Hong Kong and Peru signed a free trade agreement (FTA) on the sidelines of the Asia-Pacific Economic Cooperation Economic Leaders’ Meeting in Lima, Peru, on November 15.

In the witness of Chief Executive John Lee and Peruvian President Dina Boluarte, Secretary for Commerce & Economic Development Algernon Yau and Peruvian Minister of Foreign Trade & Tourism Úrsula Desilú León Chempén signed the Free Trade Agreement between Hong Kong, China & Peru.

The FTA encompasses trade in services, trade in goods, investment and other related areas. Its overall commitments go beyond those undertaken by the two economies under the World Trade Organization, and the trade in Hong Kong can benefit from the elimination or reduction of tariff, and the reduction of trade barriers.

Meanwhile, service providers and investors can benefit from the legal certainty of better market access and national treatment when entering and operating in Peru.

The agreement will enter into force after Hong Kong and Peru have completed their respective internal procedures.

Noting that Peru is Hong Kong’s valued trading partner in Latin America and also one of the participating countries of the Belt & Road Initiative, Mr Lee highlighted that the pact is the first one signed by the current-term Hong Kong Special Administrative Region Government, carrying strategic value to both Hong Kong and Peru.

“Apart from helping Hong Kong to gain entry into the great potential market of Peru, the FTA also provides manufacturers, service providers and investors of Hong Kong and Peru with legal certainty and better conditions, creating business opportunities and enhancing bilateral trade and investment between the two places.”

Mr Lee added that the commencement of negotiations of a separate Investment Promotion & Protection Agreement between Hong Kong and Peru is encouraging, and trusted that the two places will further enhance bilateral investment flows to bring about economic growth of both sides.

Mr Yau said that the FTA, being Hong Kong’s second one forged with Latin American economies, would create synergy with the agreement between Hong Kong and Chile, reinforcing the message to other Latin American trading partners that Hong Kong is ready to forge closer economic partnerships in the region.

“We look forward to Hong Kong’s traders and investors to grasp the opportunities brought by the FTA, and expand their businesses in Peru and through Peru to the Latin American markets.

“At the same time, the FTA would also help more Peruvian businesses to expand into Hong Kong and through Hong Kong in the region, in particular the Greater Bay Area.”

Under the FTA, Hong Kong service providers can enjoy benefits in over 150 services sectors where Peru has made specific commitments under the FTA. These commitments encompass sectors where Hong Kong has traditional strengths or has potential for development, including professional services, computer and related services, research and development services, financial services, and transport services.

For trade in goods, Peru committed to eliminate tariffs on approximately 98.3% of its tariff lines for Hong Kong’s originating goods exported to Peru, among which tariff elimination concerning 91.3% of the tariff lines would take immediate effect upon the entry into force of the FTA, while tariffs of the remaining 7% tariff lines would be phased out gradually.

Following the signing of the FTA with Peru, the geographical scope of the Dedicated Fund on Branding, Upgrading & Domestic Sales is also extended to cover Peru to further support Hong Kong enterprises in developing their businesses there.