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Hong Kong-Chile free trade deal eliminates tariffs

The tariff-free exchange of goods and services between Hong Kong and Chile, though not immediate, is a feature of the bilateral free trade agreement (FTA) that came into effect in the two jurisdictions on October 9.

The FTA was signed September 7 2012 and is Hong Kong’s first with a non-Asian or European country.

Hong Kong will not levy tariffs on any incoming Chilean products and Chile has agreed that 88% of its tariff lines will become immediately duty free. An additional 10% will be phased out in the next three years. The remaining 2% of taxed products, including sugar, cereals, and iron and steel products will continue to have tariffs due to ‘market sensitivity’.

Hong Kong companies seeking preferential tax treatment on exports to Chile must complete a Declaration of Origin and comply with preferential rules of origin.

The agreement also covers service sectors. Hong Kong’s traditionally strong financial, telecommunications and professional service sectors will now have access to the Chilean market free of barriers.

The number of service providers or employees will be not be restricted and capital will be permitted to flow freely. The FTA contains additional provisions to encourage competition and cooperation and protect environmental considerations. Both countries will enter negotiations on an additional agreement concerning investments, which will cover non-discrimination, protection from expropriation, and transfer protection.

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