 600 Australian businesses operate in the harbour city. Hong Kong’s bilateral services trade with Australia amounted to HK$41 billion in 2015, and bilateral goods trade amounted to HK$52 billion in 2016.

“For us it is an agreement that is long overdue given the extensive ties between Hong Kong and Australia, but it will also be an ambitious and productive one which will set a legal provision on a broader package of economic engagement,” Ms Browning puts. In particular, she sees collaboration opportunities in areas such as innovation, FinTech, commercial security, incubation and the digital economy through potential eliminations on non-tariff barriers in the services sector.

Once stationed in Singapore some 20 years ago, Ms Browning is a firsthand witness seeing how the city state turned the adversity of the Asian Financial Crisis of 1997 into an opportunity to rethink themselves. “The same can be said for Hong Kong,” she says. “It is an interesting strategic moment for Hong Kong right now on your innovation agenda, and we want to be part of that story with you because we think we are natural partners in so many things.”

It is expected that the FTA, which has just undergone the second round of negotiations in early August, can be implemented by early 2018. Ensuring better access to both markets for professionals will also be on top of the agenda.

 

TPP 2.0

With the US saying it will not sign the Trans Pacific Partnership (TPP), Australia and other TPP members are looking at options together. Australia is also negotiating other regional FTAs. As far as Hong Kong is concerned, Ms Browning finds enormous infrastructure and investment opportunities with Hong Kong in the mainland’s Belt and Road and Great Bay Area initiatives given Australia’s financing capability and its expertise on construction design.

Much to the Australian business community’s delight, the Consul General also assures that a Double Taxation Agreement (DTA) between Hong Kong and Australia is lining up: “Hong Kong is on the schedule, so that will happen.” Hong Kong has signed many such agreements, with only the United States and Australia remaining outliers among developed nations.

On a less positive note though, part of the Hong Kong society believes that Australia still has a role to play over former Chief Executive CY Leung’s payment saga with the Sydney-based UGL. When asked to comment on the Australian authorities’ effort to step up anti-corruption enforcement, Ms Browning says that there are already different agencies in place, such as state-based anti-corruption commissions, Australian Federal Police and regulatory authorities like the Australian Security and Investments Commission as well as the power to establish Royal Commissions, acknowledging that there are “extraordinary powers that can be invoked to bring things together” in the Australian system. She didn’t comment if those powers would be brought to bear in this case.

“It is an interesting strategic moment for Hong Kong right now on your innovation agenda, and we want to be part of that story with you because we think we are natural partners in so many things.”

Ms Browning also expresses optimism on the Australian community in the time of rising protectionist sentiment. “Australia tries to promote inclusive growth in its economy, but we still have communities and constituencies who have legitimate concerns over how economic policies should be formulated,” she explains. “As a free trade advocate, I can tell you it has never been straightforward as every generation has to build constituencies and explain the advantages, benefits, consequences and impacts of free trade and investments, and be prepared to account for policies and agendas which governments take.

“That’s why we have a very good story to tell.”

Alex Fok

Alex Fok

Alex Fok is a Harbour Times journalist monitoring Hong Kong’s daily political scene and diplomatic updates. He obtained his bachelor’s degree in Economics, Politics and International Studies from University of Warwick and his master’s degree in International Relations from the London School of Economics and Political Science. He is a former committee member of the Warwick-based Hong Kong Public Affairs and Social Service Society (WHKPASS) and was the chief editor of the society’s magazine – PASSTIMES.
Alex Fok

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