The inclusion of Hong Kong in RCEP is a win-win for all. By joining, Hong Kong can expand its market reach, create job opportunities and stimulate the economy.
In the past, unfamiliarity with different cultures and legal systems hindered international trade, and it is a fact that the rapid growth of market expansion and transaction volume inevitably brings disputes.
The benefits of Hong Kong joining extend not only to the RCEP parties but also to companies in non-RCEP countries.
Through a population of seven million, Hong Kong offers access to a market of 1.4 billion people and a gross domestic product of US$32.93 trillion (HK$256.85 trillion) in China.The mainland and Hong Kong's Closer Economic Partnership Arrangement is Beijing's most liberal free-trade deal.
Hong Kong also directly participates in international organizations such as ASEAN, WTO and AALCO.Through Hong Kong, foreign firms, including those from RCEP parties, gain access to the resources and influence of these international organizations.
As the only common law jurisdiction within China, Hong Kong provides a well-established legal system, low tax rates and an attractively simple taxation system, countless talents, a cosmopolitan atmosphere and an open market.These factors enable businesses to benefit from professional services and thrive in an optimal business environment.
External economic circulation is not only crucial for the vitality of a region but also holds significant importance for industries and individual businesses.In the business world, achieving a 10 percent annual profit these days will likely delight most shareholders.
For businesses, any increase in the percentage of profit demands dedicated efforts and meticulous market research.However, just envisage a situation where it is completely risk-free for one to effectively gain more than 10 percent profit through direct tax deductions.
Under RCEP, more than 90 percent of trade in goods will achieve zero tariffs.The RCEP parties have made progress in achieving tax concessions for trade in goods in different formats, including an immediate reduction to zero tariffs, transitional and partial tariff reductions and exception products.
With a unified set of rules of origin, foreign companies, like those from the Middle East, can also take advantage of the RCEP tariff concessions by establishing manufacturing operations in Hong Kong and other RCEP countries.Foreign companies can strategically align their production supply chains by leveraging the distinct strengths of different regions to meet the rule that, basically, means that 40 percent of a product has to be produced in RCEP states.
For example, if low-value metal products from Australia undergo processing in China and are exported to South Korea, they cannot enjoy the preferential tariff rates under the China-South Korea Free Trade Agreement as they are considered non-originating materials.However, under RCEP, the low-value metal products can be considered RCEP originating materials and benefit from preferential tariff rates in South Korea.
In recent years, rather than indulging in cut-throat price wars against other jurisdictions, Hong Kong has shifted toward competing based on the quality of its offerings.With its world-class infrastructure and business-friendly environment, Hong Kong provides an optimal platform for advanced manufacturing that applies technologies like AI, IoT and 3D printing to traditional manufacturing processes.
"Made in Hong Kong" and "made by Hong Kong" are confidence symbols to the world.Digital economy is also a substantial market that Hong Kong excels in.
Hong Kong's attractiveness as a destination for digital economy stems from its streamlined and expeditious customs clearance procedures (where under suitable circumstances, supporting documents can be provided after an application is submitted), advanced technology from AI Supercomputing Centre of Cyberport, and comprehensive data-privacy regulations.By setting up a regional office in Hong Kong, foreign firms can get a strong production base in China, particularly in Greater Bay Area cities, utilizing their extensive manufacturing capabilities.
They can also leverage our intellectual property laws and renowned reputation as an IP trading hub, allowing for high-tech final assembly and access market in other RCEP parties.Also, our legal system is robust, supported by more than 10,000 experienced lawyers and professional dispute resolution experts who are well versed in cultural differences that the world can present.
Notably, Hong Kong stands as the exclusive common law jurisdiction in China that has implemented the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and the Hong Kong Special Administrative Region, which enables parties involved in arbitral proceedings under designated arbitration centers, including AALCO-HKRAC, to seek interim measures from mainland courts, ensuring the preservation of assets, evidence and conduct.These provide businesses with a one-stop professional legal service from the very beginning until the very end.
To effectively promote RCEP and support the economies of member countries, close collaboration is essential.This cooperation should aim to facilitate business across regions and attract increased investments in the RCEP area.
Despite the many advantages of RCEP, there are criticisms concerning the absence of a binding dispute settlement system.Fortunately, AALCO-HKRAC offers a potential solution.
AALCO-HKRAC is an international disputes resolution institution set up by AALCO, which has 48 member states comprising major states from Asia and Africa.Featuring advanced and modern Online Dispute Resolution and LawTech platform, it provides highly cost-effective and speedy arbitration and mediation services for users ranging from MSMEs to large state-owned enterprises, governments, and multinational corporations local and overseas.
It is also noteworthy that all 15 RCEP member states also hold membership or observer status of AALCO, making the dispute-resolution system more reliable.
