Australian trade deal with Hong Kong raises concerns amid ongoing protests

SYDNEY - In March, Australia inked a free trade deal with Hong Kong at a quiet ceremony in Sydney that received little attention.

Back then, the deal seemed relatively insignificant, especially since Australia and Hong Kong have long had a flourishing commercial partnership.

Despite its relatively small population, Hong Kong is Australia's 12th largest trading partner and the fifth largest investor, accounting for A$116.6 billion (S$109.9 billion) worth of investments in 2017.

But, just three months after the trade deal was signed, the pro-democracy protests in Hong Kong erupted.

Now, the deal is facing criticism over concerns that Canberra is lending credibility to the city's pro-Beijing rulers and to China's growing influence there.

Members of Australia's Hong Kong community, which is large and well-established, have been urging the government to "postpone and reconsider" the deal.

In early October, several community groups, including Australia-Hong Kong Link, issued a statement saying Canberra should not proceed with the deal due to the "unstable and unpredictable economic environment".

This view echoed the position of trade unions, which have urged the government to delay ratifying the deal.

The Australian Council of Trade Unions called for the deal to be delayed until the tensions in Hong Kong are resolved, saying such a stance would help to encourage an end to the violence.

"It is important that we show solidarity with the protesters and our support for human rights, civil society and the rule of law in Hong Kong before we decide how to proceed with the (free trade agreement)," it said in a statement.

During a visit to Australia earlier this month, a leading Hong Kong pro-democracy activist, Ms Bonnie Leung, urged Australia not to ratify the deal, saying it should include human rights guarantees.

But the government remains determined to ratify the deal.

Earlier this month, a Parliamentary committee recommended ratification. It expressed concern about the political instability in Hong Kong, but noted the advice of the Department of Foreign Affairs and Trade that the deal would demonstrate Australia's support for Hong Kong's "one country, two systems" principle.

This is because the agreement affirms Hong Kong's legal capacity as an autonomous entity to enter such a deal.

The Trade Minister, Mr Simon Birmingham, said the deal supports Hong Kong's unique identity and status.

"Our view is that the final ratification of our trade agreement with Hong Kong is a demonstration of support for two systems," he told Sky News last Sunday (Oct 27).

The Labor Opposition party expressed reservations about the deal but ultimately decided to back it. This means it is likely to be approved by Parliament.

But some MPs have signalled they may change their view if the situation in Hong Kong deteriorates.

Some commentators in Australia urged MPs to block the deal, saying that it involved recognition of an administration in Hong Kong that is increasingly subservient to China.

"(The deal) will lend support and legitimacy to an administration that has trashed 'one country, two systems' and is clearly controlled by an increasingly thuggish government in Beijing," wrote Mr Michael Sainsbury, a former Beijing-based journalist, on the Crikey website.

Australia and Hong Kong have historically had close ties. About 100,000 Australians live in Hong Kong, making it one of Australia's largest expatriate communities.

About 96,000 people born in Hong Kong live in Australia, and many more have Hong Kong ancestry.

Trade between Hong Kong and Australia was worth A$18 billion in 2017. Hong Kong is a major buyer of Australian gold, food and communications equipment.

But some commentators noted that a free trade deal may be increasingly insignificant, as many companies around the world are now likely to shift regional offices to places such as Singapore.

"Many businesses already in Hong Kong are reducing their exposure or thinking about shutting their offices altogether," wrote political and economics commentator Jennifer Hewett in The Australian Financial Review.

"More and more Western companies that had been contemplating establishing offices in Hong Kong are now heading straight to Singapore."

Discussing the unlikely prospect of Beijing or Hong Kong leader Carrie Lam accommodating the demands of the pro-democracy demonstrators, Ms Hewett observed: "It's hardly a future that Hong Kong - or Western businesses - relied on."