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Services trade flows are difficult to quantify, because there is no agreement on the statistical definition of traded services, and because of the difficulty of identification. There is, however, agreement that available data significantly underestimates these flows. Table 12 places the official services flows of Hong Kong in perspective and shows that Hong Kong has a large surplus on its services trade. Globally, it was the 10th largest exporter and 15th largest importer of services in 1999.
Services trade between New Zealand and Hong Kong is governed by the WTO General Agreement on Trade in Services (GATS). On the basis of Hong Kong's 1994 GATS schedule which sets out the specifics of Hong Kong's intentional obligations on services, there is significant scope for New Zealand to seek additional services commitments from Hong Kong via a Closer Economic Partnership Agreement.
Data on the value of services exports from New Zealand to Hong Kong are incomplete, as detailed services data are hard to obtain, and confidentiality concerns preclude Statistics New Zealand from releasing data where individual providers could be identified.
Table 12: Services Trade 1999 Data for Hong Kong and New Zealand
| Exports | Imports | Balance | |||
| Value | Share % | Value | Share % | ||
| EXPORTER | (NZ$ bn) | World | (NZ$ bn) | World | (NZ$ bn) |
| New Zealand | 8.02 | 0.31 | 8.50 | 0.33 | -0.48 |
| HongKong | 65.8 | 2.60 | 46.22 | 1.80 | 19.58 |
Source: WTO International Trade Trends and Statistics
Nevertheless, recent aggregate data show services exports to Hong Kong, excluding travel, education, transportation and government services, of $14.7 million. The only available breakdown of these exports indicates that it includes:
It must be stressed that data inadequacies mean these figures significantly understate the true picture on current services trade.
Hong Kong has not made commitments in the WTO on a number of services sectors in which New Zealand has a significant trade interest (architecture, engineering, legal, postal, education, environment and air transport services). A further priority for New Zealand would be construction services, where Hong Kong's commitments have limited scope because they cover only building completion and project management. New Zealand would therefore want to explore the possibility of greater coverage of these key professional and infrastructural sectors. Presence of natural persons is another area New Zealand would want to examine, as Hong Kong's current commitments do not guarantee access for services sellers as business visitors.
In those sectors which are included in its WTO schedule, Hong Kong has limited its commitments on national treatment for foreign services suppliers. In other words, Hong Kong has not committed to provide the same treatment to services suppliers from other WTO Members that it gives to domestic services suppliers. Hong Kong's GATS commitments generally relate to the commercial presence of services suppliers, but not the cross border supply of services. This could likewise be addressed in the context of any CEP negotiation.
Education
Education is a key services export sector for New Zealand. It is our fourth largest services export sector, with an estimated $415 million in foreign exchange earnings during the 1999 December year from students studying in New Zealand. As yet, revenue earned by New Zealand institutions from distance learning or commercial presence abroad has not been calculated.
Over 1,100 Hong Kong students studying in New Zealand in 1999 were estimated to have provided some $19.6 million or 4.7 percent of the total figure. A detailed breakdown of these students' numbers shows there were 398 in New Zealand high schools, 365 in tertiary institutions and 335 studying English as a second language during 1999 (based on full-time equivalent numbers). Trade New Zealand and Education New Zealand Trust have identified Hong Kong as a potential growth market across all education sectors, providing New Zealand can remedy its current low market profile.
Hong Kong has no commitments on education in its WTO schedule. A CEP would present an opportunity to seek full commitments on market access and national treatment for New Zealand education providers, particularly in relation to short term, secondary and tertiary students. Hong Kong's education sector is open and deregulated, and there appear to be few practical impediments to entry for New Zealand suppliers. It is worth noting that the UK and Australia are at present the dominant providers of education services to Hong Kong students, through commercial presence and distance learning, as well as study abroad. Market access and national treatment commitments would provide certainty for New Zealand education providers seeking to expand their presence in the Hong Kong market.
The opportunity to enter into discussion with Hong Kong over the expansion of commitments on education services comes at a fortuitous time for New Zealand. Hong Kong is currently in the process of reviewing and expanding its education sector, with a particular focus on the tertiary sector. Hong Kong's education authorities have indicated an intention to double the number of students undertaking some form of tertiary study. It is proposed that Hong Kong's own capacity to provide tertiary education be bolstered through the provision of education services by foreign suppliers - either through study abroad by Hong Kong students, distance learning or the establishment of courses in Hong Kong by foreign institutions (or a combination of the three). Hong Kong has indicated a strong interest in expanding links with New Zealand education agencies and institutions as part of this process.
It is also worth noting that Hong Kong parents are currently sending secondary level students abroad in increasing numbers, in order to improve their English language skills. This may further present opportunities for New Zealand secondary schools.
Tourism
New Zealand tourism data feature a dramatic growth in arrival numbers and individual spending levels from the newly industrialised Asian economies of Korea, Taiwan, and the South East Asian countries. From just over 100,000 in the June 1992 year, arrival numbers from Asia increased to 311,000 by June 1997 before declining as a result of the Asian financial crisis. This growth was fuelled by a rise in disposable income in those economies, general economic liberalisation, the advent of direct air services from most of the Asian capitals and, as well, selected visa waiver agreements.
A CEP agreement could be expected to encourage visitors from Hong Kong by raising New Zealand's profile in the Hong Kong market. In contrast with the other newly industrialised Asian economies, tourist numbers from Hong Kong have actually been static at around the 30,000 mark for the past 5 years (actual tourist numbers in 2000 were 29,942). Hong Kong has no market access limitations in its WTO schedule on the consumption abroad mode of services delivery (where consumers travel to another country to consume services) for tourism and travel services, meaning that for New Zealand's purposes, the ability of Hong Kong citizens to consume travel and tourism services abroad is already assured. Hong Kong has full commitments for hotel, restaurant, travel agency and tourism operator services, permitting the commercial presence of New Zealand firms in Hong Kong. Broader sectoral definitions (particularly in relation to travel agency and tourism operator services) and improved commitments in market access and national treatment in cross border supply, could be expected to expand market access opportunities for New Zealand tourism companies seeking to deliver services cross-border to Hong Kong consumers. New Zealand also stands to make substantive gains in the tourism sector through expanded air services commitments from Hong Kong.
For New Zealanders travelling overseas, the data show that some 21,630 and 20,950 tourists declared Hong Kong to be their main destination for short-term departures over the two most recent September years. This was 1.8 and 1.7 percent of the totals for 1999 and 2000 respectively.
Environmental Services
On environmental services, it is important to note the comments made by Mrs Anson Chan, Hong Kong's Chief Secretary for Administration, during her recent visit to New Zealand in November 2000. In an address to the Hong Kong/New Zealand Business Association, Mrs Chan said that:
New Zealand companies have a wide range of expertise in areas such as clean transport, solid waste management and recycling. Local authorities also have expertise and experience they may wish to share. We would like to welcome partnership in any of these areas.
Air Transport
On air transport services, the CEP would provide an opportunity to seek commitments not only on the three "soft" rights explicitly covered by the GATS (eg aircraft maintenance and repair, selling and marketing, and computer reservation services), but also to attempt to secure commitments on a range of other rights (eg catering, ground handling, airport management, air traffic control and general aviation services).
Professional Qualifications
The recognition by Hong Kong of New Zealand professional, secondary and tertiary qualifications is another element which would assist New Zealand in marketing its education services to Hong Kong. A CEP with Hong Kong could explore scope for incorporation of a mechanism to facilitate the conclusion of agreements between regulatory agencies, professional groups and educational institutions to recognise qualifications and professional registration.
Air Services
Air services between Hong Kong and New Zealand (which are different from the air transport services discussed above) are covered by a bilateral Air Services Agreement (ASA). Currently there are eleven direct flights a week between Hong Kong and New Zealand; four by Air New Zealand with 767s and daily flights by Cathay Pacific with A340s. It will be important to ensure that air services arrangements between New Zealand and Hong Kong, negotiated pursuant to the bilateral ASA, are sufficiently liberal to support and further the enhanced trade and economic relationship that a CEP would put in place, involving increased movement of goods and people between the two economies.
New Zealand's services market is already open and largely deregulated. Under the WTO our commitments on market access and national treatment are more extensive than Hong Kong's. The exact implications of a CEP with Hong Kong for the New Zealand services sector will become clearer once formal negotiations commence and would be discussed with the industries and/or exporters concerned.
We are interested to learn of any difficulties New Zealand services suppliers have experienced in accessing the Hong Kong services market, particularly in relation to laws and/or administrative practices that may make it difficult for New Zealanders to do business in Hong Kong.
