Hong Kong and ASEAN commenced negotiations of a Free Trade Agreement (AHKFTA) and a related Investment Agreement (AHKIA) in July 2014. After ten rounds of negotiations, Hong Kong and ASEAN announced the conclusion of the negotiations in September 2017. The FTA and the Investment Agreement (the Agreements) were signed on 12 November 2017.

The Free Trade Agreement (AHKFTA) and the Investment Agreement (AHKIA) entered into force in full on 12 February 2021.

The Agreements are comprehensive in scope, encompassing trade in goods, trade in services, investment, economic and technical co-operation, dispute settlement mechanism and other related areas. The Agreements will bring legal certainty, better market access and fair and equitable treatment in trade and investment, thus creating new business opportunities and further enhancing trade and investment flows between Hong Kong and ASEAN.

The Agreements will also extend Hong Kong's FTA and Investment Agreement network to cover all major economies in Southeast Asia. They are expected to enter into force on 1 January 2019 the earliest, subject to completion of the necessary procedures.

Hong Kong (China) commits to eliminate 100% of tariffs on ASEAN goods as soon as the Agreement comes into effect. This commitment, although very liberal, does not fundamentally change the status because Hong Kong (China) has now eliminated taxes on almost 100% of the Tariff lines.

Vietnam commits to eliminate tariffs for 75% of tariff lines according to the 10-year schedule, 10% of tariff lines according to the 14-year schedule. This level can be said to be much more modest than Vietnam's tariff commitments in ASEAN (ATIGA).

Therefore, the meaning of AHKFTA is hardly in tariffs but mainly in utilizing Hong Kong (China) as a hub of logistics and financial transshipment.

Chapter 1: Establishment of the Free Trade Area, Objectives, General Definitions and Interpretations

Chapter 2: Trade in Goods

Annex 2-1: Schedules of Tariff Commitments

Part 2: Schedule of Brunei Darussalam

Part 3: Schedule of Cambodia

Part 4: Schedule of Indonesia

Part 5: Schedule of Lao PDR

Part 6: Schedule of Malaysia

Part 7: Schedule of Myanmar

Part 8: Schedule of the Philippines

Part 9: Schedule of Singapore

Part 10: Schedule of Thailand

Part 11: Schedule of Viet Nam

Part 12: Schedule of Hong Kong, China

Chapter 3: Rules of Origin

Annex 3-1: Operational Certification Procedures

Annex 3-2: Product Specific Rules

Annex 3-3: Product Specific Rules to be reviewed

Chapter 4: Customs Procedures and Trade Facilitation

Chapter 5: Sanitary and Phytosanitary Measures

Chapter 6: Standards, Technical Regulations and Conformity Assessment Procedures

Chapter 7: Trade Remedies

Chapter 8: Trade in Services

Annex 8-1: Schedules of Specific Commitments

Schedule of Brunei Darussalam

Schedule of Cambodia

Schedule of Indonesia

Schedule of Lao PDR

Schedule of Malaysia

Schedule of Myanmar

Schedule of the Philippines

Schedule of Singapore

Schedule of Thailand

Schedule of Viet Nam

Schedule of Hong Kong, China

Chapter 9: Economic and Technical Cooperation

Chapter 10: Intellectual Property

Chapter 11: General Provisions and Exceptions

Chapter 12: Institutional Provisions

Chapter 13: Consultations and Dispute Settlement

Annex 13-1: Rules of Procedure for Arbitral Tribunal Proceedings

Chapter 14: Final Provisions

Investment Agreement and two related side agreements

Investment Agreement

Side Agreement with Brunei Darussalam, Malaysia and Singapore

Side Agreement with Singapore

General rules

A good will be considered originating (ASEAN or Hong Kong, China) if:

• Case 1: wholly obtained or being wholly produced in the territory of the exporting Party; or
• Case 2: Produced entirely in the territory of the exporting Party from only originating materials from ASEAN or Hong Kong, China; or
• Case 3: Not being wholly obtained or not being produced entirely in the territory of the exporting Party but satisfying the requirements for rules of origin specified in the Agreement.

For case 3, the non-originating good in the Agreement is determined based on the following criteria:

• The Regional Value Content (RVC) criterion requires that at least 40% of the final product value originate in the AHKFTA Member States.
• Criteria for change tariff classification (CTC) requires that the product must have HS different from the HS of imported materials (according to the specific rules of origin).

Specific product rules

In addition to the general principles for determining the origin of goods, AHKFTA also stipulates specific rules for products in Appendix 3.2.

Cumulation

The AHKFTA allows for cumulation, i.e. originating materials of a member country used in the production of a good in another member country are treated as originating materials of the member country where the trade takes place processing of such goods.

Regarding services, Vietnam's commitment to open the service market in the AHKFTA is basically same the level in the WTO.

The investment commitment also reiterates the principles of conduct and protection for foreign investment similar to FTAs between ASEAN and its partners. The most notable commitment in the AHKFTA is the principle of fair and equal treatment (FET) for foreign investors, a principle emphasized in Vietnam's recent FTAs (CPTPP, EVFTA).