Hong Kong on Friday signed a free trade agreement with Peru, which, officials say, heralds the beginning of closer bilateral relations and will help spur new business opportunities between the two places.

The deal, which encompasses trade in services, trade in goods, investment and other related areas, will take effect once both sides complete their respective internal procedures.

Witnessed by Chief Executive John Lee Ka-chiu and Peruvian President Dina Boluarte, Secretary for Commerce and Economic Development Algernon Yau Ying-wah and his Peruvian counterpart, Úrsula Desilú León Chempén, signed the deal concluding two years of negotiations with the South American nation.

For trade in goods, Peru committed to eliminate tariffs on approximately 98.3 percent of its tariff lines for Hong Kong's originating goods exported to Peru, among which tariff elimination concerning 91.3 percent of the tariff lines would take immediate effect upon the entry into force of the FTA. Peru will also phase out another 7 percent of its tariff lines for such products gradually.

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The competitiveness of Hong Kong products exported to Peru will be enhanced, according Hong Kong officials.

This represents the special administrative region’s ninth free-trade agreement and the first signed by the current term of the Hong Kong Special Administrative Region government.

“The agreement covers an extensive array of liberalization and facilitation commitments, which go far beyond those undertaken by us under the World Trade Organization,” the Hong Kong leader, who is in Peru to attend the 31st Asia-Pacific Economic Cooperation Economic Leaders' Meeting, said at the FTA signing ceremony.

According to the HKSAR government, Hong Kong service providers can enjoy benefit in over 150 services sectors, including professional services, computer and related services, research and development services, financial services, and transport services, which Peru has made specific commitments under the FTA.

Recalling that Hong Kong and Peru signed a cooperation arrangement on trade and investment facilitation during an APEC Ministerial Meeting in Lima 16 years ago, Lee said the agreement will ensure the legal certainty of better market access, tariff savings and trade facilitation, and national treatment for manufacturers, service providers and investors entering and operating in Hong Kong and Peru.

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“It offers significant strategic value to both economies. Peru, with its young and energetic population of more than 34 million, is an emerging market of enormous potential. It's also a participating economy in our country's Belt and Road Initiative.”

According to the CE, the merchandise trade between Hong Kong and Peru grew 4 percent a year, on average, between 2019 and 2023.

“As the world's freest economy, Hong Kong has a business environment that aligns with best international practices. Our tax regime is simple and low, and we offer high-quality services, a skilled workforce with global vision, and the free flow of information, capital, goods and people,” he said.

Saying that the newly signed agreement showed Hong Kong’s readiness to forge a closer economic partnership with Latin America, Yau expressed his hope that it would create synergy with the FTA between Hong Kong, China and Chile signed in 2012.

Urging 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, he said: "The FTA would also help more Peruvian businesses to expand into Hong Kong and through Hong Kong in the region, in particular the Guangdong-Hong Kong-Macao Greater Bay Area.”