WORLD TRADE
ORGANIZATIONWT/TPR/M/52
12 April 1999
(99-1453)
Trade Policy Review Body
7-8 December 1998
TRADE POLICY REVIEW
HONG KONG, CHINA
Minutes of Meeting
Chairperson:  H.E. Mr. Ali Said Mchumo (Tanzania)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON      3II. OPENING STATEMENT BY THE REPRESENTATIVE OF HONG KONG, CHINA      4III. STATEMENT BY THE FIRST DISCUSSANT      6IV. STATEMENT BY THE SECOND DISCUSSANT      8V. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY    11
VI. REPLIES BY THE REPRESENTATIVE OF HONG KONG, CHINA AND
ADDITIONAL COMMENTS    18
VII. CONCLUDING REMARKS BY THE CHAIRPERSON    25
ANNEX I    28WT/TPR/M/52
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I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The third Trade Policy Review of Hong Kong, China was held on 7 and 8 December 1998.
The Chairperson welcomed the delegation of Hong Kong, China, led by Miss Yvonne Choi, DeputySecretary for Trade and Industry, as well as Mr. Stuart Harbinson, Permanent Representative of the
Hong Kong Special Administrative Region of China to the WTO, and the discussants, Ambassador
Terje Johannessen (Norway) and Mr. Yoichi Suzuki (Japan).  As usual, both discussants would speak
in their personal capacities and not as representatives of their countries.  In accordance with the
established procedures, the discussants had made available, in advance, an outline of the main issuesthey intended to raise.
2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of
the procedures for the meeting.  The report by the Government of Hong Kong, China was contained in
document WT/TPR/G/52 and that of the WTO Secretariat in document WT/TPR/S/52;  the main
issues to be raised by the discussants were contained in document WT/TPR/D/30.  Copies of advancewritten questions, submitted by eight delegations:  Australia, the European Union, Japan,
New Zealand, Norway, the Philippines, Switzerland, and the United States, had been transmitted to
the delegation of Hong Kong, China.  These questions, along with the responses provided, are
reproduced in Annex I;  questions raised on the first day of the meeting, and the responses given are
also included.WT/TPR/M/52
Page 4
II. OPENING STATEMENT BY THE REPRESENTATIVE OF HONG KONG, CHINA
3. The representative of Hong Kong, China stated Hong Kong, China's keen interest in and
involvement with the trade policies review process,  noting that the main objective of the Trade Policy
Review was to enhance transparency and promote understanding of the trade policies and practices of
Members.
4. The previous 18 months had seen momentous changes for Hong Kong, which was reunited
with the People's Republic of China, on 1 July 1997.  This extraordinary political change, under the
concept of "one country, two systems" had worked extremely smoothly.  The Chinese leadership haddemonstrated a firm commitment to ensure that the provisions of the Basic Law were upheld.  Under
the Basic Law, the Hong Kong Special Administ rative Region (HKSAR) enjoyed a high degree of
autonomy in all areas except defence and foreign affairs;  the autonomy included external commercial
relations.  Hong Kong, China's trade policies and practices had been unswerving, as clearly shown in
both the Secretariat and Government Reports. Hong Kong, China, whose trade accounted for 265% ofGDP, must be the most open economy in the world, and was ranked by authoritative international
think-tanks as the freest economy.  It applied neither tariffs, restrictions on capital movement, nor
government subsidies to individual sectors.  It regulated only where it needed to, e.g., for prudential
reasons, to ensure maximum economic efficiency in markets, and to fulfil its international rights and
obligations.
5. Hong Kong as an externally oriented economy had not been immune from the financial crisis
of the previous 18 months and had suffered a severe setback.  Following the declines in the first and
second quarters, the Hong Kong economy showed a further contraction in the third quarter of 1998,
due partly to the steep decline in its exports as a result of a distinct fall-off in import demand in its
major markets.  GDP declined by 2.7% and 5.3% in the first and second quarters of 1998,
respectively.  Unemployment was at a historical high of 5.3%.  There were, however, some
encouraging signs emerging, in terms of easing liqui dity and interest rates, and stabilized property
prices.  She believed that Hong Kong's economic fundamentals were sound, and would provide a
strong basis to return to positive growth once the regional environment and local sentiment improved.
6. The painful economic adjustment, however, had not shaken Hong Kong's conviction for free
and open trade.  Hong Kong, China had, if anything, strengthened its resolve to pursue multilateral
trade liberalization as a long term solution to sustained economic prosperity.  It had been an agonizingdecision for the Government to intervene in the stock market in August 1998.  Hong Kong, had fully
appreciated the risks of its action being misinterpreted as an attempt to boost the stock market or as a
departure from its firm commitment to the free market principle.  However, there would have been
excessive market volatility without the intervention and such volatility would have jeopardized the
integrity of its financial markets and led to a collapse of community confidence.  She noted that therewas increasing recognition by many financial authorities including the International Monetary Fund
that its decisive action contributed to stability in Hong Kong and the region.  She stressed that the
Government's action in August had been an exceptional move in extraordinary circumstances and
there was no question of Hong Kong departing from its basic principle of free trade and open market.
7. Hong Kong's policy of seeking to foster progressive trade liberalization and of promoting the
primacy of the multilateral trading system was a matter of self interest.  As a tiny island devoid of
natural resources, trade was Hong Kong's lifeblood.  The multilateral trading system was crucial to the
well-being of all economies.  Hong Kong, China valued its separate Member status in the WTO to
which it was the eighth largest contributor based on its share of international trade.
Hong Kong, China should continue to play an active a nd leading role, to defend its rights, to fulfil its
international obligations, and to strengthen the vital organization.WT/TPR/M/52
Page 5
8. Hong Kong firmly believed that increased trade and investment and a strong reliance on the
rules of the multilateral trading system held the key to the way ahead and back to the path of renewed
prosperity.  It was gratifying, and to the great credit of the multilateral trading system, thatgovernments had been unanimous in declaring that protectionism had no part in the solution.
Ministers had stated so at the Geneva Ministerial Conference in May 1998, and APEC Economic
Leaders firmly reaffirmed this at their summit in November 1998.
9. As a demonstration of its commitment to progressive liberalization and the rule-based
multilateral trading system, Hong Kong, China had taken further steps since 1994.  These stepsincluded the acceptance of the Fourth and Fifth Protocols of the GATS concerning basic
telecommunications and financial services, respecti vely;  further significant unilateral actions to
enhance competition in the telecommunications sector;  becoming a party to the Information
Technology Agreement and binding at zero the relevant tariffs in one go;  and participation to the
Agreement on Government Procurement and applying Hong Kong's regime in a fully MFN andnon-discriminatory manner.  As regards intellectual property protection, Hong Kong, China had made
major changes to its legislation that were believed to go beyond the requirements of the
TRIPS Agreement in some respects.  Hong Kong was happy to be in the first batch of reviewees in
the year 2000.
10. The representative of Hong Kong, China felt that the WTO needed to ensure that the
multilateral trading system continued to prevail, by continuing to lead from the front and showing
itself to be very much part of the solution, not the problem.  WTO needed to be attuned to the needs of
all Members and to have an agenda reflecting this.  Hong Kong, China, therefore, was at the forefront
in calling for broad-based and balanced negotiations for further liberalization of trade starting in the
year 2000 and for strengthening the rules to ensure they remain relevant in the 21
st century.WT/TPR/M/52
Page 6
III. STATEMENT BY THE FIRST DISCUSSANT
11. The first discussant H.E. Mr. Terje Johannessen stated that he fully agreed with what the
Government Report characterized:  "A Great deal has happened in Hong Kong since the 1994 TPR".
On constitutional framework, the aim of the system that entered into force on 1 July 1997 was to
ascertain a high degree of autonomy for the HKSA R in relation to the Peoples' Republic of China.
China's socialist system was not to be practised in the HKSAR, and Hong Kong's legal system
remained intact and separate from that of China.  In the context of the Trade Policy Review, it was of
paramount importance to notice that Hong Kong would remain a free port and a separate customs
territory, and would continue to play its traditional role of an international financial and monetary
centre.
12. He expressed the view that things seemed to have developed in a harmonious way during the
18 months since the system had been put into ope ration.  The notion of "one country, two systems"
would presumably require a fair amount of flexibility and, correspondingly, a lack of orthodoxideology for it to be successful.  Quoting the Government Report paragraph 1, "in all then, we have
had the full backing of the Central People's Gove rnment of the PRC which in accordance with the
Basic Law, has left the Government of the HKSAR to manage our economic and trade affairs entirely
as we think fit", and paragraph 10, "in accordance with the relevant provisions of the Basic Law, the
Government of the HKSAR has been authorized by the CPG to conclude…", he asked aboutconsistency between the expressions "entirely as we think fit" and "has been authorized by the CPG to
conclude".
13. Over the two or three previous decades, Hong Kong's annual GDP growth rate had been of
7% in real terms, which was an impressive figure whatever standards might be applied.  Hong Kong
should be given credit for this extraordinary achie vement.  As a result, Hong Kong’s per-capita GDP
in 1997 stood at US$26,600.  He raised a question as to when Hong Kong, China would cease to
consider herself as a developing country.
14. The continuation of the economic restructuring was furthermore important in the sense that
the share of manufacturing in GDP declined to only account for 7%.  In relation to this fact, he first
asked how long the mainland of China, with her own very fast economic development, would be
pleased to continue what was described in the Gove rnment Report, paragraph 19.  Secondly, he asked
whether, despite a considerable decline in manufacturing, the fact that the personnel-intensive textileindustry still accounted for 1/3 of domestic exports, a percentage that had been stable over the
previous decade, was due to the stability of textile exports, or it was the result of an unsuccessful
industrial restructuring.  Thirdly, he asked whether, considering Hong Kong’s labour force
participation rates (76% for men and 48% for women), an increase of female participation to, e.g.,
West-European standard, was foreseen and what economic implications this might have.
15. As described in paragraphs 20 to 23 in the Government Report, GDP fell by 5% in the second
quarter and 7% in the third quarter of 1998, and a 5% reduction was forecast for 1998, combined with
a sharp increase in the unemployment rate.  Such developments were far from "normal" for
Hong Kong, which might have confronted a fundamental modification of the usual pattern.  He asked
what kind of time perspective Hong Kong had to turn the negative figures back to the usual positiveones that had prevailed over a number of decades, and what conditions were necessary to ensure this.
He asked whether Hong Kong, China considered a reduction of its inflation rate (particularly on
housing) essential.
16. He considered it natural that the mainland of China, a neighbour, was the HKSAR’s largest
trading partner.  In the Government Report, paragraph 46, HKSAR's import and export system wascharacterized with zero tariff, minimum controls and no subsidies or assistance to exports.  He asked
whether Hong Kong, China saw any friction or pote ntial conflict between Hong Kong, China's tradeWT/TPR/M/52
Page 7
policy based on these three points, which did not exactly match those of its biggest trading partner.
He also asked whether Hong Kong, China was completely comfortable to be heavily dependent on
one trading partner.
17. On the Linked Exchange Rate System, the solidity and stability of the Hong Kong dollar had
been the envy of many Central Bank boards and directors.  The admiration was enhanced by the
existence of foreign exchange reserves of more than US$90 billion.  However, what could be
characterized as a coordinated attempt to get the Hong Kong dollar off its peg suddenly started to
operate.  While he understood the reasoning behind Hong Kong’s market operations, it was wellknown that foreign exchange reserves would not st em a coordinated international speculation against
a national currency.  He asked whether Hong Kong , China was aware that doubt could be spreading,
when only a year after the establishment of the HKSAR, Hong Kong, China felt it had to deviate from
some of its most sacrosanct principles.  The very exceptional situation, in which the stability of the
economic and monetary system was at stake, was known to all.  At the same time the stability andpredictability of its principles were also at stake.  By its action in August 1998, Hong Kong, China
had shown that it had given itself a "waiver".  He asked whether this could happen again.  He also
asked when the Government would sell the shares it had acquired, as the speculators now had left the
scene, and what future Hong Kong saw for the ne wly established Exchange Fund Investment Limited
and its Board of Directors, a third of w hom were recruited from the Government.
18. He viewed Hong Kong, China as a perfect WTO Member;  he had not seen a single incident
where Hong Kong, China had been at loggerheads with another Member.  Hong Kong, China's
recourse to the WTO dispute settlement mechanism was rare.
19. Since the change of the status from Hong Kong to Hong Kong, China, he saw no deviation
from Hong Kong’s traditional policy:  free trade, non-discrimination and strict adherence to the
MFN-principle.  Based on what had happened in th e preparation for the Third Ministerial Conference,
Hong Kong, China would appear to be continuing its preparation for these events with the aim ofenhancing a strong and credible multilateral trading system, further liberalizing trade and thereby
stimulating economic growth.
20. He was also particularly pleased to note that it was Hong Kong, China's intention to ensure
that the WTO's rules and regulations remained  the guidelines for bilateral arrangements.
21. He would have liked to have seen a clearer statement from Hong Kong, China that trade
policy aims would be achieved within an environm entally sustainable economy.  A clear reference to
the concept of a sustainable economic growth would be desirable and a prerequisite in the long run.
He hoped this notion would be more present in Hong Kong, China's report for its next TPR.WT/TPR/M/52
Page 8
IV. STATEMENT BY THE SECOND DISCUSSANT
22. The second discussant (Mr. Yoichi Suzuki) stated that major developments had taken place in
the international economic and trade environment surrounding Hong Kong, China since the previous
Trade Policy Review.  These made this review all the more important.  As noted in the
Secretariat Report, Hong Kong, China was a very open economy.  It was also a very active and
committed Member of the WTO.  The HKSAR stated in its report that it "shall remain" so and
"continue to speak forcefully in other fora where liberalization of trade is a key aim".  Since the
transfer of sovereignty, on 1 July 1997, no major changes seemed to have occurred in its system andpolicies in the areas of trade policy and internal measures affecting trade.
23. The openness of Hong Kong, China to trade was such that all imports entered the territory
duty free.  However, more than half of all tariff lines remained unbound:  32% of the tariff lines
would be bound at zero rates after the implemen tation of the UR Agreements.  The HKSAR had
undertaken in the context of APEC to bind a further 20% at zero from January 2000, another 25%from January 2005 and all remaining tariffs from 2010.  Though it was a very welcome initiative,
given the openness of its economy and the fact that all applied tariff rates were already zero, he asked
whether it would be possible for Hong Kong, China to accelerate further the process.
24. The HKSAR was a fervent supporter of the primacy of the multilateral trading system.  As
mentioned in the Secretariat Report, Hong Kong, China’s stance on APEC was that of "open regionalcooperation", which meant that liberalization measures were applied on an MFN basis to
non-Members.  The HKSAR had been a strong promoter of the Early Voluntary Sectoral
Liberalization (EVSL) as stated in its report.  The WTO, on the other hand, was a contractual body.
In the light of its basic policy stance on trade liberalization, he asked how the HKSAR saw the
initiative agreed by the APEC Ministers in Kuala Lumpur to pursue the EVSL in the WTO.
25. As the Secretariat Report noted, TRIPS was an area where major changes had occurred since
the previous review.  In particular, the Intellectual Property Ordinance was introduced in 1996 toensure the HKSAR's full compliance with the TRIPS Agreement.  The HKSAR also stated in its
report that "in addition to a sound legal framework th at is compatible with the TRIPS Agreement", the
HKSAR complemented the legislation "with sustained and vigorous enforcement efforts".  He
welcomed these extensive efforts by the HKSAR.  Annex 6 of the Government Report as well as
Table III.10 of the Secretariat Report showed that enforcement results for the past three years had
been remarkable.  The significant increasing trend in numbers of seizures and arrests up to June 1998,
however, demonstrated how daunting the task had been  to the authorities of the HKSAR.  He asked if
it would it be possible to indicate how far the HKSAR authorities were in their efforts to curb IPR
infringements.
26. The HKSAR had eschewed an all embracing competition law;  it considered that strong
reliance on market forces, in combination with sector-specific regulatory, administrative, and in the
case of telecommunication sector, legislative measures, were sufficient to ensure highly competitive
markets both for goods and services.  Thus, as the Secretariat Report noted, the HKSAR had no
general competition law, cartel law or other horizontal legislation banning or sanctioning collusive or
restrictive business practices such as bid-rigging, price enforcement, boycotts or price arrangementsbetween competitors.
27. The HKSAR seemed to be of the view that in a highly open and small market such as
Hong Kong, China, foreign competition would curb anti-competitive practices by private competitors.
The Government of the HKSAR envisaged action "only when market imperfections or distortions
limited market accessibility or market contestability, and impaired economic efficiency or free trade".The administrative instruments that the Government possessed, however, did not seem to be
sufficient.  Moreover, the Consumer Council, in its proposal submitted in 1996 stated that "not allWT/TPR/M/52
Page 9
markets in service sectors are automatically highly competitive under a laissez faire regime.  Some
services are mainly provided domestically and insulated from international competition".  It also cited
such sectors as legal and accounting services, medical and dental services, public utilities, localbroadcasting, and retail banking services.  It proposed the "enactment of a general competition law in
Hong Kong, because legal enforcement is viewed as the only transparent and effective way to prevent
and deal with restrictive practices".  He asked the Hong Kong delegation for its views on this matter.
28. The HKSAR industrial support policy had been characterized as "minimum intervention and
maximum support".  The industrial support policy di d not seem to be aimed at "picking winners".
As was well known, the Hong Kong Monetary Authority had intervened in the stock and futures
markets in August 1998.  The objective of the intervention was not industrial support.  As stated in the
Government Report, the purpose was "to frustrate the double play strategy of speculators".  The
Government said that "it was conscious of the possible downside of the market operation" but it
believed that "doing nothing in such circumstances would entail even greater risk and cause damagesto" the economy and society of Hong Kong, China as a whole.  However, as noted in the Secretariat
Report, the result of this intervention might affect the traditional non-interventionist industrial policy
of the Government.  The Government purchased substantial stakes in several major manufacturing
and services companies listed on the Hang Seng Index (HSI).  These included two major
conglomerates, Swire Pacific and Cheung Kong, as well as the Hong Kong & Shanghai Banking
Corporation Holdings, "Hong Kong's largest bank".  The result of this intervention might provide HSI
listed companies with an advantage vis-à-vis non-listed companies in the cost of acquiring capital
through new shares, if the HKSAR authorities tried to maintain the price of these shares above levels
that might otherwise have prevailed.  A major shareholding in the largest bank could also put the
regulatory authorities in a potential situation of conflict of interest.  The HKSAR authorities had
established the Exchange Fund Investment Limited to manage these shares at "arms length" in order
to avoid such difficulties.  However, even carefully managed, there were always concerns.  He askedhow the HKSAR intended to maintain the non-interventionist industrial policy.
29. HKSAR was heavily dependent on imports of agricultural and fishery products.  Therefore,
import measures put in place were mainly for health, safety, security or environmental reasons or to
ensure stable supply.  He noticed two products, fish and rice, where the import was controlled in such
a way as to give a possible undue market power as a result of the limitation imposed by the schemeson the number of importers.  Fish were required to  be sold wholesale through the Fish Marketing
Organization wholesale markets and all fish buyers of  the market had to be registered.  The HKSAR
continued to operate the Rice Control Scheme, which was a major exception in the otherwise free
import regime, in order to secure and maintain rese rve stock for this vital staple food, and to maintain
the price of rice at a reasonable level.  Nevertheless, the Secretariat Report had noted that in somecases the retail price exceeded the import price by a large margin.  He asked for the views of the
HKSAR delegation in this regard.
30. Service sectors were rapidly gaining weight in the economy of the HKSAR.  Their share in
GDP had grown from 65.8% to 80% in the decade up to 1996.  In the same period the share of
manufacturing had declined from 21.5% to 6.9%.  This showed the highly flexible and marketoriented nature of the Hong Kong, China economy.  The basic policy objective was to maintain a
liberal regime and to liberalize regulated industries, particularly those providing basic business inputs.
Regulations were sector-specific and had been put in place for the purpose of promoting a fair and
competitive environment, quality of services and the integrity of the profession.  However, the
"minimum intervention" policy stance had been que stioned by the Consumer Council.  Such sectors
as distribution, banking, telecommunication and energy were cited as lacking in competition.  He
asked where in these sectors the HKSAR delegation saw scope for further liberalization to ensure
further competition.WT/TPR/M/52
Page 10
31. The Government announced in September 1998 a 30-point programme guaranteeing market
stability and transparency in order to curb speculation, and seven technical measures to strengthen the
Currency Board arrangement and to avoid excessive interest rate hike.  Mr. Donald Tsang, theFinancial Secretary, had referred, in his speech to the Legislative Council on 4 November 1998, to the
expansion of the role of the Hong Kong financial market "as an international financial centre and fund
raising centre for the Mainland" and the "strengthening of HKSAR's financial regulatory regime" as
"essential to facilitate market development".  The HKSAR policy was said to have evolved from
"laissez-faire" to "positive non-intervention" to  "minimum intervention and maximum support" and
now to "sound international financial center based on regulation of international standard".  These
policies were on the whole well received.  He asked how the Government would balance the need for
tighter market discipline with that of the free economy in the financial sector.  He also asked whether
prudential measures that could put extra burden on foreign financial institutions would be reviewed in
the future.  For example, there was a limitation on foreign bank branches, licenced after 1978, toconduct banking business in one building, virtually meaning only in one branch.  According to the
HKSAR, it was a measure to avoid excessive overcrowding in the retail-banking sector.  This limit,
however, increased the dependency of the foreign banks on the inter-bank market for capital
procurement.  The limit to retail banking coupled with a high level of HIBOR was said to have
reduced the profit margin of the foreign banks to a potentially larger degree than the local banks.
32. He concluded that Members should congratulate the HKSAR on its highly open and liberal
trade and internal regime and the important efforts that the Government was putting in place to
maintain and strengthen them.WT/TPR/M/52
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V. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
33. Members expressed their appreciation for Hong Kong, China's strong commitment to the
WTO.  Members noted that Hong Kong, China was one of the most open economies in the world andthat neither the transfer of sovereignty nor the outbreak of the Asian economic crisis had changed
Hong Kong's traditional openness to both trade and foreign direct investment;  it applied zero tariffs
on all imports, non-tariff measures were virtually absent, export subsidies were absent, no safeguard,
anti-dumping, nor countervailing measures were applied.  Members generally appreciated that the
"one country, two systems" arrangement under the Basic Law had been working well.  Hong Kong,China had largely refrained from interfering with the normal functioning of the free-market system,
although it had implemented a few emergency measures aimed at stabilizing the stock exchange, land
and foreign exchange markets.  Members welcomed the early implementation of comprehensive
legislation aimed at ensuring Hong Kong, China's commitments in the TRIPS Agreement and the
strengthened enforcement of intellectual property rights;  Hong Kong, China's accession to theAgreement on Government Procurement;  its partic ipation in the Information Technology Agreement;
and its acceptance of the Fourth and the Fifth Pr otocols of the GATS, concerning telecommunications
and financial services, respectively.
34. The representative of New Zealand noted that Hong Kong, China had recently hosted a
successful meeting of certain WTO Member Trade Ministers, which concluded that a new
comprehensive round of multilateral trade negotiations was the best way to maximize gains for all
Members, and Members could, and should, provide a powerful response to the financial crisis by
agreeing to launch a further round of broad-based and balanced negotiations in the year 2000.  New
Zealand commended Hong Kong, China for the leader ship it had shown in this regard and looked
forward to its ongoing contribution to the preparatory process for the Third Ministerial Conference.
35. While Hong Kong, China would continue to set a high standard for other economies to
follow, he hoped that, in those service sectors where restrictions remained and in the goods areawhere bindings did not yet exist, it would furt her embrace, and lock in, its liberal regime.
36. The representative of Australia noted that Hong Kong, China was its sixth largest export
market both for goods and services, its fourth largest source of investment and the fifth largest
destination of Australian investment overseas.  Australia appreciated Hong Kong's active advocacy of
a new round of multilateral trade negotiations.  Hong Kong, China’s GATS commitments reflected itscommitment to the services sector, in the fina ncial and telecommunications sectors, and in its
commitment to ongoing discussions in professional services.
37. The representative of the United States noted that the continuation of the rule of law had
made Hong Kong, China one of the most attractive centers of trade and investment in the world.  The
concerns prior to the "handover" that the system of openness, predictability and transparency might becompromised had proved to be groundless.  The Basic Law that governed Hong Kong, China
provided the reliable anchor of certainty.  In her view, this trade policy review was a celebration of
the benefits and advantages of having an open and competitive economy, based upon a sound
regulatory framework that provided the right mix of guidance and flexibility.  Many of the recent
developments brought about by the economic and financial crisis of the region would makeHong Kong, China a more competitive place, as seen from the drop in real estate prices and wage
costs.
38. Hong Kong, China, as a largely service-based economy, provided an excellent example of a
Government that allowed free and open competition in the services sectors while maintaining the
appropriate level of regulatory activity.  Hong Kong, China had taken advantage of the agreement ontelecommunications to accelerate the process of competition for its international services, and the
United States looked forward to further progress in  offering more licences to international telephoneWT/TPR/M/52
Page 12
operators at the conclusion of the year.  However, the representative expressed the concern that
Hong Kong, China might not open the local fixed ne twork market to increased competition as long as
existing operators committed to substantial new investment.  This could have the effect of putting afreeze on the issuance of new licences.  U.S. companies were anxious to invest in the
Hong Kong, China market, and the United States believed it was consistent with the free-trade
philosophy of the Region to allow for open competition in a critical area of its infrastructure.
39. Hong Kong, China had moved forward rapidly to strengthen its intellectual property related
laws.  A new copyright law had been passed, and a law had come into force in 1998 allowing theauthorities to license and inspect the production of compact disks.  Despite Hong Kong, China's heavy
investment in its anti-piracy measures, the problem of copyright piracy remained serious,
notwithstanding its strengthened legal regime.  The United States had encouraged sustained efforts by
the authorities so that actual levels of piracy in the Region could be reduced.  To be effective, they
must be directed at all phases of activity - production, distribution, retail and end-user.
40. The representative of Switzerland noted that the Government had not intervened to stop the
continuing decrease in the share of manufacturing to GDP.  By ensuring a business environment
conducive to structural adjustment, investment, and growth, through the emphasis on enhancing the
skills and technology base of the economy and through the removal of infrastructural constraints,
Hong Kong, China had pursued an industrial policy without "picking winners".
41. Hong Kong, China could not be immune from the shocks and other developments in the
region and beyond.  For this reason, the representative felt that an improvement of the economic
environment in the region and elsewhere would constitute a decisive factor for a swift recovery.  The
pegging of the Hong Kong dollar to the U.S. dollar had limited the authorities' scope for controlling
the money supply and interest rates, which were still at a high level, hence undermining the recovery.
Switzerland hoped that the HKSAR would be in position to maintain the peg.
42. Hong Kong, China's accession to GPA would hopefully stimulate the further enlargement of
membership.  With the new legislation on intellectual property rights and its enforcement, it was
hoped that recurring problems of counterfeit would disappear over time.
43. In response to the 1996 Consumer Council recommendation, Hong Kong, China had agreed
to adopt a comprehensive competition policy, to ensure transparency and to prevent certain practices
or get them under control.  The representative believed that clear rules would safeguard competition.
44. Switzerland was confident that Hong Kong, Chin a would maintain an open and fair trade
regime even in the face of the current serious economic downturn.  Hong Kong, China had clearly
demonstrated its strong openness not only in the area of goods, but also in the services sector,
including financial services.
45. The representative of Norway stated that she was impressed by the way Hong Kong's
reintegration into mainland China under the "one country, two systems" doctrine had been handled.
She underlined the exceptional transparency of Hong Kong, China's trade policy, making
Hong Kong, China an important contributor to the development of the multilateral trade system.
46. She commended Hong Kong, China on the operation of its maritime transport sector, based
on free market principles.  Hong Kong, China had played an important and constructive role duringthe Uruguay Round as well as in the Negotiating Group on Maritime Transport Services (NGMTS).
Norway hoped that Hong Kong, China would base its po licies in this sector on free-market principles,
and would continue to play a constructive role, based on free and fair competition, when addressing
future challenges in the maritime transport sector in the WTO.WT/TPR/M/52
Page 13
47. In addition to the questions provided in writ ing, Norway sought further clarification on
several issues.  In the maritime transport sector, she asked whether Hong Kong vessels were allowed
to carry passengers and goods between Chinese ports without any restrictions;  and whetherHong Kong, China's new status had resulted in any modifications in the way those vessels were
treated in Chinese ports, or were subject to the same treatment as vessels from other countries, with
respect to taxes, levies, etc.
48. On tariffs, she asked, with reference to page 26, paragraph 8 of the Secretariat's report,
whether Hong Kong, China had any plans to increase its level of bound tariffs.  If this was not thecase, she was interested in the reasons preventing Hong Kong, China from doing so.
49. With reference to footnote 25 on page 32 of the Secretariat's report regarding the Agreement
on Textiles and Clothing, she asked whether the liberalization carried out by Norway had had any
effect on Hong Kong, China's exports and production of products covered by the relevant categories.
She also asked for more information on the control regime on the import and export of textiles andclothing mentioned in paragraph 51-53 in the Government report.
50. Noting, from paragraph 149 of the Government report, that Hong Kong, China did not take
any safeguard, anti-dumping or countervailing measures, she asked the delegation to elaborate on the
philosophy behind this;  the way demands from national industries as regards actions taken in these
fields were handled;  and how Hong Kong, China was dealing with the provisions on anti-dumpingactions on behalf of a third country in accordance with Article 14 in the Agreement on Anti-dumping.
51. She also asked whether the existing import system for rice was considered to create a basis
for establishing special rights for importers that were in a position to maintain a reserve stock of rice.
If this was the case, she wondered about the consider ations regarding such special rights in relation to
the WTO provisions on state trading enterprises.
52. The representative of the European Union stated that, despite current economic difficulties,
Hong Kong, China had chosen to preserve the free market principles that had served it well in the
past.  In addition to its duty-free policy on all imports, the HKSAR had improved its regime of
intellectual property rights protection, taken an importa nt part in the multilateral opening of financial
service markets, acceded to GPA, become an active participant in the ITA, and taken steps to
strengthen, albeit maybe insufficiently, some aspect of its competition policy.
53. In the context of an active policy of promoting and protecting legitimate trade,
Hong Kong, China and the EU had initialled an im portant customs cooperation agreement, the first of
this kind signed by the HKSAR since the handover.  The agreement, which reflected and underlined
the interests the two parties had in common, would be  an important tool to facilitate trade, while
efficiently combatting fraud.
54. Although some of the measures to stabilize the stock market, resist the pressure on its
currency, and maintain its position as an important international financial centre had been questioned,
the EU acknowledged that the HKSAR remained one of the freest and most open markets in the
world.
55. The EU fully shared the confidence expressed by the Secretariat that, subject to appropriate
efforts to improve productivity and regain competitiveness, the traditional advantages and soundpolicies of Hong Kong, China would soon allow it to emerge from the current economic crisis and
resume its strong economic performance.
56. The EU also believed that Hong Kong, China ha d a vitally important role to play in the WTO.
First, the HKSAR was well placed to advocate greater liberalization negotiations with China.WT/TPR/M/52
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Hong Kong, as one of the major beneficiaries of Chinese membership of the WTO, should act as an
example to the whole of China of how an open and globally integrated market was necessary to
achieve lasting economic prosperity.  Second, as a vocal supporter of a new comprehensive round oftrade negotiations, Hong Kong, China should join forces with the EU and a growing number of other
Members to promote this objective in the process leading to the Ministerial Conference in 2000.
57. The representative of the Philippines congratulated the HKSAR on its successful transition,
implications of which could not be underestimated especially for countries neighbouring Hong Kong,
China.
58. The representative of Japan stated that he was encouraged by the fact that Hong Kong, China
had made every effort to uphold its highly open and transparent trade and financial regime and
believed that Hong Kong, China would continue to be one of the most important commercial and
financial centers in East Asia.  Japan was the third largest trading partner of Hong Kong, China:  the
total amount of trade was over HK$300 billion in 1997.  Japan was also one of the largest investors inHong Kong, China:  by the end of 1996, 142 Japanese enterprises had invested HK$18 billion in the
industrial sector.
59. Japan encouraged Hong Kong, China to continue its liberal foreign exchange policy and
maintain free capital flows.  Maintenance of the peg of the Hong Kong dollar was a matter of interest
in this regard.  Japan understood that the authorities regulated and supervised its financial market inline with the international practices.  Such regulation and supervision had to be conducted in a
balanced manner to maintain the attractiveness of the "free market" in Hong Kong, China.
60. Japan appreciated that Hong Kong, China's trade policy was, in general, consistent with the
WTO Agreements.  Though all the customs duties were applied at a zero level, more than 60% of
tariff lines were still unbound.  Hence, Japan welcomed the commitments by Hong Kong, China to
bind voluntarily its tariffs, in the context of th e APEC, to zero by the year 2010.  Japan strongly
expected that Hong Kong, China's early acceptance of the Fifth Protocol of the GATS wouldencourage other Asian countries to further liberalize the financial sector despite current economic
difficulties.
61. Though Hong Kong, China's early completion of necessary legislation implementing the
TRIPS Agreement was appreciated, it was still easy to find goods bearing a forged trade mark, and
pirated cassette tapes and audio-visual software in  the Hong Kong market.  Japan encouraged the
relevant Hong Kong authorities to make further efforts to enforce laws and regulations for the
protection of intellectual property rights.
62. The representative of Hungary noted that in addition to Hong Kong, China's open
merchandise trade regime, the services trade regime was also very liberal and had been further
improved in the review period.  Hong Kong, China did not maintain any MFN exemption under
GATS Article II and there were few exceptions to national treatment.  He highlighted the
liberalization efforts in the financial and telecomm unication services sectors.  Hong Kong, China had
indicated readiness for an early TRIPS review and w ould be reviewed in the first group of developing
economies in the first half of 2000.
63. The economic fundamentals of Hong Kong, China were sound, and there was every reason to
believe that they were going to ensure a relatively rapid recovery.  He stressed that the exchange rate
was stable;  inflation was low;  Hong Kong, China possessed the third largest international reserves;
and the Government's fiscal position was sound.  It had zero debt and a consistent record of fiscal
discipline with an average 2% surplus since 1984 in terms of GDP;  the banking system was also
healthy.  Hungary welcomed the signs of adjustments in the economy, which could already bedetected.WT/TPR/M/52
Page 15
64. In Hungary's view, in order to contribute to the containment of the crisis sweeping through
Asia and affecting all economies, it was absolutely essential to keep markets open.  He complimented
Hong Kong, China for not only doing so, even in the face of worsening trade balances, but for playingan active role in advocating further liberalization in the framework of a comprehensive new round of
trade negotiations, and for participating constructively in the preparatory process for the Third WTO
Ministerial Conference.
65. He stressed that neither the reunion with mainland China, nor the Asian crisis had changed
Hong Kong, China's well-known commitment to the multilateral trading system.  He urged the TPRBto acknowledge and appreciate that Hong Kong, China had been and continued to be one of the most
liberal and open economies of the world, and one of the most committed champions of free-trade.
66. Hong Kong, China's intervention in the stock market in the summer of 1998 was timely and it
could not be interpreted as industry- or company-specific assistance.
67. The representative of Czech Republic stated his positive perception of Hong Kong's role in
the multilateral trading system and the impact of its trade policy on that system.  Hong Kong, China's
excellent record in international trade had its root s in the firm belief in open and free markets, sound
macroeconomic policy and enterprising people, showin g an incredible capacity to adjust to changing
economic realities.  He had no doubt that the adherence to basic values that enabled Hong Kong to
become one of the most competitive economies in the world, together with improved externalenvironment, would provide Hong Kong with a st rong basis for resumption of its economic growth.
68. The Hong Kong Monetary Authority 's intervention in August 1998 included nearly 9% stake
in the Hong Kong and Shanghai Banking Corporation Holdings.  He asked Hong Kong, China to
elaborate on a possible influence of the Hong Kong Monetary Authority on the Hong Kong &
Shanghai Banking Corporation Holdings' future operations.
69. The manufacturing industry's share in GDP had declined from 22% in 1985 to 7.3% in 1996,
while the share of services had risen from 70% to 84.4% in the same period.  The value added ofHong Kong's manufacturing industries had fallen by 15% between 1991 and 1996.  He asked for
Hong Kong’s comment on these figures, and whether a continuing decline of manufacturing's share of
GDP posed any problem for further development of the Hong Kong's economy.
70. Hong Kong's real-estate market had been percei ved as remarkably prosperous for all players
involved, the reason being huge demand and shortage of land.  During the past year, however,property prices and rents had declined dramatically.  To stabilize the situation, the Government had
decided to suspend its land sales.  He asked Hong Kong, China to elaborate on the Government's
objectives in this area, how the real-estate market was expected to develop in future, and what other
measures, if any, were envisaged to further stabilize property prices.
71. The representative of India stated that as Hong Kong, China continued to put such primacy on
putting its commitments into practice, India believed that it would impart tremendous strength and
value for the multilateral trading system established through the GATT/WTO.  Hong Kong, China
would need to exercise deliberate care in ensuring that while it sought to consolidate and adjust the
sectors severely affected by the global financial crisis, the adaptation and integration with mainland
China would not serve to displace and weaken Hong Kong, China's competitive edge in the world.The key would lie in establishing an appropriate symbiosis so that the chain of events for economic
transactions would not develop weak or missing links.
72. He noted with satisfaction that even in this current difficult situation, Hong Kong, China had
refrained from interfering with the normal functioning of the free market system and that trade and
investment measures had not been applie d on an industry- or area-specific basis.WT/TPR/M/52
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73. Referring to the Secretariat's report, he pointed out that, in February 1996, Hong Kong, China
had requested consultations with Turkey, stating that Turkey's quantitative restrictions on imports of
textiles and clothing products violated Turkey's obligations under GATT Articles XI and XIII.However, there was no information on the outcome of these consultations, in particular, whether a
mutually agreed solution to the dispute was reached and whether such a solution was notified.  India
believed that instances such as these served to undermine the efficacy of the Disp ute Settlement
Understanding and the multilateral trading system, and would accordingly urge Hong Kong, China to
appropriately rectify the situation.
74. The representative of the Republic of Korea stated that Korea enjoyed healthy trade and
economic relations with Hong Kong, China.  Kor ea had found practically no problems in trading with
Hong Kong, China.  He hoped that Hong Kong , China would maintain a non-intervention policy in
the market to strengthen freer and most open trade and investment regime.  It was important for
Hong Kong to maintain the peg system by taking advantage of its huge foreign reserves.  He statedthat Korea would do its best effort to cooperate with Hong Kong, China to have Asian economies
come out of the economic crisis and resume their strong economic performances.
75. The representative of Canada noted that economic relations between Hong Kong and Canada
had expanded with the steady increase in trade and investment.  Over the last five years, two-way
trade in goods had increased from Can$1.8 billion in 1993 to Can$2.95 billion in 1997.  In 1997,Hong Kong, China was the seventh largest export market for Canada globally and the fourth largest
Asian market.  Major Canadian exports to Hong Kong included gold, agri-food products, and
telecommunications equipment.  In 1997, Canadian goods imports from Hong Kong totalled
Can$1.25 billion, and included electrical equipment, apparel and clothing accessories, and mechanical
equipment.  Canada also exported about Can$63 million worth of commercial services to Hong Kong
in 1997, including financial, legal, accounting, air transport, and telecommunications services.
Canada's commercial service imports from Hong Kong totalled about Can$98 million, includingfinancial, shipping, and tourism services.
76. Hong Kong, China was also an important source of direct and portfolio investment for
Canada, in sectors including electronics, telecommunications, finance, oil and gas, and real estate.
Hong Kong's foreign direct investment in Canada had reached Can$2.9 billion in 1997.  In the same
period, Canada's FDI into Hong Kong had reached Can$2.7 billion.  Currently, there were close to100 Canadian companies with branches or subsidiaries in Hong Kong.  The Canadian Chamber of
Commerce in Hong Kong was the largest chamber outside of Canada, with some 900 members.
77. Canada appreciated Hong Kong, China's support during Canada's tenure as chair of the APEC
process in 1997.  Hong Kong, China’s support fo r the APEC EVSL initiative and its commitment to
the multilateral trading system were further demons trations of the Territory's commitment to trade
liberalization.
78. The financial crisis which had hit Asia in 1997 has resulted in serious economic costs.
Canada's trade figures showed that its exports to Hong Kong were down by an estimated 30% in the
first six months of 1998 over the same period in 1997.   However, he noted that, although it was facing
economic difficulties, Hong Kong, China had retained its commitment to free trade, andHong Kong, China's leadership was important in demonstrating openness and resisting the temptation
to unnecessarily intervene in economic decision making.  Canada noted the helpful role that
Hong Kong had played in developing informal networks of Asian central bankers to increase
understanding about the implications of global ca pital flows.  The basic fundamentals of the
Hong Kong economy were strong.  The banking and financial structure was transparent and its basewas strong.  Canada expected Hong Kong to be one of the first economies to return to positive
growth.WT/TPR/M/52
Page 17
79. Given Hong Kong's commitment to free trad e in both goods and services, Canada looked
forward to reaching an agreement with Hong Kong to conduct an early review of the adequacy of air
services between Hong Kong and Canada.  Hong Kong and Canada had maintained an open approachto air services arrangements, and it was in this spirit that Canada looked forward to consultations with
Hong Kong to balance the services offered by both parties.
80. Canada recognized the extensive work of the Government in enforcing intellectual property
laws, and urged further vigilance and action in this regard, particularly with respect to the ongoing
problem of copyright infringement.
81. It was important for Hong Kong, China to maintain its autonomy in trade, economic, and
financial matters as a "Special Administrative Region" of China.  As a financial, transportation and
management hub, Hong Kong had an important regional role to play in Asia's economic growth and
development.  Hong Kong was also the most impor tant source of investment into China and a key
element in China's economic development and role.  Canada congratulated Hong Kong, China for itscommitment to the multilateral trading system.
82. The representative of Turkey noted that Hong Kong, China's policy of "minimum intervention
and maximum support" was continuing, and congratulated Hong Kong, China on its liberal, open and
competitive trade and economic policies.
83. The representative of Thailand, on behalf of the ASEAN nations noted that ASEAN had
benefited from Hong Kong's open and transparent system.  Hong Kong, China's relationship with
ASEAN was long-standing and deep -rooted.  Hong Kong, China was ASEAN's major trading partner
and he believed it would be so for many years to come.  ASEAN, in particular Thailand, was at the
centre of the financial crisis, which started in the middle of 1997, and with no exception Hong Kong
had been affected.  The transition of Hong Kong had occurred during the time that Thailand, in
particular, had come under heavy speculative exchange attack.  In retrospect, Thailand had not
realized the magnitude of the social and economic implications of such speculative activities.  It wasshocking for ASEAN, collectively, to see this onslaught of force that had unleashed upon their
economy in such a way that it was an aspect of the harsh reality of economic interdependence.  It was
lamentable and regrettable that the effect was not contained in one region or one country but had
spilled over to their neighbours, such as Hong Kong .  On the stock market intervention, without the
action of the Hong Kong government, he believed that ASEAN economies might have ended up witha regional financial wasteland.WT/TPR/M/52
Page 18
VI. REPLIES BY THE REPRESENTATIVE OF HONG KONG, CHINA AND
ADDITIONAL COMMENTS
84. The replies by the representative of Hong Kong, China were divided into three main themes:
(i) economic environment;  (ii) trade policies and measures;  and (iii) sectoral issues.  Written
responses to specific questions were circulated to  members (Annex I).  Following the replies, the
Chairperson opened the floor to TPRB members for further comments and questions.
(i) Economic environment
85. The representative of Hong Kong, China appreciated delegations' interventions and strong
recognition and support for Hong Kong, China's policies.  Under the Basic Law, "one country, two
systems" should continue for 50 years, and Hong Kong, China had continued to pursue free trade and
open economic policies on all fronts.
86. On macroeconomic performance, Hong Kong, China depended crucially on when the region
would regain stability and growth, and how soon a nd by how much the credit stringency situation
could improve.  Domestically, tight credit and high interest cost would continue to deter activity in all
areas.  However, given sound fundamentals, Hong Kong, China was well placed to react quickly
when the external circumstances and local sentiments improved.  Hong Kong had zero fiscal debt and
fiscal reserves of US$57 billion.  Despite a budget deficit in the current year, Hong Kong, China
would strive to achieve a fiscal balance over a medium term under the prudent management of public
finances.
87. The Hong Kong economy's current composition was a result of market forces.  She believed
that Hong Kong should move into areas which required the innovation and skills that its highly
educated workforce could provide;  Hong Kong's support programmes were aimed at providing the
necessary and relevant infrastructure for this, not to pick and choose specific sectors.  Further
development of China would not adversely affect Hong Kong.  The experience of the last 20 years,
since China adopted its open door policy, had also proved the reverse.  In any event, the Basic Lawclearly stated that the HKSAR would continue to pursue its own economic and trade policies.  In this
context, Hong Kong, China greatly looked forward to China's early accession to the WTO.  China was
Hong Kong's number one trading partner and its accession was clearly in Hong Kong's interests.
China's membership of the WTO would accord Hong Kong, China's business better market access,
more certainty and predictability.
88. Some Members were concerned at the apparent rapid decline of the Hong Kong, China
manufacturing industry, matched by the increase in the services component.  In some ways, this
superficially dramatic change was more apparent than real, as mentioned in paragraph 19 of the
Government Report.  Statistically, when the manuf acturing process moved out of Hong Kong, all the
rest (such as  marketing, sourcing, design, product development and quality control), which wasusually high value added, remained in Hong Kong, and this valuable rump was suddenly classified as
"services".  Hong Kong saw this as a logical consequence of its stage of development:  not something
to try to reverse but rather a spur to ensure that its people had the skills to meet the changing
environment.
89. On Hong Kong's "developing country" status, a self-elected status in the WTO context,
Hong Kong, China noted that there were no agreed objective criteria or listed factors determining
such status.  Whilst Hong Kong, China recognized that its GDP per capita was high, this on its own
was too crude a yardstick, and so far as Hong Kong, China was concerned, it found the distinction
between developed and developing in the WTO somewhat artificial.  Hong Kong, China acted and
operated according to its principles and own intere sts.  She noted that Hong Kong, China was not
treated by some trading partners as a developed economy, i.e. in respect of textiles.WT/TPR/M/52
Page 19
Hong Kong, China commended Norway for advancing its phasing out of quota under the ATC.  It
provided an excellent example for others.
90. On the exchange rate system, the Government  was fully committed to maintaining exchange
rate stability under the linked exchange rate system, which was crucial to the maintenance of stability
and prosperity in Hong Kong.  The robustness of the link had been underpinned by the strong foreign
exchange reserves (US$88.7 billion as at end October 1998), representing about seven times the
currency in circulation and about 40% of M3.  The system had received the full support of the IMF.
Abandoning the link to achieve competitive devaluation was not the answer.  Depreciation wouldmean higher import prices for Hong Kong, which would accelerate inflation and increase the cost of
Hong Kong, China's exports in goods and services .  The link was essential to Hong Kong as an
international financial centre and externally oriented economy.
91. The Government's incursion in the stock market was exceptional and probably unique.  Its
objective was to maintain the stability and integrity of Hong Kong's financial systems which wouldotherwise have been under serious threat of cross-market manipulation.  Hong Kong, China could not
give up its rights to safeguard and defend the stability of its system.  At the same time,
Hong Kong, China would live up to its responsi bility to the region.  Almost immediately, in
September, Hong Kong, China had taken measures to enhance the efficiency of the currency board
system and to strengthen the transparency and discipline of the securities and futures markets.  Thesemeasures had so far been effective in stabilizing the markets.  In the long term, Hong Kong believed
these new measures would provide a firmer basis on which the further development of its financial
market would take place and its role as a major international financial centre would be strengthened.
In Hong Kong, China's view, the incursion had no t given additional advantages to the companies
concerned in terms of capital raising.  It was envi saged that the shares would be disposed of in an
orderly manner over a period of time.  The Board of the Exchange Fund Investment Limited had a
non-official Chairman, and comprised a two-thirds majority membership from different sectors of thecommunity.  It was a stated policy of the Government not to interfere with the management and
operation of the companies whose shares it had acquired.
92. The first discussant was reassured by Hong Kong, China's reply that the deviation from its
trade policy fundamentals had been regarded exceptional.  The fact that Hong Kong, China had lost a
lot of its reserves had shown the difficulty of stemming the speculation.  Despite complete absence ofnatural resources, Hong Kong, China was well equipped with human resources, which were as
essential as natural resources.  He commented that  there would be a lot of opposition to the attempt to
regard the notion of developed/developing countries as artificial.  He hoped that the one third of
Government representation in the Exchange Fund Investment Limited company was of the same
quality as that from private sector.
93. The second discussant shared the points raised by the first discussant and thanked
Hong Kong, China for the assurance on the points th at would add to the credibility of the Government
on the conduct of its economic policy.  He was satisfied to note that the Government intended to
dispose the share of its holding in an orderly manner over a period of time.  He hoped that this would
happen in the near future, since the holding of a large amount of shares would tie the hands of theGovernment.  The Government had been fortunate in  its effort to maintain the non-interventionist
stance, for the share price had not dramatically dropped since the intervention.  On the developing
country status, he noted that Hong Kong, China had committed itself in the context of APEC to
eliminating tariff duties and liberalizing its market completely by 2010;  the target of 2010 was for
developed countries.  Therefore, he noted that at least in the context of APEC, Hong Kong had
considered itself to be a developed economy.
94. The representative of Hong Kong, China in respon se stated that developing status in the WTO
was not black and white because very often developing economies shared the same concern asWT/TPR/M/52
Page 20
developed countries.  Hong Kong, China had not mean t to imply that it did not believe in special and
differential treatment where appropriate.  In APEC , Hong Kong, China voluntarily offered to bind its
tariff by 2010;  it was not a question of assuming developed country status.  The drop in Hong Kong'sreserves was used in order to purchase Hong Kong shares, which thus far had made US$4 billion
profit.  She stressed that for disposal of shares the Exchange Fund Investment Limited advised the
Financial Secretary.  The prices were not the primary concern to Hong Kong, China but rather the
stability and normal operation of the market.
(ii) Trade policies and measures
95. The representative of Hong Kong, China st ated that Hong Kong, China had already
undertaken to bind tariffs at zero per cent on all imports of goods in three phases by the year 2010 in
the context of APEC.  In addition, Hong Kong had further bound all products covered by the
Information Technology Agreement at zero in one stage, instead of four, on 1 July 1997.
Hong Kong, China saw no need to further accelerate its bindings.
96. Hong Kong, China's accession to the GPA had not changed the Government's procurement
policy, which was open, non-discriminatory, and provided a level playing field for all suppliers.  It
was in this spirit that Hong Kong, China had also been participating actively and constructively in the
work of the Working Group on Transparency in Government Procurement since its establishment.
97. Hong Kong, China did not have any enabling legislation on anti-dumping, countervailing
duties and safeguards because it did not believe in protecting its domestic industries through such
measures.  Hong Kong, China was glad that delegations' comments had given recognition to the
efforts Hong Kong, China had made in intellectual property legislation and enforcement.
Hong Kong's Prevention of Copyright Piracy Ordinance represented the first systematic attempt in the
world to enact legislation to prevent copyright piracy before it occurred, rather than deal with the
consequences after the event.  She also stated that Hong Kong, China was the first place in the world
to legislate against the manufacture or possession for sale of devices designed to defeat copyrightprotection, as envisaged in the 1996 WIPO Copyright Convention.
98. Hong Kong, China's entire body of intellectual property statutes, supplemented by the body of
common law on intellectual property, effectively implemented the provisions of the TRIPS
Agreement.  The figures in the tables appearing in Annex 6 of the Government Report and
Table III.10 of the Secretariat Report reflected stronger enforcement action and more effective legaltools rather than a worsening of Hong Kong, China's problems.  Hong Kong, China had made illicit
manufacture of pirated optical disks in Hong Kong extremely difficult, and had increased greatly its
enforcement action against sales of pirated and counterfeit goods.  As a result, the sale of pirated and
counterfeit goods had effectively been driven out of most legitimate commercial premises.  Where
further sale of infringing articles was detected, it was subject to vigorous raiding operations from theenforcement authorities.  Hong Kong, China planne d to more than double its annual expenditure on
public education on respecting intellectual property rights over the next three years.  Until recently,
Hong Kong had been the second largest exporter (by dollar value) of movies in the world.
Hong Kong's movie industry had been seriously harmed by copyright piracy.  Hong Kong therefore
concurred entirely with its trading partners that the effective enforcement of intellectual propertyrights was of the utmost importance to its local economy as well as to its international trade.
99. Hong Kong, China was committed to promoting competition and economic efficiency
through a comprehensive, transparent and overarching competition policy. Under this framework,
Hong Kong envisaged a variety of options, such as developing a pro-competitive culture;  adopting
pro-competition codes of practices;  dealing with anti-competitive practices on a sectoral basisthrough legislation, or through the regulatory bodies of the sectors concerned;  persuasion;  supporting
the work of its Consumer Council, etc.  Hong Kong, China considered the introduction of a generalWT/TPR/M/52
Page 21
competition law to be an overkill, given Hong Kong's small and externally oriented economy and
already highly competitive environment.
100. The second discussant noted that Hong Kong had already eliminated all applied tariffs, and it
was going to bind the tariff in three phases.  He wondered whether it would not be possible to
accelerate this process, and asked for the reason not to bind the tariff immediately.  He asked for
Hong Kong, China's view on whether it was possible to proceed further with a similar sort of sectoral
approach in the WTO or whether a broader based approach was more efficient.  He asked whether
Hong Kong, China intended to protect its industries in one way or another, and if so, what would bethe means to protect its industries, for example from a sudden surge of imports.  He wondered
whether the good enforcement record was proof of stronger enforcement action or of the worsening of
the situation.  The figure showed that the record of enforcement had surged at a very rapid pace in the
past years, making it difficult to believe that situation was less serious.  He asked whether the peak
had been attained in enforcement and efforts would be easier in the future.  He also asked if theincreasing figures demonstrated an increase in th e number of infringements or the strengthening of
enforcement capabilities of authorities.  He as ked for Hong Kong, China's comment on the Consumer
Council's observation that legal instrument was more transparent than other means implemented by
the Government, and that a general competition law would be the most transparent way of ensuring a
competitive climate.  He also asked what means Hong Kong, China had in place to clear up suchanti-competitive practices by private firms as bid-rigging or price-setting.
101. The first discussant commented that the reason provided by Hong Kong, China for not
introducing a general competition law, i.e. that it was a small and externally oriented economy, was
exactly the reason he would cite to have comprehensive legislation.
102. In response, the representative of Hong Kong, China stated that Hong Kong, China was open
to more bindings but it would consider this in the light of progress in future multilateral negotiations
in this area. Hong Kong always believed that a comprehensive approach was the best means forprogressive liberalization, but at the same time Hong Kong, China did not rule out a sectoral approach
because it could be used to spur liberalization on a global basis.  The recent ITA experience showed
something one could build on, but the ITA II negotiations also illustrated that such an approach was
becoming more difficult.  The higher figures in enforcement statistics reflected three factors:  the
change in Hong Kong, China's law, which allowed its enforcement authorities to seize infringingarticles on suspicion rather than requiring absolute proof;  there had been an increase in the staffing of
the enforcement agencies responsible for intellec tual property enforcement;  and Hong Kong, China
had enacted new laws permitting stricter action against optical disk factories.  The figures for 1998
should represent a peak in enforcement results, though  Hong Kong, China recognized the need to
keep its efforts at the current high levels.  Given the openness of its economy, Hong Kong, China wasnot yet convinced that the balance of advantage lay in comprehensive legislation.  Not all practices in
the private sector that limited market accessibility or contestability would impair economic efficiency.
Hong Kong, China believed that only those that were  not in the overall interest of Hong Kong, China
should be attended to.  In general, Hong Kong, China's approach was that it would prefer to exhaust
all the other options before considering embarking on the legislative route.  Case-by-case orsector-by-sector consideration would give more flexibility and would make more tangible results
easier to achieve.  The Government had considered very carefully the observations in the Consumer
Council's report, and also had conducted extensive consultations with the private sector in
Hong Kong, China.  Following from those consultations, the Government had come to the view that
there was not a clear case yet to embark on the legislative route.
103. The first discussant noted that the main aim of competition law would be to create stability
and predictability, not flexibility as mentioned by the representative of Hong Kong, China.WT/TPR/M/52
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104. The representative of Hong Kong, China resp onded that Hong Kong, China's approach did
offer flexibility in the way to deal with problems, and could achieve better results.  It was also clear
that different economies in the WTO had adopted a different approach to the question of competitionpolicy.  She regarded it important that Hong Kong, China was committed to providing a
pro-competitive environment, and this could be achieved best under the current approach.
(iii) Sectoral issues
105. The representative of Hong Kong, China noted that the Rice Control Scheme was intended to
ensure a stable and steady supply of rice and to pr ovide a reserve stock in case of emergency.  Rice
was the most important foodstuff for Hong Kong.  There was no commercial production of rice in
Hong Kong:  all rice was imported and importers were free to choose the source of supply.  As an
initial step to increase competition and liberalize trade, Hong Kong, China had allowed more
newcomers to the import trade in late 1996 and introduced the Optional Quota System in October
1997.  Looking ahead, Hong Kong was actively considering ways to enhance further competition andprovide easier access to the trade.
106. Hong Kong, China's service markets were very open.  The "one-building" rule remained an
important aspect of ensuring the soundness of Hong Kong, China's banking regime in order to avoid
overcrowding in the retail banking sector;  it was not an impediment to foreign commercial presence
in Hong Kong.  Foreign banks were welcome to acquire shares in, or take over local banks withbranching rights;  there was no limit on foreign ownership, nor requirement to form joint ventures.  It
was of note that since 1978, the number of foreign banks in Hong Kong had risen from 67 to 143.  In
terms of market share, foreign banks took up 56% of the total loans for use in Hong Kong, nearly half
of all deposits, and 35% of loans to individuals.  These facts clearly illustrated that, the "one-building"
rule had not caused any market access difficulties for foreign banks wishing to do business in Hong
Kong.  The Hong Kong Monetary Authority had commissioned a consultancy study on the future
direction of the banking sector over the medium term.  A comprehensive package ofrecommendations that would further improve competition and enhance the safety and soundness of
the overall banking system in Hong Kong woul d be available soon.  Hong Kong, China remained
committed to greater liberalization of the banking system.  Tighter market discipline and free
economy need not contradict each other;  it was a matter of non-discriminatory regulation more than
deregulation.  Hong Kong had endeavoured to regulate only where essential to do so.
107. Most services sectors were free and open, with no nationality or residency requirements, or
other staffing requirements applied to foreign firms.  On binding of commitments, Hong Kong, China
would expect to see matching commitment levels by others.
108. Hong Kong, China's telecommunications industry was very liberal and Hong Kong, China
was in the process of opening the sector well beyond the commitments only recently bound in theFourth Protocol of the GATS.  Hong Kong, China's objectives would be to increase competition in the
best interests of the consumer and to advance its position as a telecommunications hub in its broadest
sense.
109. The "One Country, Two Systems" concept was a unique one under which "the previous
capitalist system and way of life shall remain unchanged for 50 years" (Article 5 of the Basic Law).Subject to the provisions in the Basic Law, the HKSAR was free to manage its economic and trade
affairs as it thought fit, and according to Article 133 of the Basic Law, acting under specific
authorizations from the CPG, Hong Kong, China could negotiate and conclude new Air Services
Agreements.  There was no inconsistency between  the two passages in the Hong Kong report.
110. Marine traffic between Hong Kong and Ch ina was not classified as domestic, and
Hong Kong, China enjoyed no special privileges in mainland ports.WT/TPR/M/52
Page 23
111. The first discussant commented that, on maritime services, Hong Kong, China was looking
for others to match its aim to get this sector launched.  He suggested that Members pledge to get
successful results on maritime transport services.  He asked for more specific comments fromHong Kong, China in this matter.
112. The representative of the United States hoped that Hong Kong, China's answer that the issue
of external communications licences was on the ba sis of market demand would not suggest or imply
economic needs tests.  There was still the notion that the Government's decision would be based upon
a review of what the existing carriers were doing and the additional investment activities they wouldundertake.  In a dynamic location such as Hong Kong, he hoped that the decisions on this particular
issue would come out in favour of greater competition and more entrance.
113. The representative of New Zealand, noting Hong Kong, China's response that foreign banks
were totally free to acquire any local bank with branching rights, asked whether a foreign bank's
acquisition of 51% of a domestic bank would imply that it would no longer be a domestic bank and
that it could have more than one building.  He also asked whether there was an issue of naming rights
once a foreign bank acquired a domestic bank;  whether such a bank was obliged to keep the domestic
bank's name to keep more than one building it might own.
114. The representative of Hong Kong, China rep lied that Hong Kong, China was looking for
meaningful results not only in the maritime but in all services sectors that would be included in a
comprehensive round of services negotiations to be launched in 2000.  The outcome of
Hong Kong, China's review on basic telecommunications was expected to be available soon.
Hong Kong, China would definitely bear in mind effective competition in the basic
telecommunications sector in the best interest of consumers.  Hong Kong, China had no foreign
investment restrictions in the telecommunications sector and there was no economic needs test.  In the
banking sector, changing ownership did not change the status of a bank.  In recent years, at least two
foreign banks had entered the Hong Kong market by acquisition.  It was up to the foreign banksconcerned to decide whether they wanted to change the name.
115. The second discussant noted that in Hong Kong, China's written answer, the difference
between the import and retail prices of rice was explained as being the result of commercial activities
by the stakeholders.  Nevertheless, a limited number of stakeholders might have undue market power
because, given the highly efficient distribution system in Hong Kong, even if it was a reflection ofcommercial activities the price difference should not be as large as that shown in the Secretariat
Report.  He asked for Hong Kong, China's comment in this regard.
116. Hong Kong, China had said that the "one-buildin g" regulation was put in place to ensure the
soundness of the banking regime;  in order to avoid overcrowding in the retail banking sector.  He
wondered whether regulations were imposed on local banks in order to avoid overcrowding in this
sector.
117. The representative of Hong Kong, China reiterat ed that with respect to trade in rice, the
important point was Hong Kong, China's determination to continue its efforts to liberalize the rice
trade.  Rice importers in Hong Kong did not sell directly to customers, but through wholesalers to
retailers, and such transactions would involve bulk storage, distribution, re-packaging, and marketingbefore reaching the hands of consumers through retail outlets.  Therefore, the difference between the
import and retail prices of rice in Hong Kong was a reflection of commercial activities.  It was
therefore an over-simplification to conclude why mark-up existed in the rice market in Hong Kong.
In addition, importers were allowed to import more than the quota set, thus there was no restriction on
imports.WT/TPR/M/52
Page 24
118. Locally incorporated banks were not subject to the one-branch policy, but overseas banks
were free to acquire locally incorporated banks for market access purposes.  Foreign banks were not
very interested in the retail business sector.  They had been free to do business in Hong Kong throughthe avenues mentioned.WT/TPR/M/52
Page 25
VII. CONCLUDING REMARKS BY THE CHAIRPERSON
119. The third Trade Policy Review of Hong Kong, China was conducted by the TPR Body on
7 and 8 December 1998.  These remarks, prepared on my own responsibility, are intended tosummarize the main points of the discussion;  they are not intended as a full report.  Further details of
the discussion will be fully reflected in the minutes.
120. The discussion developed under three main themes:  (i) economic environment;  (ii) trade
policies and measures;  and (iii) sectoral issues.
(i) Economic environment
121. Members congratulated Hong Kong, China on both the smooth transfer of sovereignty and on
its reaction to the Asian crisis.  Notwithstandin g these two major developments, the present economic
regime could be characterized as "business as usual".  Indeed, the Hong Kong, China economy
remained among the most open of WTO Members, a feature which had contributed toHong Kong, China having one of the highest standards of living in the world.  Despite the current
economic difficulties, notably the contraction of GDP and rising unemployment, Hong Kong had
maintained its traditional openness to both trade and investment and had not taken any measures
directly affecting imports or foreign direct investment, thereby demonstrating its continuing
commitment to the primacy of the WTO, to which Hong Kong, China had contributed significantleadership.
122. Members raised a number of questions particularly with respect to the special role and status
of the Hong Kong Special Administrative Region (HKSAR) in China;  the impact of the Asian
financial crisis on Hong Kong, China's macroeconomic performance, its exchange rate system and
fiscal policy;  recent stock market intervention;  and the change in the economic and trade structure of
Hong Kong, China.
123. In reply, the representative of Hong Kong , China thanked Members for their support for
Hong Kong, China's policies and for their confirma tion that Hong Kong, China continued to conduct
"business as usual".  She added that under the Basic Law the HKSAR had a firm, guaranteed,
framework to pursue free and open economic policies on all fronts.
124. On Hong Kong, China's macroeconomic performance, she stated her conviction that the
economy's fundamentals were sound and that Hong Kong, China was well placed to react once localsentiment and external circumstances, on which Hong Kong, China was heavily dependent, improved.
The linked exchange rate system had served the economy well and its abandonment was not an
appropriate response to the existing difficulties;  the link remained essential both to
Hong Kong, China's role as a major international financial centre and to its efforts to promote
international trade, particularly given the external orientation of the economy.  In addition, with zerogovernment debt and high fiscal reserves, the Government maintained a prudent fiscal stance, which
would contribute to a rapid recovery.
125. On Members' questions about the Government's recent incursion in the stock market, the
representative assured the meeting that this did not represent a departure from Hong Kong, China's
long established policy of free trade and an open economy;  intervention had been exceptional,probably unique, intended to maintain the stability and integrity of Hong Kong, China's financial
system.  The Government did not believe that this intervention conferred any advantage on those
companies whose shares were purchased and the shareholding would be sold in an orderly manner.
On the decline of manufacturing, the representative noted that this was more apparent than real and
was, in any event, not something to try to reverse, but rather should act as a spur to ensure that the
needed skills would be available to meet the challenges posed by a changing environment.WT/TPR/M/52
Page 26
(ii) Trade policies and measures
126. Members commended Hong Kong, China on its continued trade liberalization effort and on
the transparency of its trade and investment regime, which remained one of the most attractive in theworld.  In particular, Members welcomed Hong Kong, China's accession to the WTO Agreement on
Government Procurement and its early completion of the necessary legislation implementing the
TRIPS Agreement.  Members also expressed their appreciation of Hong Kong, China's industrial
development policy, which involved "minimum intervention and maximum support".
127. Members raised a number of questions, particularly with respect to:  the prospects of further
binding Hong Kong, China's tariff lines, less than half of which were currently bound;  anti-dumping;
a bid challenge system in government procurement practices;  the maintenance of the
non-interventionist industrial policy;  the continuing problem of forged trade marks and copyright
piracy, notwithstanding strengthened legislation on intellectual property;  and the adequacy of
Hong Kong, China's competition policy.
128. In reply, the representative stated that Hong Kong, China saw no need to accelerate its
schedule to bind tariffs, particularly as it had already taken significant action in this regard, for
example, under the ITA.  Hong Kong, China had no enabling legislation on anti-dumping,
countervailing duties and safeguards because it did not believe in protecting its domestic industries
through such measures.  Hong Kong, China's accession to the Agreement on GovernmentProcurement had not changed the Government's  procurement policy, which was open and non-
discriminatory.  Hong Kong, China's support pr ogrammes were aimed at providing the necessary
infrastructure to move into areas that required innovation and skills, but not to pick special sectors.
Hong Kong, China had effectively implemented the provisions of the TRIPS Agreement and stronger
enforcement actions had been taken.  Hong Kong, China was committed to promoting competition
and economic efficiency through a comprehensive, transparent and overarching competition policy;
the introduction of a general competition law was not necessary given Hong Kong, China's small,externally-oriented, highly competitive economy.
(iii) Sectoral issues
129. Members congratulated Hong Kong, China on it's market-driven regime for production and
trade in goods and services.  In addition, they complimented Hong Kong, China on its sound
regulatory framework, which provided the right mix of guidance and flexibility.  Members alsocommended Hong Kong, China on its acceptance of the Fourth and the Fifth Protocols of the GATS,
concerning telecommunications and financial services, respectively, in which Hong Kong, China's
commitments had contributed significantly to the successful outcome of the negotiations.
130. Members raised a number of questions particularly with respect to seemingly high mark-ups
associated with the rice control scheme; and  restrictions in some service sectors, notably foreign
banking operations, telecommunications and transportation.
131. In reply, the representative stated that Hong Kong, China had taken steps to liberalize the rice
trade and was actively considering ways to further enhance competition.  Most of Hong Kong, China's
markets for services were free and open.  Hong Kong, China remained committed to greater
liberalization of the banking system, where regulation was applied only when essential.  The"one-building" rule had not caused any market access difficulties for foreign banks;  there were no
restrictions on foreign direct investment into the sector.  On telecommunications, the Government was
in the process of opening the sector well beyond its commitments under the Fourth Protocol of the
GATS.  The Basic Law clearly specified that Hong Kong, China would maintain its previous system
of shipping management and regulation.  Hong Kong, China enjoyed no special privileges in the portsof mainland China.WT/TPR/M/52
Page 27
Conclusions
132. In conclusion, it is my feeling that this Body strongly commended Hong Kong, China for
maintaining its predictable trade and investment regime following reunification with China anddespite the Asian crisis.  Notwithstanding these two major developments, the free-market principles
underlying Hong Kong's trade and investment policies together with its respect for the rule of law had
not changed.  Members also expressed their confidence that with these policies Hong Kong, China's
economy would soon resume strong and sustained econom ic growth.  In short, it is my sense that
Members felt that Hong Kong, China remained one of the most open economies in the world, and thatthey looked forward to Hong Kong, China's consolidat ion of this status by, for example, increasing its
bindings and GATS commitments.  Members also looked forward to seeing Hong Kong, China
continuing to contribute, by its example and leadership at the WTO, to the further strengthening of the
multilateral trading system.WT/TPR/M/52
Page 28
ANNEX I
RESPONSES TO QUESTIONS
AUSTRALIA
Australia is concerned at the high excise that ex ists on wine in Hong Kong.  While we welcome the
reduction in excise from 90% to 60% in early 1997, are there any plans for a further reduction in the
excise? (see Secretariat’s Report, page 37)
Overall speaking, our tax regime is one of the simplest and lowest among the economies in
the world.  Duties and taxes are major sources of Government revenue.  In determining tax rules, wehave to balance the revenue we can receive against our overall fiscal position and the impact on the
community.  We consider the various tax and duty rates in the context of our annual Budget exercise.
The duties on alcoholic beverages are a tax, not a tariff.  The same tax rate for a category of
alcoholic beverages applies to all beverages which fall under that category, irrespective of whether
they are locally manufactured or imported.  The duty rate of 60% in wine is ad valorem  and the actual
duty payable is commensurate with the value of the product concerned.  As a matter of fact, duties on
alcoholic beverages, which are charged on the value of the product, constitute only a small portion of
the price of such beverages.
Australia notes the requirement that food expected to last more than 18 months or that is deep frozen
be accompanied by an indication of its minimum durability, by indicating “best before” in bothChinese and English (Secretariat Report para. 76, page 46).  We would be interested in any comment
on the necessity to have the words “best before” in  both languages when product labelling otherwise
need only be in English.
Pre-packaged food product labels could be in English or in Chinese.  On the other hand, the
words ‘best before’ are required to be in both English and Chinese and the ‘best before’ date should
be shown in either Arabic numerals or in both English and Chinese languages.  The reason for such
requirements is that the ‘best before’ date is important for consumer protection and ensuring foodsafety.
In regard to the Rice Control Scheme, the Secretariat’s Report (para.10, page 66 – Trade Policies by
Sector) notes that in the past, retail prices exceeded import prices by a large margin, and questions
whether with a large mark-up the scheme is still ju stified.  We would be interested in Hong Kong’s
views.
Rice is an important staple diet in Hong Kong.  There is no commercial production of rice in
Hong Kong.  All rice is imported from abroad.  The purpose of implementing the Rice Control
Scheme is to ensure a steady and stable supply of rice and to provide a reserve stock to cater for any
sudden disruption to the supply.
The differences in the import and retail prices of rice in Hong Kong is not a mark up of profit.
In Hong Kong, stockholders (i.e. importers) do not se ll directly to the customers.  Like many other
commodities, importers sell through wholesalers to the retailers.  Such transactions would involve
break bulk, storage, distribution, re-packaging and marketing before reaching the hands of the
consumers through retail outlets.  The difference in the import and retail prices is therefore a
reflection of the above commercial activities.  It is therefore an over-simplification to conclude that awide margin of mark up exists in  the rice market in Hong Kong.
Members will be aware that the price of rice in Hong Kong has been very stable over the past
ten years and the increase in price is much lower than inflation and commodities prices over the sameWT/TPR/M/52
Page 29
period.  Specifically, the aggregate inflation rate between 1987 and 1997 is recorded as 126% as
compared with a 83% aggregate increase in the price of rice.
On Banking, the Secretariat’s Report (para. 35, page 74) notes that foreign-established banks
licensed in Hong Kong are subject to the condition that they conduct their banking business only in
one building, thereby effectively restricting their operation to one branch.  Are there any plans for
Hong Kong to amend the one-branch rule?
The one building condition, which was introduced in 1978 on prudential grounds, has not
caused any market access difficulty for foreign banks wishing to conduct business in Hong Kong.  Infact, the number of foreign banks has grown from 67 to 143 since 1978.  In terms of market share,
foreign banks take up 56% of the total loans for use in Hong Kong, nearly half of all deposits and
35% of loans to individuals.  Foreign banks are also totally free to acquire any local bank with
branching rights.  50% of locally incorporated banks have substantial foreign ownership.
Hong Kong remains committed to greater liberalization of the banking system.  We strongly
believe that healthy competition is essential to the development of the banking market.  Competition
amongst participants can enhance product innovation, raise the level of sophistication and improve
efficiency in the process of intermediation.  We are also aware that such developments must take
place within a relatively stable environment to enable the benefits of competition to be fully realized.
In this regard, the Hong Kong Monetary Aut hority (HKMA) has commissioned a consultancy study
on the future direction of the banking sector over the medium term.  The “one building” condition is
being reviewed along with a number of other regulato ry features in Hong Kong.  The consultant will
produce a comprehensive package of recommendations aimed at improving competition and
enhancing the safety and soundness of the overall banking system in Hong Kong by the end of this
year.
The Secretariat’s Report (para. 16 Summary Observations;  Box III.1 para 131;  and para. 2
page 63 - Trade Policies by Sector) notes that the Consumer Council has pointed to a lack ofcompetition in certain sectors including banking, legal and accounting services and
telecommunications.  The report notes that certain sectors particularly telecommunications and legal
services, have been subjected to increased competition.  We would be interested in authorities plans
for further increasing competition in areas such as the energy sector?
In brief, the Government considered that the demerits of a competition law outweighed the
merits of enacting an all-embracing competition law.  A less intrusive approach was more appropriate
for the Hong Kong economy.
Nevertheless, the Government agreed to adopt a more proactive, transparent and
comprehensive competition policy for Hong Kong.  This involved:
- Issuing a policy statement on the objectives of and guiding principles on promoting
competition;
- requiring all bureaux to give due regard to the competition angle in setting new
policies or reviewing existing policies;
- requesting all bureaux and departments to submit new initiatives  for promoting
competition;
- establishing a high-level Competition Policy Advisory Group (COMPAG), to be
chaired by the Financial Secretary, to review competition-related policy issues andWT/TPR/M/52
Page 30
examine the extent to which both the public and private sectors should seek to
introduce more competition;
- requesting the Consumer Council  to contin ue to monitor and review trade practices
in sectors prone to "unfair" trading activities;  and
- requesting the Consumer Council to assist and encourage trade associations to
establish codes of conduct for promoting competition.
The Government published the Policy Statement on 25 May 1998, which sets out the
objective of the Government's competition policy and offers some pointers to facilitate compliance
with the Policy.  All government entities, and publ ic and private-sector bodies are encouraged to
adhere to the following pro-competition principles:
- maximizing reliance on , and minimizing interference with, market mechanisms:
- Maintaining a level-playing field;  and- Minimizing uncertainty and fostering confidence in system fairness and predictability
by:
- consistent application of policies;
- Transparent and accountable operations; and
- Adherence to equitable and non-discriminatory standards and practices.
The following are some examples which reflect our sector-specific approach to enhance
competition:
Hong Kong, China has in recent years been opening the telecommunications market.  There is
however still a dominant service provider in the market.  We have therefore incorporated provisions
against anti-competitive behaviour in the licensing conditions.
We are conducting a review on both the telecommunications and television markets to see
how the markets could be further opened up to enhance competition.
We have no barriers to entry into the energy sector in Hong Kong, nor foreign ownership
restrictions.  As regard to the current position on electricity, we are currently examining the feasibility
of promoting greater interconnection (between the CLP and HEC grids) and competition in the
electricity supplies sector.  A consultancy study started in May 1998 for completion by the end of
1998.  The study report will be published for public comments in early 1999 and we will publish a
policy statement on the subject later in that year.
We prohibit through administrative means bid-rigging from tenderers in bidding government
projects, i.e. tenderers who practise  bid-rigging would be disqualified.
The Secretariat Report (para. 91 page 89) notes that there exists some preferential arrangements for
the recognition of qualifications for barristers and limited markets access restrictions.  Also,
concerning foreign legal professionals qualifying as Hong Kong solicitors (para.93 page 89), thosewho have qualifications in the United Kingdom ma y be exempt from taking all examinations when
certain criteria are met whereas those who have obtained qualifications from certain other common
law jurisdictions such as Australia may be exempt ed from taking only some of the examinations for
gaining admission as a solicitor in Hong Kong.  Are there plans to bring the treatment for all common
law lawyers into line?WT/TPR/M/52
Page 31
Paragraph 4 of the Government Report sets out the current regulatory regime for admission of
foreign lawyers or solicitors in the HKSAR.  It is true that the exemption granted to those who have
qualified in different common law jurisdictions vary.  But this is for the good reason that the lawpractised in Hong Kong is most closely related to that in the UK.  We believe the important point is
that all foreign lawyers are able to gain admission as Hong Kong solicitors by passing the qualifying
examinations, the scope of which are clearly identified and known in advance, and the access to
which is regular and not restricted.
CZECH REPUBLIC
According to the report by the Secretariat, th e Hong Kong Monetary Authority did intervene in
August 1998 in an attempt to stabilize share prices on the Hong Kong Stock Exchange by purchasing
substantial shares in several companies, includ ing nearly 9% stake in the Hong Kong and Shanghai
Banking Corporation Holdings.  Could the delegation of HKC elaborate on a possible influence of the
Hong Kong Monetary Authority on HKBC Holdings' future operations?
It is a stated policy of the Government that we have no intention to interfere with the
management and operation of the companies whose shares we have acquired.  Furthermore, in orderto address concerns on the potential conflict of interest that may arise from the government’s
ownership of these shares and the Hong Kong Monetary Authority’s role as the regulator of banks in
Hong Kong, the government has established the Exchange Fund Investment Limited with its own
board of directors.  For more details relating to  EFIL, please refer to the answers to question A.1(c)
raised by the EU.
Manufacturing industry's share in GDP declined from 22% in 1985 to 7.3% in 1996, while the share
of services rose steadily from 70% to 84.4% in the same period.  The value added of Hong Kong's
manufacturing industries fell by 15% between 1991 and 1996.  Could the delegation of Hong Kong
comment on these figures?  Does a continuing decline of manufacturing's share of GDP pose any
problem for further developmen t of the Hong Kong's economy?
The rapid decline of HK’s manufacturing industry is more apparent than real, as is mentioned
in paragraph 19 of our Report.  For statistical purposes, when the manufacturing process moves out of
Hong Kong, the remainder in Hong Kong is classified as ‘services’.  The remainder comprises such
activities as marketing, sourcing, design, product development and quality control which are usually
high value added items.  We see this as a logical consequence of our stage of development:  notsomething to try to reverse but rather a spur to ensure Hong Kong people have the skills to meet the
changing environment.
Hong Kong's real-estate market had been perceived as remarkably prosperous for all players
involved, the reason being huge demand and shortage of land.  During the past year, however,property prices and rents have declined dramatically.  To stablilize the situation, the government
decided to suspend its land sales.  Could the delegation of Hong Kong elaborate on the Government's
objectives in this area?  How is the real-estate ma rket expected to develop in future and what other
measures, if any, are envisaged to further stabilize property prices?
It has been our policy to make available adequate land to meet the economic and social needs
of the community, having regard to the prevailing market conditions and the underlying factors which
give rise to forecast demand over time.  The suspension of land sales by auction and public tender
since 22 June 1998 until 31 March 1999 was part of a package of exceptional measures introduced in
June 1998 to bring relief to our economy which was adversely affected by the unfavourable and
unstable regional economic situation.WT/TPR/M/52
Page 32
We will make a decision in early 1999 on whether to resume land sales upon the expiry of the
suspension.  We have been monitoring market deve lopments closely and in making the decision will
take into account all relevant factors such as the economic and political developments in Asia andaround the world as well as public confidence, the liquidity situation of the market, the financial and
construction capacity of developers and support from the banking sector in our local economy.
EUROPEAN UNION
Market Intervention
As a result of the real estate crisis which started to develop in late 1997, the Government restricted
the supply of land to the market.  Is this policy likely to continue in view of the present economic
circumstances?
It has been our policy to make available adequate land to meet the economic and social needs
of the community, having regard to the prevailing market conditions and the underlying factors which
give rise to forecast demand over time.  The suspension of land sales by auction and public tender
since 22 June 1998 until 31 March 1999 was part of a package of exceptional measures introduced in
June 1998 to bring relief to our economy which was adversely affected by the unfavourable and
unstable regional economic situation.
We will make a decision in early 1999 on whether to resume land sales upon the expiry of the
suspension.  We have been monitoring market deve lopments closely and in making the decision will
take into account all relevant factors such as the economic and political developments in Asia and
around the world as well as public confidence, the liquidity situation of the market, the financial andconstruction capacity of developers and support from the banking sector in our local economy.
Following turmoil on the stock and futures markets in the summer of 1998, the Government
introduced measures in both the current market and the securities and futures market (paragraph 33
of the Report by the Government).  Are these measures considered sufficient, four months after their
introduction?  Will the Government propose further regulations to increase transparency and curb
speculation?  Please explain.
The measures introduced at the end of August and early September 1998 aim to enhance the
efficiency of the currency board system and strengthen the transparency and discipline of the
securities and futures markets and thereby make our markets less susceptible to cross-market
intervention.  Some of these measures have already entered into force and have so far been effectivein stabilizing both the currency market and the securities and futures markets.  They have also been
kept under regular review by the Government and the market bodies to ensure that they achieve the
desired objectives without undue hindrance to normal market operation.  Those remain outstanding
are either under active implementation or careful consideration in conjunction with the market
regulator and bodies.  At the moment, we have no further new measures in mind, apart from thosewhich form part of our continuing efforts to improve our market systems and regular reviews on them.
More explanation is requested on the future of the economy created as result of the stock market
intervention in August 1998 (paragraph 12 of the Report by the Secretariat):  ownership, proportion
of shares, modalities of management etc.
The Hong Kong Special Administrative Region Government announced on
30 September 1998 that the Exchange Fund Investme nt Limited (EFIL) would be set up to manage
the stock acquired by the Exchange Fund in the market operations in August 1998.WT/TPR/M/52
Page 33
To address the concerns on the potential conflict of interest that may arise from the
government’s ownership of these shares and the Hong Kong Monetary Authority’s role as the
regulator of banks in Hong Kong, the company has its own board of directors.
The Directors of EFIL were appointed on 22 Oc tober 1998 and the first meeting of the Board
was held on 26 October 1998.
Ownership and the Board of Directors
The Board has a non-official Chairman and comprises distinguished members of different
sectors of the community, including members of the Legislative Council and a university professor.
The Directors are appointed by the Financial Secretary as shareholders of EFIL on a personal basis.
The Directors would disclose their personal holdings in the Hong Kong stock market and
report all future transactions as and when they occur to the company.  Directors have the specific
fiduciary duties under the Companies Ordinance.
As the portfolio remains part of the Exchange Fund, the Financial Secretary as the controller
of the Fund must remain ultimately responsible for the major investment decisions affecting the Fund.
The Company and modalities of management
The purpose of setting up the EFIL is to ensure that the substantial Hong Kong equities
portfolio acquired by the Exchange Fund is managed separately and prudently by this new company.
The EFIL acts as a fund manager of the Exchange Fund.
The EFIL is a private limited company and is su bject to the full regulation of the Securities
and Futures Commission in exactly the same way as other institutions engaging in similar businesses
in Hong Kong.  The EFIL will also be designated as a public body under the Prevention of Bribery
Ordinance, which means that the Directors and employees will have to comply with the high standardof conduct imposed on public servants by  the Prevention of Bribery Ordinance.
The EFIL is responsible for safeguarding the interests of the SARG in these shareholdings
and advising the Financial Secretary on major voting decisions which may have significant financial
and corporate governance implications.
The EFIL will receive a management fee from the Hong Kong Monetary Authority which
will cover the staff and other operating expenses incurred by the company.
Disclosure and proportion of shares
At its first meeting, the Board considered that in future the Government should disclose any
incremental changes in shareholding of 1% more of the issued shares in respect of those shareholdings
exceeding the 10% threshold.  This will place the Government in exactly the same position as any
other private sector investors in terms of disclosure  standards.  This will provide a level playing field
for all market participants and is consistent wi th the Government’s wish to be transparent and
accountable.
The stock portfolio acquired during the August market operations was disclosed on
26 October 1998.  The table below shows the shareholdings.WT/TPR/M/52
Page 34
Exchange Fund – Hong Kong Equity Portfolio
Constituent Stock No. of shares % of issued shares Average purchase price
(HK$)
HSBC Holdings PLC 237,001,800 8.80% 172,0312
Hong Kong Telecom 972,098,400 8.16% 15.2387
Hutchison Whampoa 304,550 7.86% 38.0601
China Telecom 478,806,000 4.06% 10.8820
CLP Holdings Ltd 136,022,000 5.50% 35.0154
Hang Seng Bank 109,202,700 5.71% 43.7451
Cheung Kong Holdings 237,628,500 10.34% 33.5349
Sun Hung Kai Properties 191,660,000 8.01% 25.7710
Hong Kong Electric 124,335,500 5.15% 24.0532
Henderson Land 85,349,000 4.96% 23.7743
Hong Kong China Gas 289,041,000 6.67% 9.0043
Cheung Kong Infras 96,403,000 4.28% 14.3268
Swire Pacific 'A' 115,433,000 12.28% 23.9954
Citic Pacific 146,713,000 6.09% 10.4062
Cathay Pacific Airways 119,208,000 3.52% 6.2545
New World Development 236,470,000 11.91% 8.9315
Wharf Holdings 121,679,000 5.30% 7.5859
Henderson Investments 91,308,000 3.24% 4.2285
Bank of East Asia 83,017,600 6.10% 8.4639
Amoy Properties 71,135,500 2.49% 3.8312
Shanghai Industrial HLDG 71,413,000 8.49% 10.9883
China Resource Enterprises 136,414,000 8.78% 5.6776
Hang Lung Development 33,156,000 2.50% 5.6205
Shangri-La Asia 61,674,000 3.44% 5.0266
Wheelock & Co 62,391,000 3.08% 4.1626
Sino Land Co 107,238,000 3.43% 2.5792
Television Broadcast 35,741,000 8.56% 17.6047
First Pacific 143,864,000 6.07% 2.5912
Hysan Development Co. 60,524,000 5.89% 5.2217
HK & Shanghai Hotel 57,494,000 4.97% 4.1801
Hopewell Holdings 209,323,000 4.78% 0.8251
Great Eagle 24,652,000 4.51% 6.5568
Guangdong Investment 157,472,000 6.33% 1.4038
Total investment made:  HK$118.1 billion
Budget Deficit
Due to the recent slow down in the economy, the Government introduced a package of relief measures
that is expected to aggravate the budget deficit.  Article 107 of the Basic Law provides that:
“The Hong Kong Special Administrative Region shall follow the principle of keeping
expenditure within the limits of revenues in drawing up its budget, and strive to achieve a
fiscal balance, avoid deficits and keep the budget commensurate with the growth rate of itsgross domestic product”.
It has not been specified in Article 107 what the Government can do in special or difficult economic
circumstances such as the ones that are be ing experienced now.  How does the Hong Kong
Government view this situation in the light of the provisions of Article 107?  What strategies will the
Government use to decrease the budget deficit that is expected?
As a result of the package of relief measures announced on 22 June 1998 together with a
general slowdown in government revenues as a result of our economic circumstances during 1998, it
is clear that Hong Kong will experience a budget deficit in the current financial year.  The deficit will
be financed from our very substantial fiscal reserves which stood at HK$457 billion at the end of the
previous financial year.
While it is too early to speculate on the contents of the 1999 Budget, our main objective will
be to alleviate the effect of the economic downturn on those most affected and to provide an
environment for economic recovery.  We shall strive to achieve a fiscal balance over the mediumWT/TPR/M/52
Page 35
term.  That does not necessarily mean that we wi ll be able to balance our budget in 1999-2000 but,
that said, we will strictly adhere to our prudent management of our public finances.  In particular, we
will continue to control the growth of government expenditure in line with the forecast trend growthrate of the economy and to maintain a level of fiscal reserves which are adequate for operating,
contingency and monetary purposes as spelt out by the Financial Secretary in his 1998 Budget.
Bilateral Agreements
Under paragraph 29 of the Report by the Secretar iat, the customs cooperation agreement EC-HK
should be added to the list of bilateral agreements as the first of this kind signed by the new HKSAR.
Further information is requested also on the HK agreement on textiles in relation to exemption of visa
for certain products raised in July 1998.
We have only initialled the Customs Cooperations Agreement with the EC.  The necessary
follow up, including ratification by the EC, is still underway.  There is no bilateral agreement signed
between Hong Kong, China and the U.S. on the elimination of visa requirements for productsintegrated under stage two of ATC.  The U.S. undertook unilaterally to lift this requirement and apply
on a MFN basis after India, Pakistan and Hong Kong , China made a joint request for review of the
U.S.’ visa requirement for integrated products in the TMB.
Rules of Origin
Paragraph 66 of the Report by the Government states that “all registered manufacturers verified to
have the manufacturing capability to perform the origin-conferring process of their registered
products may apply for certificates of origin”.  Further to this verification, do the issuingorganizations further check or verify that the products covered by a specific certificate of origin do
qualify, because of their manufacturing pr ocess, as being of Hong Kong origin?
There is no compulsory requirement for exporters to take out Certificates of Origin to cover
their exports from Hong Kong.  If they choose to take out a Certificate of Origin, their applicationsare subject to checks by the Hong Kong Customs.  Such checks are conducted on a selective or
random basis.  The purpose of such checks is to ensure that the consignment has undergone the origin
conferring processes in Hong Kong and qualified for the issue of a Certificate of Origin.
In addition to the above checks, Hong Kong, China will also conduct checks on Certificates
of Origin in response to requests from importing countries.  Results of such checks will be conveyed
to the relevant overseas authorities upon the completion of checks.
We would like to receive information on the U .S. customs directive listing 127 HK and 14 Macao
companies convicted by domestic courts in relation to  false claims of origin in respect of textiles
products destined for export to the U.S. (Comme rcial information Circular 142/98) from Trade
Department of the HKSAR.
The information is contained in Trade Departme nt’s Commercial Information Circular (CIC)
142/98 and CIC 147/98.  We would be happy to provide a copy of the circular if required.
IPR
Hong Kong, China indicates that the present system for the protection of copyright is in conformity
with the TRIPS Agreement (paragraph 125 of the Repor t by the Government).  This specific statement
is not made for other sections of the TRIP S Agreement, although under paragraphs 124 and 137,
reference is made to the fact that the present IPR system is TRIPS compatible.  CanWT/TPR/M/52
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Hong Kong, China confirm that the present legislat ion in all areas of intellectual property rights,
including enforcement, not only complies, but impl ements all requirements of the TRIPS Agreement?
In 1996, Hong Kong, China passed a package of interim amending legislation aimed ensuring
that our intellectual property legislation would be able to implement all of the provisions of the TRIPS
agreement as early as possible.  In 1994, we had already passed legislation for the protection of the
lay-outs of integrated circuits (TRIPS Ar t. 35-38).  In 1996 we also enacted new sui-generis
legislation to protect plant varieties (TRIPS Art. 27 (3) (b)).  In the summer of 1997, we subsumedthese amendments in new copyright, patent and registered designs legislation which maintained our
compliance with TRIPS while greatly increasing the transparency of our laws and the effectiveness of
enforcement provisions contained in them.  Similar improvements will be evident in the draft Trade
Marks Bill which will be introduced into our Legislative Assembly early next year.
We are happy to make it clear that Hong Kong, China’s entire body of intellectual property
statutes, supplemented by the body of common law on intellectual property, effectively implement the
provisions of the TRIPS Agreement.
Specific reference is made to a number of specific IPR areas:  copyright, patents, designs, trademarks
and geographical indications and to other intellectual property rights? (layout designs of integrated
circuits and new plant varieties).  Does Hong Kong, China provide for legislation in the remaining
areas covered by the TRIPS Agreement, such as protection of undisclosed information and control of
anti-competitive practices in contractual licences in line with the provisions of the TRIPS Agreement?
Hong Kong, China’s implementation of the provisions of the TRIPS Agreement does not rely
entirely on statute law.  There are areas of the  common law dealing with undisclosed informationsufficient to implement Hong Kong, China’s future obligations as from the year 2000.
Hong Kong, China has not chosen to enact any specif ic statutory provisions in respect of situations
referred to in Article 40 of the TRIPS Agreement.
Enforcement of legislation plays a crucial role in the area of intellectual property rights.  Major
efforts have been undertaken by Hong Kong, China in the year 1997 and the first half of the year
1998.  How does Hong Kong, China explain the massive increase in the manufacturing, importation
and subsequent seizure of infringing goods and equipment used for their production?  Can Hong
Kong provide further details of the origin of the infringing goods and of the equipment used for their
production?  What happens to products and equipment used for their production once they have beenconfiscated?  Have further enforcement action been taken after summer 1998?
Hong Kong, China introduced new enforcement provisions in its Copyright Ordinance in
June 1997 which gave the Customs and Excise Department sweeping new powers to seize suspected
pirated goods.  We followed that with a new Prevention of Copyright Piracy Ordinance this year,which enables the enforcement authorities to enter optical disk factories without a warrant and seize
suspected infringing CDs as well as the equipment they were produced on.  These two measures have
greatly enhanced our law enforcement powers, resulting in the seizure of enormous quantities of
infringing articles.
As previously mentioned, the impressive enforcement statistics in Annex 6 of the
HKSAR Report as well as the Table III. 10 of the Secretariat Report reflect stronger enforcement
action and more effective legal tools rather than a massive increase in the scope of the problems
confronting us.  Before this year, Hong Kong, China had no law which provided powers to obtain
information on equipment for manufacturing optical disks, registering its whereabouts, and licensing
the manufacture of optical disks.WT/TPR/M/52
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We introduced new laws in the face of increasing attempts to manufacture pirated disks on
Hong Kong, partly caused by more effective enforcement in the Chinese Mainland, and partly due to
an explosion in regional demand for optical disk products both legitimate and infringing.
Seized suspected pirated or counterfeit goods are normally retained as evidence for court
proceedings.  Once the courts have handed down convictions, counterfeit goods are destroyed and
equipment implicated in their manufacture is di sposed of in a manner outside the channels of
commerce and in such a way as to minimize the risk of further infringements.  Intelligence we haveobtained indicates that underground optical disk factories have moved out of Hong Kong since the
commencement of the Prevention of Copyright Piracy Ordinance.
Hong Kong, China is only member to a limited number of international conventions in the area of
intellectual property rights.  Does Hong Kong, China intend to accede to other internationalconventions in this area?
Apart from Hong Kong, China’s membership of  the WTO in our own right, the following
intellectual property conventions have been applied to Hong Kong, China by the People’s Republic of
China:
- the Paris Convention for the Protection of Industrial Property;
- the Berne Convention for the Protection of Literary and Artistic Works;
- the Universal Copyright Convention;
- the Geneva Convention for the Protection of Producers of Phonograms against
unauthorized duplication of their phonograms;
- the Patent Cooperation Treaty;  and
- the Convention Establishing the World Intellectual Property Organization.
Hong Kong, China is ready to increase our participation in multilateral agreements
concerning intellectual property.  Where such agreements are restricted to sovereign states, the
People’s Republic of China will assist Hong Kong , China to participate in accordance with the
provisions of the Basic Law.
Members may wish to note that despite the fact that the WIPO Copyright and Performer’s
Rights Treaties of Geneva 1996 are not applied to Hong Kong, our laws have in fact effectively
implemented their provisions and were one of the first to do so.
Anti-Dumping, Safeguard and Countervailing Measures
The Report by Hong Kong, China’s Government states on page 29, Chapter VIII, A, that this country
does not take any safeguard, anti-dumping and countervailing measures and that, accordingly it does
not have such legislation.  Could the Hong Kong, China authorities confirm that no safeguard,anti-dumping and countervailing measures can be adopted under the present legal system unless they
are introduced further to a legislation providing for all the substantive and procedural requirements
mentioned in the relevant WTO Agreements?
As mentioned in our Report, Hong Kong, China does not take any safeguard, anti-dumping
and countervailing measures and has no such legislation.  In the hypothetical case that we intend to
take such measures, we envisage the need to enac t specific implementing legislation in these areas.
We however reiterate that we have no intention to do so.
INDIA
Paragraph 26 of the Secretariat's Report advises us that in February 1996 HKC had requested
consultations with Turkey, stating that Turkey's quantitative restrictions on imports of textiles andWT/TPR/M/52
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clothing products violated Turkey's obligations unde r GATT Article XI and XIII.  However, there is no
information on the outcome of these consultations, in particular, whether a mutually agreed solution
to the dispute was reached and whether such a solution was notified.  We believe that instances suchas these serve to undermine the efficacy of the DSU and the multilateral trading system and would
accordingly urge HKC to appropriately rectify the situation.
In 1996, HK initiated consultations with Turkey on the quantitative restrictions imposed by
the latter on imports of textiles and clothing products.  Subsequently, we decided to pursue the matteras a systemic issue in the then newly established Committee on Regional Trade Agreements (CRTA).
Given our systemic interest in the matter, we have joined as a third party in the recent panel case
initiated by India against Turkey.
JAPAN
Tariffs
More than 60% of all tariff lines of Hong Kong, China remain unbound although the rest are bound
at 0%.  In its 1996 APEC Individual Action Plan (IAP), Hong Kong committed itself to binding allremaining tariffs at zero with effect from January 2010.  It is highly appreciated that
Hong Kong, China is voluntarily binding at zero in  addition to the 0% applied tariff rates on all the
products.  As the first stage of binding all products at zero, Hong Kong, China is binding a further
20% of its imports with effect from January 2000.
(a) Please explain tariff of which products are to be bound at zero.
(b) When will Hong Kong, China submit its draft schedule, including the above
mentioned modification, for verification by Members?
In our 1996 IAP, we committed to bind tariffs at zero on an additional 20% of our imports
from January 2000.  We have accelerated implementation of part of this commitment by bindingtariffs on all the products covered by the Information Technology Agreement (ITA) at zero at one go
on 1 July 1997.  These products accounted for 7.7% of our total imports in 1996 value terms.
In our 1998 IAP submitted to the APEC Ministerial Meeting last month, we committed to
bind at zero tariffs on the remaining 12.3% of our imports with effect from January 2000.  This willinclude binding at zero tariffs on the products to be covered by ITA II, after the current negotiations
on the expansion of the coverage of the ITA are concluded.  Other products to be bound will be drawn
from the indicative list (at HS 2-digit level) as below.WT/TPR/M/52
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Products to be bound in 2000 will be drawn from the following HS Chapters:
HS Chapter Product Description
34 Soap, lubricating preparations etc.
36 Explosives and matches etc
38 Miscellaneous chemical products
39 Plastics and articles thereof
40 Rubber and articles thereof
46 Manufacturers of straw, basketware etc
65 Headgear and parts thereof
66 Umbrella and parts thereof
67 Prepared feather and down etc
73 Articles of iron or steel
74 Copper and articles thereof
78 Lead and articles thereof
80 Tin and articles thereof
82 Tools, cutlery etc and parts
83 Miscellaneous articles of base metal
84 Mechanical appliances and parts
85 Electrical machinery, equipment & parts
90 Optical, photographic instruments and parts thereof
92 Musical instruments and parts thereof
94 Furniture, mattresses and others
95 Toys, games and sports requisites
96 Miscellaneous manufactured articles
We have announced our intention to bind at zero on the remaining 12.3% of tariff bindings
from January 2000.  As soon as a decision is taken on the products the tariff on which will be bound,
we shall prepare and submit to the WTO our draft supplementary schedule(s) for verification by otherMembers.
Government procurement
Hong Kong acceded to the GPA on 20 May 1997, and th e GPA entered into force for Hong Kong on
19 June 1997.  Hong Kong was given a one-year deferred application of Article XX of the GPA to
allow time for the setting up of a Bid Challenge System.  Although the Government Report states that
a bid challenge system has been set up to enable suppliers/contractors to challenge alleged breaches
of the WTO GPA, it has not notified to the GP Committee.
- Has a bid challenge system already been established?  If so, please explain the
outline of the system and when it was established.
- Why has the establishment not been notified to the GP Committee?  When is the
notification expected to be done?
We are in the final stages of establishing a bid challenge system to enable
suppliers/contractors to challenge alleged breaches of the WTO GPA.  During the course of preparing
the report for the Trade Policy Review, we have anticipated that the bid challenge system would beWT/TPR/M/52
Page 40
able to be established by November 1998.  However, we have experienced some slight delay, but all
formalities should be completed by the end of this year.  We will notify our national implementing
legislation to the Committee on Government Procurement in due course, which would contain detailsof our bid challenge system.
Competition policy
It is reported that the Government has adopted what might be characterized as a light-handed
approach to competition and regulation, eschewing an all-embracing comprehensive competition law.
What actions does the Government take against collusive or restrictive anti-competitive practices
such as price cartel or bid-rigging?  (para 6, page 24, para 12, page 60 of the Secretariat Report)
It is reported that the Government holds the view that voluntary compliance with guidelines or codes
of practice is a more appropriate approach for a small, highly open and competitive economy like the
HKSAR.  Is the voluntary compliance secured so far?  (para 131, page 60 of the Secretariat Report)
It is reported that the Government envisages taking action “only when market imperfections or
distortions limit market accessibility or market contestability, and impair economic efficiency or free
trade, to the detriment of the overall interest of Hong Kong".  Please explain how the Government
decides whether the market is imperfect or dist orted.  Please also explain what actions the
Government takes if such decision is made.  (para 131 of the Secretariat Report)
According to the Secretariat Report, a comprehensive report on competition policy, published by the
Consumer Council in November 1996, finds that not all markets in service sectors are automatically
highly competitive under a laissez-faire regime and that some services, including legal andaccounting services, medical and dental services, public utilities, local radio and television
broadcasting, retail banking services, restaurants and supermarkets, are mainly provided
domestically and insulated from international comp etition.  Has the Government taken any action to
follow up this report?  If so, please describe the actions taken. (para 131 & Box III.1 of the
Secretariat Report)
HKSAR seems to have recently made an internal  decision not to introduce any legislation on
competition.  Is this correct?  If so, please explain the reason for the decision.
The Government works together with the Cons umer Council to monitor and review business
practices in both the public and private sectors.  A competition Policy Advisory Group (COMPAG),
chaired by the Financial Secretary, has been set up in December 1997 to review policy issues related
to competition.  The COMPAG Secretariat keeps track of  all referrals and brings them to the attention
of COMPAG should there be substantial policy or systemic implications.  Alleged restrictive practices
in the public and private sectors are referred to the policy bureau concerned for consideration.  If arestrictive business practice limits market accessibility or contestability and impairs economic
efficiency or free trade to the detriment of the overall interest of Hong Kong, our Government will
take administrative or legal steps as appropriate to remove such a practice.  We adopt a case-by-case
approach and each case is considered on its own merits.
Experience in Hong Kong, China suggests that self-regulatory regimes do work in that they
command respect among members and can bind them to adopting standards to meet social
expectations.  Such schemes already exist for outbound travel agents and a few professions.  For an
open, transparent and small economy like Hong Kong, China, public pressure often plays a useful
counterbalancing role.WT/TPR/M/52
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In brief, the Government considered that the demerits of a competition law outweighed the
merits of enacting an all-embracing competition law.  A less intrusive approach was more appropriate
for the Hong Kong economy.
Nevertheless, the Government agreed to adopt a more proactive, transparent and
comprehensive competition policy for Hong Kong.  This involved:
- issuing a policy statement on the objectives of and guiding principles on promoting
competition;
- requiring all bureaux to give due regard to the competition angle in setting new
policies or reviewing existing policies;
- requesting all bureaux and departments to submit new initiatives for promoting
competition;
- establishing a high-level Competition Policy Advisory Group (COMPAG), to be
chaired by the Financial Secretary, to review competition-related policy issues andexamine the extent to which both the public and private sectors should seek to
introduce more competition;
- requesting the Consumer Council to continue  to monitor and review trade practices in
sectors prone to "unfair" trading activities;  and
- requesting the Consumer Council to assist and encourage trade associations to
establish codes of conduct for promoting competition.
The Government published the Policy Statement on 25 May 1998, which sets out the
objective of the Government's competition policy and offers some pointers to facilitate compliance
with the Policy.  All government entities, and publ ic and private-sector bodies are encouraged to
adhere to the following pro-competition principles:
- maximizing reliance on, and minimizing interference with, market mechanism;
- maintaining a level-playing field;  and
- minimizing uncertainty and fostering confidence in system fairness and predictability
by:
- consistent application of policies;
- transparent and accountable operations;  and
- adherence to equitable and non-discriminatory standards and practices.
The following are some examples which reflect our sector-specific approach to enhance
competition:
- Hong Kong, China has in recent years been opening the telecommunications market.
There is however still a dominant service provider in the market.  We have thereforeincorporated provisions against anti-competitive behaviour in the licensing
conditions;
- we are conducting a review on both the telecommunications and television markets to
see how the markets could be further opened up to enhance competition;
- we have no barriers to entry into the energy sector in Hong Kong, nor foreign
ownership restrictions.  As regard to the current position on electricity, we areWT/TPR/M/52
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currently examining the feasibility of prom oting greater interconnection (between the
CLP and HEC grids) and competition in the electricity supplies sector.  A
consultancy study started in May 1998 for completion by the end of 1998.  The studyreport will be published for public comments in early 1999 and we will publish a
policy statement on the subject later in that year;
- we prohibit through administrative means bid-rigging from tenderers in bidding
government projects, i.e. tenderers who pr actise bid-rigging would be disqualified.
Hong Kong, China is committed to promoting competition and economic efficiency.  Under
this framework, we envisage a variety of options, such as developing a pro-competition culture,
adopting pro-competition codes of practices, dealing with anti-competitive practices on sectoral basis
through legislation or the regulatory bodies of the sectors concerned, if applicable, persuasion,supporting the work of our Consumer Council etc.
Investment
It is reported that all businesses in the HKSAR must obtain a Business Registration Certificate from
the Inland Revenue department within one mont h of the commencement of business and that the
certificate must be renewed annually.  (para 104, page 52 of the Secretariat Report)
Please explain the criteria to obtain the certificate.  Why the certificate must be renewed
annually?
Under the Business Registration Ordinance (BRO), every person carrying on a business in
Hong Kong, with only a few exceptions, is required to register his business with the Business
Registration Office and to renew the business registration certificate when it expires.  Except for those
exempted under the BRO, any person who registers under the BRO has to pay a business registration
fee and levy for the Protection of Wages on Insolvency fund for the first registration and the
subsequent renewal of the certificate.
The Certificate has to be renewed annually since information concerning the registration
needs to be updated for verification purpose and to facilitate profits tax collection.  It also ensures that
the businesses registered are likely to still be in business.
IPR
According to the Secretariat Report and the Government Report, two types of patent are granted in
Hong Kong, China.  The grant of a "standard patent" is based on the registration of a patent granted
by one of the designated patent offices:  the Chinese Patent Office, the United Kingdom Patent Officeand the European patent Office.  For " short-term patent", applicants have to file application with a
search report from a prescribed searching authority.
Does this mean that "standard patent" is granted only after it is registered in one of the designated
patent office and that "short-term patent" is not granted unless a search report from a prescribedsearching authority is attached?
The simple answer to both questions is “yes”.  Standard patent applications are handled under
the two-stage procedure described in paragraph 114 of the Secretariat Report.  Short-term patents are
granted in Hong Kong, China on the basis of a form ality examination only.  Each application must be
supported by an international search report issued by one of the searching authorities prescribed under
the Patent Cooperation Treaty (presently those noted in Note 84 of the Secretariat Report).  Up to aWT/TPR/M/52
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year is allowed after filing of a short-term patent application for the applicant to supply the
international search report.
Financial Services
Regarding services auxiliary to insurance, please explain why Hong Kong, China did not bind
cross-border supply of claims settlement services.  (para 27, page 72 of the Secretariat Report)
Please explain why foreign banks are not allowed to establish a new locally incorporated subsidiary
with a full banking.
Not allowing to establish a new locally incorporated subsidiary seems to have no rational so long as
foreign banks are currently allowed to enter the domestic market by setting up a branch office.(para 35, p. 74 of the Secretariat Report)
It is reported that foreign-established banks license d in Hong Kong in the form of a branch after 1978
are subject to the condition that they conduct their banking business in only one building, thereby
effectively restricting their operation to one branch.  Such restriction limits the activities of foreignbanks in providing banking services in Hong Kong, China.  Does Hong Kong, China have any
intention to abolish or to review this restriction?
In respect of cross-border supply of “services auxiliary to insurance”, Hong Kong, China has
made the following market access commitment “none other than claims settlement services, except
for settlement of claims under contracts of goods in transit insurance entered into wholly
outside HKSAR in respect of goods consigned to HKSAR”.  The reason why we have not bound
cross-border supply of claims settlement services is that prior authorization by the regulating authority
is required for prudential control and consumer protection reasons.  In other words, claims settlementrequires commercial presence in the HKSAR.  Noneth eless, it should be noted that we have made full
commitment under Mode 3 (ie “none”) which imposes no restrictions on market entry so long as the
authorization criteria are fulfilled.
In the case of an institution incorporated in Hong Kong which is seeking a full banking
licence, it must in the opinion of the Monetary Authority be “closely associated and identified with
Hong Kong” and has operated as a restricted licence bank or deposit-taking company or at least a
period of ten consecutive years in Hong Kong.  Therefore the issue is not that foreign banks are notallowed to establish a local subsidiary with a full bank licence.  Rather, it would be difficult to fulfil
the criterion in practice.
There has not been a significant need or desire on the part of foreign banks to enter the
Hong Kong market by establishing a local subsidiary.  This is due to the fact that they can eitheracquire a local bank with full branching right or enter the market in branch form and still have access
to the domestic market without having to meet re quirements of local incorporation such as minimum
capital and capital adequacy requirements.
Recently, we have employed an independent consultancy firm to advise on a number of
regulatory features including the form of entry by foreign banks.  We are awaiting the final report of
the consultant and will consider the consultant’s recommendations in this respect.
Please refer to the answer to question 1 raised by New Zealand.WT/TPR/M/52
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Professional Services
Construction and Engineering Related Services
According to paragraph 107 of the Government Report, qualifications for registration as architects,
engineers, landscape architects, planners and surveyors include possession of an ordinary residence
in the HKSAR and attainment of one year’s relevant professional experience in the HKSAR.
- Does the “possession of an ordinary residence” means that a person who wants a
register should be a resident of the HKSAR, or that he or she just has to file an
address in the HKSAR?  If the former , does Hong Kong, China have intention to
deregulate this requirement?
- Does the “one year’s relevant professional experience” includes period conducting
business without registration?
According to paragraph 108 of the Government Report, architects, engineers and surveyors have to
be registered as Authorized Persons (AP) before they may perform their duties under the BuildingsOrdinance, and in addition, engineers have to be regist ered as Registered Structural Engineers (RSE)
before they may perform their duties under the Buildings Ordinance.  Please explain the criteria for
registrations as AP and as RSE.
According to paragraph 110 of the Government Report, for services in the public sector, anyone who
has an interest in offering professional services may apply for inclusion in the Approved List or
Directory, and qualification for admission to the List usually relates to the strength of theprofessional staff and relevant experience.  Please explain the concrete criter ia for admission to the
List.
The residency requirement is intended to convey that the person must be usually resident in
Hong Kong.  The rationale is that we believe a person who is not residing in the territory is less likelyto be familiar with the local conditions/statutory requirements and hence not capable of providing
satisfactory services.
Professional experience in relevant discipline in a responsible position while not being
registered may be counted towards the “one year’s relevant professional experience”.
Under the Buildings Ordinance, we have the following criteria for registration as Authorized
Persons (AP) and Registered Structural Engineers (RSE).
First, applicants for registration as AP must be registered with the Registered Architects
Board, the Registered Engineers Board (in the civil or structural discipline) or the Registered
Surveyors Board.  For registrations RSE, applicants should be registered with the Registered
Engineers Board (in the civil rostructural discipline ).  The applicants should also for a continuous
period of one year (within the three years preceding the date of his application) have had practical
experience gained in Hong Kong.
Applications should then be made in specif ied forms and applicants would be required to
attend an interview conducted by the Authorized Persons Registration Committee or the Structural
Engineers Registration Committee, as the case may be.  The main aspects of assessment on the
applicants include the objectives of the Buildings Ordinance and Regulations and functions of an
AP/RSE, the practical experience to meet local requirements and to discharge the duties as an
AP/RSE, and the working knowledge of the Building Ordinance and related legislation relevant to an
AP/RSE.WT/TPR/M/52
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Upon satisfactorily passing the interview and payment of the prescribed fees for registration,
the applicant may become an AP or RSE, as the case may be.
The criteria for inclusion into the consultants and contractors lists are listed out in
Attachment 1.
Medical services
According to paragraph 111 of the Government Report, most health care professionals are required
to register with the relevant statutory Board or Council before they can practise in the HKSAR.
Paragraph 112 states that requirements and standards laid down by the relevant statutory regulatory
authorities are formulated in the interest of public health and safety and based on objective criteria,
such as the level of professional qualification obtained.  Please explain the concrete criteria for theregistration.
Please see Attachment 2.
Legal Services
The Government Report states that the Government of HKSAR is discussing with the Hong Kong Bar
Association on the necessary steps to be ta ken to enable lawyers from non-commonwealth
jurisdictions who possess the necessary qualifications and training to gain admission in the HKSAR
to practice as a barrister.
Please outline the changes envisaged for the criteria for a admission as a barrister.
- When are the amendments expected to be made?- An examination to be taken by foreign lawyers who wish to practice as barristers is
stated to be one option for such amendments.  Please explain the qualifications totake the examination and subjects of the examination.
The changes envisaged would be to allow foreign lawyers (Commonwealth and
non-Commonwealth countries) to gain admission as a ba rrister in Hong Kong on the same basis.  The
proposed detailed amendments (including the qualification requirement and examination subjects) arestill under consideration.
Telecommunications
It is reported that interconnection with dominant carrier is, in principle, left to commercial
negotiations but that, if the negotiation is found to be in difficulties or if public interest consideration
is necessary the Telecommunications Authority can intervene by determining the terms and conditions
of the interconnection agreement as provided in the Telecommunications Ordinance.  (para 62, p. 82
of the Secretariat Report)
- Please explain in which case the Authority decides that the negotiation is found to be
in difficulties or that public interest consideration is necessary.
- Please explain how the Authority de termines the terms and conditions.
Under the Telecommunication Ordinance, the Telecommunications Authority (TA) has the
statutory power to determine the terms and conditions of the interconnection agreement.  But it hasbeen a policy in Hong Kong, China to allow commercial negotiations to take place as far as possible.WT/TPR/M/52
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It is only when the concerned parties could not agree on the agreement and one party raised the matter
to the TA for arbitration that he would exercise his statutory authority.  The TA may also exercise his
power if an agreement entered into is considered to  be against public interest, for example, where the
agreement provided for discriminatory treatment against other operators or consumers.
In determining the terms and conditions of the interconnection, he would bear in mind the
costs involved in providing such service to the concerned parties, and allowed for a reasonable
element of profit.  Depending on the types of interconnection concerned, he may adopt methodologiessuch as the Long Run Average Incremental Cost (LRAIC) of Fully Distributed Cost (FDC)
methodologies.
Maritime Transport
Japan understands that maritime transport between HKSAR and China (i.e. Shanghai) continues to be
classified as international transport in Schedule  of Hong Kong, China, in which it has committed no
limitations on mode one to three and is not re-classified as cabotage transport services even after the
establishment of HKSAR.  Is this understanding correct?
In the Schedule of Specific Commitments of Hong  Kong, China, limitations on national treatment for
Maritime Transport Services is unbound for mode 1.  Please explain all the regulations which limit
national treatment of cross-border supply in maritime transport services.
Article 124 of the Basic Law of the Hong K ong Special Administrative Region (HKSAR) of
the People’s Republic of China provides that :
“The Hong Kong Special Administrative Region shall maintain Hong Kong’s previous
systems of shipping management and shipping regulation, including the system for regulating
conditions of seamen.
The Government of the Hong Kong Special Ad ministrative Region shall, on its own, define
its specific functions and responsibilities in respect of shipping.”
HKAR’s shipping relationship with the Mainland of China is governed by this principle,
namely Hong Kong registered vessels may call freely ports in the Mainland which are open to foreign
vessels, and Hong Kong registered vessels may not take part in internal water transport in theMainland of China (ie. cabotage).  The same arrang ement as that before the transfer of sovereignty in
1997.
As stated in para. 103 of our Government Report, on marine and port facilities, there are no
restrictions or regulatory measures as such on market access because Hong Kong is a free port.Virtually all our cargo handling facilities have been built and operated by the private sector.
The question of whether or not to bind any sector or sub-sector is a matter of negotiation.
This part of Maritime Services sector is no different.WT/TPR/M/52
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NEW ZEALAND
Trade Policies by Sector:  ServicesBanking
The Government Report notes that Hong Kong, China maintains a “one building condition”
(partially modified in 1994) on foreign banks “on prudential ground to avoid excessive overcrowding
in the retail banking sector”.
Has Hong Kong, China considered alternative policy options to meet these prudential concerns?
The one building condition, which was introduced in 1978 on prudential ground, has not
caused any market access difficulty for foreign banks wishing to conduct business in Hong Kong.  In
fact, the number of foreign banks has grown from 67 to 143 since 1978.  In terms of market share,
foreign banks take up 56% of the total loans for use in Hong Kong, nearly half of all deposits and
35% of loans to individuals.  Foreign banks are also totally free to acquire any local bank with
branching rights.  50% of locally incorporated banks have substantial foreign ownership.
Hong Kong remains committed to greater liberalization of the banking system.  We are of the
view that healthy competition is essential to the development of the banking market.  Competition
amongst participants can enhance product innovation, raise the level of sophistication and improve
efficiency in the process of intermediation.  We are also aware that such developments must take
place within a relatively stable environment to enable the benefits of competition to be fully realized.
In this regard, the HKMA has commissioned a consultancy study on the future direction of thebanking sector over the medium term which covers the “one building” condition along with a number
of other regulatory features in Hong Kong and will result in a comprehensive package of
recommendations aimed at improving competition and enhancing the safety and soundness of the
overall banking system in Hong Kong.
Telecommunications
We note Hong Kong, China’s intention to review the number of fixed telecommunications network
services licences by the end of 1998.
Is Hong Kong, China able to provide advice on whether more licence applications are to be invited?
The commitment of Hong Kong, China is to re view in 1998 whether more licences for local
fixed network services would be issued.  We are conducting this review in 1998 and a decision should
be made by the end of 1998 or early 1999.
NORWAY
It is stated in the Report by the Government that the licensing of frozen meat and poultry is under
review, in order to establish whether the present control of these products as reserved commoditiesshould be continued.  Could Hong Kong, China Delegation provide some further details with respect
to the ongoing review, including when it is expected to be finalized?
The Government has reviewed the present control over import and export of frozen meat and
frozen poultry.  The review concluded that frozen meat and frozen poultry should no longer be taken
as reserved commodities.  As such, the Governme nt will remove them from the control of the
Reserved Commodities Ordinance by the year 2000.  In so doing, importers of these products will notWT/TPR/M/52
Page 48
need to keep a reserve stock nor register as stockholder.  Nevertheless, these products will still be
subject to licensing control for public health reason.
In the Report by the WTO Secretariat, maritime transport is said to be crucial for
Hong Kong, China’s international trade.  Is maritime transport between China and Hong Kong
considered to be domestic or international?  In the same context, what would be the case with respect
to maritime transport between Hong Kong and Taiwan?
Would foreign vessels be in the position to carry passengers, with no restrictions, between Hong Kong
and China and/or between Hong Kong and Taiwan?
How would the issues raised in questions two and four above relate to Hong Kong, China’s
commitments on maritime transport under the GATS?
We would like to know whether HKC vessels ma y carry passengers and goods between Chinese ports
without any restrictions.
Has HKC's new status resulted in any modifications in the way those vessels are treated in Chinese
ports, or are they subject to the same treatment as vessels from other countries, in accordance with
respect to taxes, levies, etc?
Article 124 of the Basic Law provides that:The Hong Kong Special Administrative Region sh all maintain Hong Kong’s previous systems
of shipping management and shipping regulation, including the system for regulatingconditions of seamen.
The Government of the Hong Kong Special Ad ministrative Region shall, on its own, define
its specific functions and responsibilities in respect of shipping”.
HKSAR’s shipping relationship with the Mainland is governed by the principle, that Hong
Kong registered vessels may freely call at ports in the Mainland which are open to foreign vessels,
and Hong Kong registered vessels may not take part in internal water transport in the Mainland
(i.e. cabotage).  This is the same arrangement as operated before the transfer of sovereignty in 1997.
Similarly, under the same principle, Hong Kong registered vessels are free to call Taiwanese
ports, and carry goods and passengers without restriction, before and after the transfer of sovereignty
in 1997.
Under this Article, shipping services to the Mainland operate in conformity with all shipping
conventions that govern overseas voyages.
The issues raised in the two questions above do not have any implication for
Hong Kong, China’s commitments on maritime transport under the GATS.
With reference to page 26, para. 8 of the Secretariat's Report, we would like to know whether HKC
has any plans for an increase in her level of bound tariffs.  If not, what are the reasons preventing
HKC from doing so?
We consider that the timetable for binding tariffs in our IAP is appropriate having regard to
the time frame for achieving the Bogor goal (industrialized and developing economies to achieve the
Bogor goal of free and open trade and investment by the years of 2010 and 2020 respectively).  InWT/TPR/M/52
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fact, Hong Kong, China is one of the two economies which have a clearly stated timetable for binding
ALL tariffs.  We look forward to others doing the same.
With reference to footnote 25 on page 32 in the Secretariat Report regarding the ATC, we would like
to obtain some information with respect to the effects, if any, of the liberalization carried out by
Norway on HKC's exports and production of products covered by the relevant categories.
We welcome the decision taken by Norway in advancing the phasing-out quantitative
restrictions on textiles and clothing products under the ATC.  It provides an excellent example for
others.  We look forward to similar efforts from other textiles importing members.
We would appreciate some more information on the control regime on the import and export of
textiles and clothing mentioned in paras. 51-53 in the Government Report.
To implement the ATC the Trade Department operates a quota system governing the
allocation and use of textiles quota to ensure that Hong Kong does not export in excess of the restraint
limits under the ATC, and a licensing system whereby all textiles exports from Hong Kong and
imports into Hong Kong are required by law to be covered by valid licences or notifications whereappropriate.  The details of the two systems are set out in Attachment 3.
According to para. 149 in the Government Report, HKC is not taking any safeguard, anti-dumping or
countervailing measures.  Could the HKC delegation elaborate on the philosophy behind this, the way
demands from national industries as regards action taken in these fields are being handled, and how
HKC is dealing with the provisions on AD actions on behalf of a third country in accordance with
Art. 14 in the Agreement on AD?
Hong Kong is known on our position on the rules areas including anti-dumping,
countervailing duties and safeguards.  We note that there is no multilateral obligation for any Member
to introduce corresponding domestic legislation or to take such remedies.  As stated in the
Government Report, we do not have any enabling legislation on those trade measures because we donot believe in protecting our domestic industries through these measures.
Similarly, Article 14 of the Anti-Dumping Agreement provides the right, not obligation, to a
WTO member to take AD action on behalf of a third country.  The first sentence of Article 14.4 of the
Agreement makes this clear.  It says, ‘the decision whether or not to proceed with a case shall restwith the importing country’.  As explained above, we also have not put in place the mechanism
necessary for anti-dumping action on behalf of third country.
We would like to know whether the existing import system for rice is considered to create a basis for
establishing "special rights" for importers that are in the position to maintain a reserve stock of rice.If this is the case, what are the considerations regarding such "special rights in relation to the WTO
provisions on State Trading Enterprises?
HKC does not maintain any State Trading Enterprises.  We do not think that the Rice Control
Scheme has created a basis for establishing special rights for importers who are in a position to keep areserve stock.  Under the Rice Control Scheme, importers who have registered with the Trade
Department are obliged to maintain a reserve stock sufficient for 45 days consumption of the
populace.  The maintenance of a reserve stock is not a quid pro as stated in paragraph 8, page 66 of
the Secretariat Report.  Rather, it is an obligation on the part of the importer to keep a reserve to cater
for sudden disruption in supply.  In case of emergency, importers are also obliged to increase their
level of supply to meet the consumption needs of the people of Hong Kong.WT/TPR/M/52
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Hong Kong practises free trade and free enterprise and is committed to the liberalization of
trade.  In line with this policy, we are committed to liberalize the rice trade.  By liberalization, we
mean easy access to the trade and enhancement of competition.  Given rice is an important staplefoodstuff, we would adopt a gradual and cautious approach in opening up the trade.
PHILIPPINES
Taking into account the statement made in the WTO Secretariat’s Report (WT/TPR/S/52) in
paragraph 32, Section III, concerning state trading, and paragraph 12, Section IV, regarding imports
of meat products, the Philippines requests clarification on the following points:
What is the policy concerning the importation and distribution of live hogs into Hong Kong, China?
For public health and disease prevention reasons, imports of live hogs/pigs into Hong Kong
are subject to permit control administered by the Agriculture and Fisheries Department.  Terms and
conditions including those relating to distribution, if any, will depend on the purpose of the import
and be set out in the permits issued.
What would be the regulations and processes any exporter would need to know if such exporter
wanted to export live hogs into Hong Kong, China?  In particular:
- Would imports of live hogs fall under a licensing scheme that would cover the
issuance of licenses to persons or firms registered as stockholders with the Trade
Department?  If so, who would these be?
- Does this situation not qualify under the purview of state trading?  Why?
- Are importations made on an MFN basis?  Or are these preferred country-suppliers?- Do any quota limitations apply?  If so, what are the annual quantities?Imports of live hogs/pigs from all sources are subject to the permit controls, and there is no
quota limitation.  Such imports are not subject to any licensing or registration requirements of the
Trade Department.  Agriculture and Fisheries Depart ment does not influence the level or direction of
imports of live hogs/pigs through purchases or sales or otherwise, and neither has it been conferredupon any exclusive trading rights and privileges in such connection.  The situation thus does not fall
within the purview of the activities of state trade enterprises as defined in GATT Article XVII and the
relevant Annex 1A Understanding.  For details of the regulations and permit application procedures,
exporters may write to:
Agriculture and Fisheries Department
Canton Road Government Offices
393 Canton Road
Kowloon
Hong Kong
Or consult its website at www.info.gov.hk/afd.WT/TPR/M/52
Page 51
SWITZERLAND
Intellectual Property
Please specify the situation in Hong Kong, China, regarding the use of “Swiss made” by the
Hong Kong watch industry.
Please also elaborate on future developments and changes foreseen, if any, concerning the Regulation
on Watches of 1991.
HKC’s rules of origin follow the basic criterion of substantial transformation and are in
conformity with the international practice and standards as recommended in Annex D1 of the
International Convention on the Simplification and Harmonization of Customs Procedures(the Kyoto Convention).  For manufactured goods involving multi-country processes of materials or
components, they must be the products of a manufacturing process (or processes) in HKC which has
transformed permanently and substantially the shape,  nature, form or utility of the basic materials
used in the manufacture.
The current origin criterion for watches in HKC is the manufacture of watch movement.
Under the Trade Descriptions Ordinance Cap 362, the country in which the movement of a watch was
manufactured or produced is to be regarded as the country in which the watch has been manufactured
or produced.  The law does not require any origin marking on watches, but any watch displaying an
origin marking will have to conform to the law.   Watches incorporating HKC movements can bear
‘Hong Kong’ or similar origin markings.  Watch es which incorporated imported movements can be
marked according to the origin of the movements.
There are no plans to change the origin criterion for watches but we are monitoring the
developments of the Harmonized Work Programme (HWP) on Rules of Origin.  HKC is committed to
align our origin rules with the results of the HWP.
The registration of Patents Ordinance provides for government use of patent in times of declared
extreme urgency.  Please indicate whether in thes e cases the conditions of Art. 31 of the TRIPS
Agreement are not met.
The Registration of Patents Ordinance was repealed and replaced by the existing Patents
Ordinance (Cap. 514) in June 1997.  In drafting the relevant provisions of the ordinance
(sections 68 to 72), Hong Kong, China made carefu l reference to the need to implement the detailed
requirements set out in Art. 31 of the TRIPS Agr eement.  All the elements of Article 31 are fully
implemented in Hong Kong, China’s Patent Ordinance.  A copy of the relevant provisions is provided
in Attachment 4.
Trade Descriptions
Please explain why in the Table III.10(b) the figures indicated under the section quantity are different
in the years 1996 and 1997 for the products listed hereafter, while under the section value the figuresare identical for these two years?
Quantity Value (HK$ (‘000))
1996 1997 1996 1997
Pharmaceutical product & Medicine 85,756 680,743 331 331
Watches & accessories 50,086 322,537 15,423 15,423
Computer & accessories 8,408 5,080 9,511 9,511WT/TPR/M/52
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I regret we are guilty of an oversight here.  Please refer to an updated version of the table in
Attachment 4.
Does Hong Kong, China require the submission of undisclosed test or other data as the condition for
the approval of the marketing of pharmaceutical or agricultural chemical products which utilize new
chemical entities?  In the affirmative, please specify how Hong Kong, China law complies with the
requirement of Art. 39.3 of the TRIPS Agreement to protect such data against unfair commercial use.
Hong Kong, China complies with Article 39.3 for the protection of data against unfair
commercial use.  Pharmaceutical products or pesticides must be registered under the Pharmacy and
Poisons Ordinance (Cap. 138) or the Pesticides Ordinance (Cap. 133) respectively before sale.  The
registration involves the supply of the necessary scientific documentation to substantiate the safety,
efficiency and quality of the product.  Undisclosed documentation submitted by a manufacturer insupport of an application for registration of his pharmaceutical product is not referred to or relied
upon in any other registration applications.
Intellectual Property
Please specify the evolution of the production of “Swiss made” watches since the introduction of the
“Swiss made” Regulation.  What are the main export markets and volumes for “Swiss made” watches
from Hong Kong, China for the last four years?
We assume that Switzerland is interested in knowing the volume of watches assembled in
Hong Kong incorporating Swiss movements.  This type of watches if exported from Hong Kong is
classified as re-exports rather than domestic exports.  The figure is lumped together with all otherwatches re-exported through Hong Kong.  Therefore, there is no breakdown for this type of “Swiss
made” watches in our re-export statistics.
For the overall domestic and re-export statistics of watches, please see figures in
Attachment 5.
Please provide figures about your imports of “Swi ss made” watch movements for the last four years.
Import of watch movements from Switzerland accounted for 3.5% our total import of watch
movements in 1997.  Please see import statistics in Attachment 5.  Switzerland is the second largestsupplier in respect of mechanical movements and the sixth largest supplier in respect of electrical
movements.
In respect of electrical movements, the largest supplier is Japan (67.2%) followed by China
(14.2%) and Thailand (9.2%).  In respect of mechanical movements, the largest supplier is China(72.9%), follows by Switzerland (24%) and Japan (6.5%).
Paragraph 66 of the Report by the Government states “all registered manufacturers verified to have
the manufacturing capability to perform the origin-conferring processes of their registered products
may apply for certificates of origin”.  Further to this verification, do the issuing organizations furthercheck or verify that the products covered by a specific certificate of origin do qualify, because of their
manufacturing process, as being of Hong Kong origin?
There is no compulsory requirement for exporters to take out a Certificate of Origin to cover
their exports of watches from Hong Kong.  If they choose to take out a Certificate of Origin, their
applications are subject to checks by the Hong Kong Customs.  Such checks are conducted on a
selective or random basis.  The purpose of such checks is to ensure that the consignment hasWT/TPR/M/52
Page 53
undergone the origin conferring processes in Hong K ong and qualified for the issue of a Certificate of
Origin.
In addition to the above checks, HKC will also conduct checks on Certificates of Origin in
response to requests from importing countries.  Results of such checks will be conveyed to the
relevant overseas authorities upon the completion of checks.
UNITED STATES
Transportation Services
In paragraph 100, the report (WT/TPR/G/52) states  that Hong Kong relegates charters to a
supplemental role, in effect affording scheduled carriers a “right of first refusal” before authorizingcharter flights.  This appears inconsistent with  paragraph 9 of the U.S.-Hong Kong Memorandum of
Understanding (MOU) of 29 September 1995, which states in pertinent part, “The Hong Kong side
confirmed that its policy on charter operations was not to give scheduled operators a veto over
charter applications …”.  Would Hong Kong again confirm that the policy established in the 1995
bilateral MOU remains in effect?
It is incorrect to characterize Hong Kong’s long-standing policy on approving applications for
charter services as giving scheduled operators a “right of first refusal” before charter flights are
authorized.  Under our policy, which was put in place long before 1995 and is still valid, applications
for charter services are normally approved if the applicant has reasonably demonstrated that scheduled
services cannot satisfy the genuine demand by providing the service or capacity required, and that, in
case of applications made by airlines based outside Hong Kong, the government of the country inwhich the airline making the application is based would afford no less favourable treatment to a Hong
Kong based airline making a similar application.  Following the transparent, objective criteria set out
in this policy, the Hong Kong aeronautical authorities take into account all relevant information,
including the information provided by the applicant, when considering a charter application.  No
scheduled operator enjoys any “right of first refusal” or “right of veto” in the approval process for anycharter applications.
In paragraph 101, the report suggests favouritism for ground handling by specialized firms, as
opposed to self handling by air carriers.  This appears inconsistent with paragraph 7 of the
U.S.-Hong Kong MOU, which explicitly establishes a policy of neutrality on his issue.  Again, would
Hong Kong confirm that the policy established in the 1995 bilateral MOU remains in effect?
The current practice of the Airport Authority at the airport in respect of self-handling is
consistent with the provision in paragraph 7 of the Hong Kong/U.S. MOU.  Our aeronautical
authorities would be prepared to address matters concerning the MOU through bilateral channels ifnecessary.
Telecommunications Services
Paragraph 94 of the reports suggests that competition in external facilities based telecommunications
will begin from 1 January 2000.  We appreciate the steps Hong Kong has recently taken to encourage
more competition in its telecom sector, and we unders tand that Hong Kong is now reviewing licensing
policies for wire-line services.  While the regulator (Hong Kong Telecommunications Authority)
initially appeared willing to expand the number of licensees, incumbent operators are reportedly
using their significant political influence to prevent this.  What is the outlook now for additional
facilities-based licenses being granted in 1 January 2000?WT/TPR/M/52
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We would like to note that allowing unlimited te lecommunications competition in Hong Kong could
help to obtain greater market opening in China, which would significantly benefit current Hong Kong
telecommunications firms.
Hong Kong, China has proposed in the consultation paper “1998 Review of Fixed
Telecommunications – A considered View” to:
- issue external telecommunications facilities licences on the basis of market demand;
and
- discuss with the industry, including both existing new fixed network licencees and
potential entrants, the commitment they are willing to make in network roll-out,
before deciding whether to extend the moratorium of further fixed network licences.
Hong Kong, China received 37 submissions and is analysing them.  A decision on these
should be forthcoming in late 1998 or early 1999.  The objective is to raise the level of effective
competition in the best interest of the consumers and to strengthen Hong Kong, China’s position as a
telecommunications, broadcasting and Internet hub.
IPR Protection
Paragraph 136 of the report outlines the large number of seizures of pirated software, movie, and
music CDs made in 1997 and the first half of 1998.  Yet the number of retail outlets selling pirated
products remains high.  Can this rate of seizures be sustained or increased without new legislation
that would authorize judges to cl ose temporarily shops used to sell pirated products.  Would making
piracy a “serious and organized” crime bring more  resources into the battle against pirated CD
products?
Our present position is that we have achieved two goals which we identified after
consultations last year and this year, both with our local industries and with representatives from ourtrading partners.  The first is that we have made illicit manufacture of pirated optical disks in Hong
Kong extremely difficult: recent reports from the industry are that illegal pressing of pirated CDs has
moved almost entirely out of Hong Kong.  The second goal we have achieved is to greatly increase
our enforcement action against sales of pirated and counterfeit goods.  As a result, the sale of pirated
and counterfeit goods has effectively been driven out of most legitimate commercial premises.  Wherefurther sale of infringing articles is detected, it is subject to vigorous raiding operations from the
enforcement authorities.
We remain open-minded as to what further enhancements to our already-formidable array of
anti-piracy legislation we could make if the problem worsens.  With retail of pirated items havinglargely been driven out of legitimate commercial centres, and with no more than uncertain allegation
of organized crime involvement, the effectiveness of the specific proposals in the question is unsure.
But nothing is being ruled out.
FIRST DISCUSSANT, AMBASSADOR TERJE JOHANNESSEN (Norway)
In the very last sentence in para. 1 of the Government's report: "….., in accordance with the Basic
law, has left the Government of the HKSAR to manag e our economic and trade affairs entirely as we
think fit.".
Then in para. 10 of the same report, it is said in sentence no. 2 that "In accordance with the relevant
provisions of the Basic Law the Government of the HKSAR has been authorized by the CPG toWT/TPR/M/52
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conclude nearly…".  The two notions of "entirely as we think fit" and "has been authorized by the
CPG" to conclude seem to contain some inconsistency.  Any comments on this issue will be welcome.
Subject to the provisions in the Basic Law, the HKSAR is free to manage its own economic
and trade affairs entirely as we think fit.  According to Art. 133 of the Basic Law, acting under
specific authorizations from the CPG, the HKSAR may negotiate and conclude new Air Services
Agreements.  There is no question of inconsistency between the two passages in the Government
Report.
The per-capita GDP Hong Kong, China was at US$26,60 0.  When will Hong Kong, China cease to be
a LDC?
The developing country status in the WTO is by self-election.  We also note that there is no
agreed objective criteria or listed factors determining such status.  Whilst we recognize that our GDP
per capita is high, this on its own is too crude a ya rdstick.  It should be noted that Hong Kong, China
is treated by some trading partners as developing in the context of, for example, textiles and clothing.
How long do you think that Mainland China, with he r own very fast economic development, will be
pleased to continue what is described in para. 19 of the Government's Report?
We fully support China’s very fast economic development.  The relative comparative
advantages between economies are something that will be maintained as they grow and develop.
There is no reason why the current synergy betw een the two economies cannot continue in future.
Despite a considerable decline in manufacturing, the personnel-intensive textiles industry still will
account for 1/3 of domestic exports, a percentage which has been stable over the last decade.  Is this
stability for textiles, as part of exports, the expressed will of the operators, or is it the result of a
unsuccessful industrial restructuration?
The fact that textiles continue to account for 1/3 of Hong Kong’s domestic exports reflects
partly the existence of the quota system imposed by some importing economies on our textiles and
clothing exports, and partly the niche positions Hong Kong manufacturers have acheived in the sector,
particularly in high value-added production.  Indeed, the contribution of textiles to Hong Kong´s total
exports has reduced over the past decade as re-exports have bloomed.
Do you foresee increase participation of women in the labour force and what is the economic
implication?
The participation rate of women in the labour force is affected by a number of factors
including economic and cultural considerations.  The important thing is that it is unlawful todiscriminate against women in the offer of jobs, which is based on personal abilities, qualifications
etc.
What kind of time perspective do you have for turning the negative figures back into the usual positive
ones which have been the trademark of your economic performance over quite a number of decades?And what conditions have to be fulfilled for you to come back to what I call Hong Kong "normalcy"?
Do you think that a reduction of your inflation rate (particularly on housing) will be essential?
It is very difficult to predict with any certa inty when Hong Kong´s economy will return to its
positive growth primarily because Hong Kong, being a highly externally orientated economy, is
reliant on the health of other economies around the globe.  In this regard, there is little evidence yet on
an upswing of the Japanese economy.  Some of our Asian neighbours are still experiencing
difficulties.WT/TPR/M/52
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However, Hong Kong has already undergone a severe but rapid adjustment.  Property prices
have dropped some 45%.  The month-on-month inflat ion in October was near zero.  Unfortunately,
unemployment is at a record high of 5.3%.  Nevertheless, there are some encouraging signs and we dobelieve our open economy, with its ability to adjust rapidly, puts Hong Kong in a good position to
react quickly when the global economic situation picks up and local sentiments improve for the better.
Having intervened into the market once, could it not happen again?  When the speculators have left
the scene, when will the Government sell the shares you acquired last summer?  What is the future ofthe Exchange Fund Investment Limited, with its board recruited from the Government?
In response to the first question, we cannot give up our rights to safeguard and defend the
stability of our system.  At the same time, we shall also live up to our responsibility to the region.  It
would be very much in our interest to achieve these objectives without having to resort to actions inthe market by the government.  That is why, almo st immediately in September, we took measures to
enhance the efficiency of the currency board system and to strengthen the transparency and discipline
of the securities and futures markets.  These measures have so far been effective in stabilizing our
markets.  In the long term, we believe these new measures will provide a firmer basis on which the
further development of our financial market will take place and our role as a major internationalfinancial centre will be strengthened.
As regards the disposal of the shares acquired and the future of Exchange Fund Investment
Limited, please refer to the detailed answer given to the question raised by the EU.
SECOND DISCUSSANT, MR. YOICHI SUZUKI (Japan)
Tariffs
The HKSAR has committed in the context of APEC to bind further 20% at zero from January 2000,
another 25% from January 2005 and all remaining tariff from 2010.  It is indeed a very welcome
initiative but given the openness of its economy and the fact that already all applied tariff rates arezero, would it not be possible to accelerate further the process?
We consider that the timetable for binding tariffs in our IAP is appropriate, having regard to
the timeframe for achieving the Bogor goal (industrialized and developing economies to achieve the
Bogor goal of free and open trade and investment by the years of 2010 and 2020 respectively).  Infact, Hong Kong, China is one of the two economies which have a clearly stated timetable for binding
ALL tariffs.  We look forward to others doing the same.
General
How would the HKSAR see the initiative that the APEC Ministers have agreed recently in
Kuala Lumpur to pursue the EVSL in the WTO in the light of its basic policy stance on trade
liberalization?
Hong Kong, China is a staunch support of free trade and fully supports further trade
liberalization, be it in the WTO or unilateral liberalization in the context of APEC.  Consistent with
our pro-free trade stance, we have played an active role in the APEC EVSL initiative.  Having regard
to the spirit of open regionalism in the Bogor Declaration, HKC s understanding is that liberalization
initiatives taken in APEC, albeit on a voluntary basis, should be applied on an MFN basis.
Intellectual Property RightsWT/TPR/M/52
Page 57
The Annex 6 of the HKSAR Report as well as the Table III. 10 of the Secretariat Report show that
enforcement results for the past three years are remarkable.  But the significant increasing trend in
numbers of seizures and arrests up to June 1998 demonstrates well how daunting the task is to theauthorities of the HKSAR.  Would it be possible to indicate to us as to how far the HKSAR authorities
are in their efforts to curb the IPR infringements?
Hong Kong, China introduced new enforcement provisions in its new Copyright Ordinance in
June 1997 which gave the Customs and Excise Department sweeping new powers to seize suspectedpirated goods if they suspected that they were infringing.  We followed that with a new Prevention of
Copyright Ordinance this year, which enables the enforcement authorities to enter optical disk
factories without a warrant and seize suspected infringing CDs as well as the equipment they were
produced on.  These two measures have greatly enhanced our law enforcement powers, resulting in
the seizure of enormous quantities of infringing articles.
Competition and Regulatory Policy
HKSAR seems to be of the view that in a hi ghly open and small market such as HKC, foreign
competition will curb the anti-competitive practices by the private competitors. The Government ofthe HKSAR envisages to take action ‘only when market imperfection or distortion limit market
accessibility or market contestability, and impair economic efficiency or free trade?  And it cites such
sectors as legal and accounting services medical and dental services, public utilities, local
broadcasting, retail banking services and so on.  It then proposes that the ‘enactment of a general
competition in Hong Kong, because legal enforcement is viewed as the only transparent and effective
way to prevent and deal with restrictive practices’.  What is the view of the HKSAR delegation?
In brief, the Government considered that the demerits of a competition law outweighed the
merits of enacting an all-embracing competition law 2.  A less intrusive approach was more
appropriate for the Hong Kong economy.
Nevertheless, the Government agreed to adopt a more proactive, transparent and
comprehensive competition policy for Hong Kong.  This involved:
- issuing a policy statement on the objectives of and guiding principles on promoting
competition;
- requiring all bureaux to give due regard to the competition angle in setting new
policies or reviewing existing policies;
- requesting all bureaux and departments to submit new initiatives for promoting
competition;
- establishing a high-level Competition Policy Advisory Group (COMPAG), to be
chaired by the Financial Secretary, to review competition-related policy issues and
examine the extent to which both the public and private sectors should seek to
introduce more competition;
- requesting the Consumer Council  to contin ue to monitor and review trade practices
in sectors prone to "unfair" trading activities;  and
- requesting the Consumer Council to assist and encourage trade associations to
establish codes of conduct for promoting competition.WT/TPR/M/52
Page 58
The Government published the Policy Statement on 25 May 1998, which sets out the
objective of the Government's competition policy and offers some pointers to facilitate compliance
with the Policy.  All government entities, and public- and private-sector bodies are encouraged to
adhere to the following pro-competition principles:
- maximizing reliance on , and minimizing interference with, market mechanism:
- maintaining a level-playing field;  and
- minimizing uncertainty and fostering confidence in system fairness and predictability
by:
- consistent application of policies;
- transparent and accountable operations;  and
- adherence to equitable and non-discriminatory standards and practices.
The following are some examples which reflect our sector-specific approach to enhance
competition:
- Hong Kong, China has in recent years been opening the telecommunications market;
- there is however still a dominant service provider in the market.  We have therefore 
incorporated provisions against anti-competitive behaviour in the licensing 
conditions;
- we are conducting a review on both the telecommunications and television markets to
see how the markets could be further opened up to enhance competition;
- we have no barriers to entry into the energy sector in Hong Kong, nor foreign
ownership restrictions.  As regard to the current position on electricity, we are
currently examining the feasibility of prom oting greater interconnection (between the
CLP and HEC grids) and competition in the electricity supplies sector.  A
consultancy study started in May 1998 for completion by the end of 1998.  The studyreport will be published for public comments in early 1999 and we will publish a
policy statement on the subject later in that year.
We prohibit through administrative means bid-rigging from tenderers in bidding government
projects, i.e. tenderers who practise  bid-rigging would be disqualified.
Where in these sectors does the HKSAR delegation see the room for further liberalization to ensure
further competition?
Please refer to the answer to the previous question.
As a general question, how will the HKSAR Government balance the need for tighter market
discipline with that of the free economy in the financial sector?  Will prudential measures that could
put extra burden on foreign financial institutions be reviewed in the future?
Tighter market discipline and free economy in the financial sector need not contradict each
other.  For the financial sector, it is a matter of non-discriminatory regulation more than deregulation,
as evidenced in the experience of the recent financ ial turmoil, which holds the key to stability and
success.  Hong Kong has endeavoured to regulate only where essential to do so.  We do not believe
we have gone overboard and note that all significant economies have similar standards and safeguards
in place.  In overall terms, our financial services regime is at least as liberal as those prevailing in the
other major financial centres.WT/TPR/M/52
Page 59
The HKSAR has committed in the context of APEC to bind further 20% at zero from January 2000,
another 25% from January 2005 and all remaining tariff from 2010.  It is indeed a very welcome
initiative but given the openness of its economy and the fact that already all applied tariff rates arezero, would it not be possible to accelerate further the process?
We consider the timetable for binding tariffs in our IAP is appropriate, having regard to the
timeframe for achieving the Bogor goal (industrialized and developing economies to achieve the
Bogor goal of free and open trade and investment by the years of 2010 and 2020 respectively).  Infact, Hong Kong, China is one of the two economies that have a clearly stated timetable for binding
ALL tariffs.  We look forward to others doing the same.
How would HKC see the initiative that the APEC Ministers have agreed recently in Kuala Lumpur to
pursue the EVSL in the WTO in the light of its basic policy stance on trade liberalization?
Hong Kong, China is a staunch support of free trade and fully supports further trade
liberalization, be it in the WTO or unilateral liberalization in the context of APEC.  Consistent with
our pro-free trade stance, we have played an active role in the APEC EVSL initiative.  There is no
question in our mind that, for those APEC members who are also WTO members, theirimplementation of the EVSL, albeit on a voluntary basis before binding agreement is reached in the
WTO, should be on an MFN basis.
The Annex 6 of the HKSAR Report as well as the Table III. 10 of the Secretariat Report show that
enforcement results for the past three years are remarkable.  But the significant increasing trend in
numbers of seizures and arrests up to June 1998 dem onstrates well how daunting the task is to the
authorities of the HKSAR.  Would it be possible to indicate to us as to how far the HKSAR authoritiesare in their efforts to curb the IPR infringements?
Hong Kong, China introduced new enforcement provisions in its Copyright Ordinance in
June 1997 which gave the Customs and Excise Department sweeping new powers to seize suspected
pirated goods.  We followed that with a new Prevention of Copyright Piracy Ordinance this year,which enables the enforcement authorities to enter optical disk factories without a warrant and seize
suspected infringing CDs as well as the equipment they were produced on.  These two measures have
greatly enhanced our law enforcement powers, resulting in the seizure of enormous quantities of
infringing articles.
We make this point because it is important for Members to understand that the impressive
enforcement statistics in Annex 6 of the HKSAR Report as well as the Table III. 10 of the Secretariat
Report reflect stronger enforcement action and more effective legal tools rather than a worsening of
Hong Kong, China’s problems.
Our present position is that we have achieved two goals which we identified after
consultations last year and this year, both with our local industries and with representatives from our
trading partners.  The first is that we have made illicit manufacture of pirated optical disks in
Hong Kong extremely difficult:  recent reports from the industry are that illegal pressing of pirated
CDs has moved almost entirely out of Hong Kong.  The second goal we have achieved is to greatlyincrease our enforcement action against sales of pirated and counterfeit goods.  As a result, the sale of
pirated and counterfeit goods has effectively been driven out of most legitimate commercial premises.
Where further sale of infringing articles is detected, it is subject to vigorous raiding operations from
the enforcement authorities.
We would wish to add that we believe that effective enforcement must be matched with
effective public education.  We have been eager to learn from our trading partners in this area.  I amglad to be able to tell you that even in the present difficult economic circumstances,WT/TPR/M/52
Page 60
Hong Kong, China plans to more than double our annual expenditure on public education on
respecting intellectual property rights over the next three years (to about US$1 million.)
Note that the Rice Control Scheme gives undue market power to certain organizations/companies.What are HKC's views in response to the Secretariat's comments?
We do not think that the Rice Control Scheme has given undue market power to certain
importers who are in a position to keep a reserve stock.  Under the Rice Control Scheme, importers
who have registered with the Trade Department are obliged to maintain a reserve stock sufficient for45 days consumption of the populace.  The maintenance of a reserve stock is not a quid pro as stated
in paragraph 8, page 66 of the Secretariat Report.  Rather, it is an obligation on the part of the
importer to keep a reserve to cater for sudden disruption in supply.  In case of emergency, importers
are also obliged to increase their level of supply to meet the consumption needs of the people of
Hong Kong.
Hong Kong practises free trade and free enterprise and is committed to the liberalization of
trade.  In line with this policy, we are committed to  liberalize the rice trade.  By liberalization, we
mean easy access to the trade and enhancement of competition.  Given rice is an important staple
foodstuff, we would adopt a gradual and cautious approach in opening up the trade.
Would HKC consider reviewing the one building policy for foreign banks?
Please refer to the answer to the first question raised by New Zealand.WT/TPR/M/52
Page 61
Attachment 1:  Responses to questions from Japan
MINIMUM ENTRY CRITERIA FOR CONSULTANTS LISTS
ARCHITECTURAL CONSULTANTS
STAFF  (including Principals)
Members : Minimum of five qualified architects, at least two of whom must be an
Authorized Person (List I).  One resident principal of the firm must be aqualified architect.  A consultant to a firm is not counted as staff.
Qualifications : Qualified means a corporate member of the Hong Kong Institute of
Architects or a Registered Architect or an Authorized Person (List I).
Resident Status : To count as staff, individuals must be resident Hong Kong ID Card holders
and the practice must constitute their principal source of employment.
HISTORY
Time Established : The firm must have practised in the relevant profession in Hong Kong for a
minimum of five continuous years.
Work Done : Completion of at least one project over HK$200M HKIA Group I, covering
mainly new works construction, in the prior three years.
OFFICE
Size/Equipment : Reasonable size, suitably furnished and adequately equipped with modern
drafting and computing facilities.
Support/Staffing Levels : Employ adequate technical  support.  Acceptable ratio 1 professional/1-2
assistant/2 technical officers and in line with office size/workload.
WORK DONE
Appraisal of Standards
(Quality/Cost): Design concepts and standards to be judged, with design solutions and
suitability of details, against the finished article and its performance in use.
Nature of work carried out : Firms have or can carry out work similar to that which is being considered
for commission.
Economy of design : Can be judged as above.
Design awards : To be noted.
ISO 9000 CERTIFICATION
In accordance with current requirements set out in Works Bureau Technical
Circular.WT/TPR/M/52
Page 62
MINIMUM ENTRY CRITERIA FOR CONSULTANTS LISTS
BUILDING SERVICES CONSULTANTS
STAFF (including Principals)
Members : Minimum of five qualified engineers including principal(s).  One resident
principal of the firm must be a qualified engineer.  A consultant to a firm is
not counted as staff.
Qualifications : Qualified means qualification or membership of a professional institution
recognized for corporate membership of the Hong Kong Institute of
Engineers (Elect., Mech. or BS discipline) with relevant post corporatemembership experience in at least two of the following:-  A/C Electrical, FSand lift installations.
Resident Status : To count as staff, individuals must be resident Hong Kong ID Card holders
and the practice must constitute their principal source of employment.
HISTORY
Time Established : The first must have practised in the relevant profession in Hong Kong for a
minimum of five continuous years.
Work Done : Completion of at least one building project over HK$200M in the prior
three years.
OFFICE
Size/Equipment : Reasonable size, suitably furnished and adequately equipped.
Support/Staffing Levels : Employ at least ten technical support staff with a minimum OC and at least
four secretarial/clerical support staff.
WORK DONE
Appraisal of Standards
(Quality/Cost): Demonstrate satisfactory work standards on at least two building projects,
which shall be over HK$200M.  It would be necessary for the firm to
provide necessary facilities for detailed inspection, to be undertaken by wayof presentation drawings, assisted access to buildings, client and/or building
contractors references etc.
Nature of work carried out : Firms have or can carry out work similar to that which is being considered
for commission.
ISO 9000 CERTIFICATION
In accordance with current requirements set out in Works Bureau TechnicalCircular.WT/TPR/M/52
Page 63
MINIMUM ENTRY CRITERIA FOR CONSULTANTS LISTS
QUANTITY SURVEYING CONSULTANTS
STAFF (including Principals)
Members : Minimum of three qualified quantity surveyors.  One resident principal of
the firm must be a qualified quantity surveyors.  A consultant to a firm is not
counted as staff.
Qualifications : Qualified means qualification or membership of a professional institution
recognized for corporate membership of the Hong Kong Institute of
Surveyors (Quantity Surveying Division).
Resident Status : To count as staff, individuals must be resident Hong Kong ID Card holders
and the practice must constitute their principal source of employment.
HISTORY
Time Established : The first must have practised in the relevant profession in Hong Kong for a
minimum of five continuous years.
Work Done : Demonstrate that they have been carrying out the full range of Quantity
Surveying Services on projects broadly equivalent to those for which they
might be engaged by Government.
OFFICE
Size/Equipment : Reasonable size, suitably furnished and adequately equipped.
Support/Staffing Levels : Employ a total of at least twelve staff.  Only those carrying out or assiting
with work commonly regarded as traditional professional quantity surveyingwill count as staff.
WORK DONE
Appraisal of Standards
(Quality/Cost): An acceptable range of Quantity Surveying Services, the execution of which
should be the firm's principle source of employment.
Nature of work carried out : The carrying out of work other than traditional professional quantity
surveying will not of itself prevent the inclusion of a firm on the list as
procedures governing conflict of interest would apply.
ISO 9000 CERTIFICATION
In accordance with current requirements set out in Works Bureau TechnicalCircular.WT/TPR/M/52
Page 64
MINIMUM ENTRY CRITERIA FOR CONSULTANTS LISTS
STRUCTURAL ENGINEERING CONSULTANTS
STAFF (including Principals)
Members : Minimum of four qualified engineers.  One resident principal of the firm
must be a qualified engineer.  A consultant to a firm is not counted as staff.
Qualifications : Qualified means qualification or membership of a professional institution
recognized for corporate membership of the Hong Kong Institute of
Engineers (Structural Engineering Discipline).
Resident Status : To count as staff, individuals must be resident Hong Kong ID Card holders
and the practice must constitute their principal source of employment.
HISTORY
Time Established : The first must have practised in the relevant discipline in Hong Kong for a
minimum of five continuous years.
Work Done : Completion of at least one building project over HK$200M in the prior three
years.
OFFICE
Size/Equipment : Reasonable size, suitably furnished and adequately equipped with modern
drafting and computing facilities.
Support/Staffing Levels : Employ adequate technical support.  Minimum of eight technical support
staff.
WORK DONE
Appraisal of Standards
(Quality/Cost): At least up to the quality of work normally produced by SEB.  The applicant
should demonstrate satisfactory work standards on at least two projects, oneof which must be of over HK$200M.
ISO 9000 CERTIFICATION
In accordance with current requirements set out in Works Bureau Technical
Circular.WT/TPR/M/52
Page 65
MINIMUM ENTRY CRITERIA FOR CONSULTANTS LISTS
LANDSCAPE ARCHITECTURAL CONSULTANTS
STAFF (including Principals)
Members : Minimum of two qualified staff.  One resident principal of the firm must be
a qualified landscape architect.  A consultant to a firm is not counted as
staff.
Qualifications : Qualified means corporate membership of UKLI (Design stream), AAILA,
NZILA or qualification recognized fo r corporate membership of the Hong
Kong Institute of Landscape Architects after 1 January 1997.
Resident Status : To count as staff, individuals must be resident Hong Kong ID Card holders
and the practice must constitute their principal source of employment.
HISTORY
Time Established : Not specified.
Work Done : Demonstrate that they have been carrying out the full range of landscape
Quantity Surveying Services on projects broadly equivalent to those forwhich they might be engaged by Government.
WORK DONE
Appraisal of Standards
(Quality/Cost): Demonstrate satisfactory design and work standards on at least two projects
of similar scale to those for which they might be employed by Government.
Nature of work carried out : Demonstrate capability for work similar to that which might be considered
for Government commission.
ISO 9000 CERTIFICATION
In accordance with current requirements set out in Works Bureau Technical
Circular.WT/TPR/M/52
Page 66
MINIMUM TECHNICAL AND MANAGEMENT CRITERIA FOR ADMISSION, CONFIRMATION AND PROMOTION OF CONTRACTORS
Group/Status Buildings Port works Roads & drainage Site formation Waterworks
Entry on probation to
Group A1) Registration with the
Building Authority's
Register of Contractors.
2) Experience in contracts
representative in size
and complexity of Arch
SD projects, of value
over 50% of the
Group A limit.
- sub-contract work must
cover the whole range
of building trades.There are no Group A
contractors for the Port
Works category.1) Satisfactory
completion of public
roads and drainage
works, within the past
five years, to a total
value of not less than
50% of the Group A
limit.  Experience as
subcontractor may
count.  Private sector
experience may also be
accredited.There are no Group A
contractors for the Site
Formation category.1) Possession of adequate
water works construction
experience either acquired
as contractor or
subcontractor for
government contracts.
2. Mainlaying experience is a
pre-requisite.
3. Normally expected to have
undertaken works of a
water works nature with a
total value of over
$10 million in the past
ten years
.
Confirmation to Group A 1) Satisfactory completion
of at least one
government building
contract, after inclusion
in the group, of value
over 50% of the
Group A limit and
covering the whole
range of building
trades.1) Satisfactory
completion of at least
one Government
Roads and Drainage
contract of value over
50% of the Group A
limit after inclusion in
Group A on probation.
Experience as a
principal subcontractor
may count.1) Satisfactory completion of
two or more mainlying
contracts in the
waterworks category with
a total value of not less
than $20 million after
admission to Group A on
probation.
Entry on probation toGroup BA. Direct Entry
1) Registration with the
Building Authority's
Register of Contractors.
2) Experience as main
contractor in contracts
representative in size
and complexity of
Arch SD projects, of
value over 50% of the
Group B limit.
B. By promotion (see
note)
1) Satisfactory completion
of at least one
government building
contract, after
confirmed in Group a,
OF VALUE OVER
75% OF THE Group A
limit and of
considerable scope and
complexity and
covering the whole
range of building
trades.1) Satisfactory
completion of
two contracts of
predominantly Port
Works nature, of which
one contract should be
completed within
three years preceding
the application for
inclusion and the value
of works carried out for
each of the
two contracts should
exceed 75% of the
Group A limit;experience as a
principal subcontractor
may be accredited.A. Direct Entry
1) Satisfactory
completion of public
roads and drainage
works, within the past
five years, to a total
value of not less than
the Group B limit.
Experience as a
principal subcontractor
may count.  Private
sector experience may
also be accredited.
B. By promotion
1) Satisfactory
completion of at least
one government roads
and drainage contract
of value not less than
75% of the Group A
limit after
confirmation in
Group A.  Experience
as a principal
subcontractor may
count.1) Satisfactory
completion, with
three years, one
contract or contracts
involving total
earthworks quantity
not less than
100,000 m
3 , of which
one contract would
involve earthworks
quantity not less than
50,000 m3 in one or
more of the following:
i) bulk excavation
and filling
(excluding
quarrying and
maintenance of
spoil dumps);
ii) sanitary landfill;iii)slope stabilization.
2) Experience as
principal
subcontractor may be
accredited.A. Direct Entry
1) Possession of water works
construction experience
either acquired as
contractor or subcontractor
for private sector
contracts, or as
subcontractor for
government contracts.
2) Mainlaying experience is a
pre-requisite.
3) Satisfactory completion of
three or more contracts of
a waterworks nature of
totally not less than
$75 million in value in the
past ten years.  If in the
capacity of a
subcontractor, the
applicant must prove to
have a major involvement
in the works.
B. By promotion1) Satisfactory completion of
three or more contracts in
the waterworks category of
totally not less than
$25 million in value after
confirmation in Group A.
2) Private sector experience
may be accepted to
supplement public sector
experience.
Confirmation to Group B 1) Satisfactory completion
of at least one
government building
contract, after inclusion
in the Group, of value
over 75% of the
Group B limit.1) Satisfactory
completion of at least
one Government
Group B Port Works
contract of value not
less than 50% of the
Group B limit.
Experience as
subcontractor is not
accredited.1) Satisfactory
completion of at least
one Government Road
and Drainage contract
of value not less than
75% of the Group B
limit after inclusion in
Group B on probation.
Experience as a
principal subcontractor
may count.1) Satisfactory
completion of at least
one Government Site
Formation contract of
value not less than
50% of the Group B
limit, or one
government contract
with earthworks
quantity not less than
200,000 m3 since
inclusion.  Experience
as subcontractor is not
accredited.1) Satisfactory completion of
two or more contracts in
the waterworks category of
totally not less than $50
million in value with at
least one contract in Group
B value, after admission to
Group B on probation.
Cont'd -/-WT/TPR/M/52
Page 67
Group/Status Buildings Port works Roads & drainage Site formation Waterworks
Entry on probation to
Group CA. Direct Entry
1) Registration with the
Building Authority's
Register of Contractors.
2) Experience as main
contractor in contracts
representative in size
and complexity of Arch
SD projects, of value
over the probationary
limit of Group C.
3) ISO 9000 Certification.B. By Promotion (see
note)
1) Satisfactory completion
of at least two
government building
contracts, after
confirmed in Group B,
of value over 75% of
the Group B limit;  and
2) ISO 9000 Certification.A. Direct Entry
1) Satisfactory completion
in the past three years
of at least two contracts
in the Port Works
category, each of a
value not less than 75%
of the Group B limit.
Experience as
subcontractor is not
accredited.
2. ISO 9000 Certification.B. By Promotion1) Satisfactory
completion of at least
one Government Group
B Port Works contract,
after confirmation to
Group B, of value not
less than 75% of the
Group B limit.
Experience as a
subcontractor is not
accredited.
2. Private sector
experience may be
accepted to supplement
public sector
experience.
3) ISO 9000 Certification.A. Direct Entry
1) Satisfactory
completion in the past
ten years of a
sufficient number of
roads and drainage
contracts of a total
value not less than two
times the probationary
Group C limit.  The
value of each contract
shall be over 75% of
the Group B limit.
Experience as
subcontractor is not
accredited.
2) ISO 9000
Certification.
B. By Promotion1) Satisfactory
completion of at least
one government road
and drainage contract
of value not less than
75% of the Group B
limit after
confirmation to Group
B.  Experience as a
subcontractor is not
accredited.
2) ISO 9000
Certification.A. Direct Entry
1) Satisfactory
completion in the past
three years of at least
two contracts in the
works category, each
of a value over 75% of
the Group B limit.
Experience as
subcontractor is not
accredited.
2) ISO 9000
Certification.
B. By Promotion1) Satisfactory
completion of at least
one Government
Group B site
formation contract,
after confirmation to
Group B, of value notless than 75% of the
Group B limit, or one
government contract
involving earthworks
quantity not less than
300,000 m
3.
Experience as a
subcontractor is not
accredited.
2) Private sector
experience may be
accepted to
supplement public
sector experience.
3) ISO 9000
Certification.A. Direct Entry
1) Possession of waterworks
construction experience
either acquired as
contractor or subcontractor
for private sector
contracts, or as
subcontractor for
government contracts.
2) Mainlaying  experience is
a pre-requisite.
3) Satisfactory completion of
four or more contracts of
at least two different types
of work totally valued not
less than $180 million with
at least one contract of
Group C value in the past
ten years.  If in the
capacity of subcontractor,
the applicant must prove to
have a major involvement
in the works.
4) ISO 9000 Certification.B. By Promotion1) Satisfactory completion of
three or more contracts in
the waterworks category of
at least two different types
of work totally valued at
not less than $60 million
with at least one contract
of Group B value, after
confirmation to Group B.
2) Private sector experience
may be accepted to
supplement public sector
experience.
3) ISO 9000 Certification.
Confirmation to Group C 1) Satisfactory completion
of at least two
government building
contracts, both of which
should be of value over
75% of the
probationary Group C
limit and of
considerable scope and
complexity.
Note:  As an alternative to
"promotion", a
contractor already on
the Approved List may
apply for entry to a
higher group by
submitting details of
experience in the
private sector.1) Satisfactory
completion of at least
one Government Group
C Port Works contract
of value not less than
75% of the
probationary Group C
limit.  Experience as a
subcontractor is not
accredited.1) Satisfactory
completion of at least
one government road
and drainage contract
of value not less than
75% of the
probationary Group C
limit after inclusion in
Group C on probation.
Experience as
subcontractor is not
accredited.1) Satisfactory
completion of at least
one Government
Group C site
formation contract of
value not less than
75% of the
probationary Group C
limit.  Experience as
subcontractor is not
accredited.1) Satisfactory completion of
two Group C contracts in
the waterworks category of
two different types of total
value not less than $120
million after admission to
Group C on probation.
Remarks:
1. Group A limit and Group B limit mean the group tender limit for Group A and Group B respectively.
2. Probationary Group C limit means the total value of Group C contracts in any one category for which a probationary Group C co ntractor
is eligible to be awarded.WT/TPR/M/52
Page 68
MINIMUM NUMBER AND QUALIFICATIONS OF
FULL TIME MANAGEMENT AND TECHNICAL PERSONNEL
TO BE EMPLOYED BY THE CONTRACTORS
BEFORE ADMISSION, RETENTION, CONFIRMATION OR PROMOTION
Group/Status Buildings Roads and Drainage, Waterworks
(Note 1)
Group A (probationary or
confirmed)Top management (Notes 2, 3 and 4) Top management (Notes 2, 3 and 4)
At least one member of the resident top
management shall have a minimum ofone year local experience in managinga construction firm obtained in the pastthree years.At least one member of the resident
top management shall have aminimum of one year localexperience in managing aconstruction firm obtained in the pastthree years.
Technical staff (Notes 3 and 4) Technical staff (Notes 3 and 4)
At least one person with one or more of
the following qualificationsAt least one person with one or more
of the following qualifications
(i) Higher Certificate in Building
Studies/Civil Engineering froma Hong Kong polytechnic, aHong Kong recognized traininginstitution or equivalent andone year local working
experience in building works;
or(i) Higher Certificate in Civil
Engineering from a HongKong polytechnic, a HongKong recognized traininginstitution or equivalent andone year local working
experience in the relevant
category of works;  or
(ii) Ordinary Certificate in Building
Studies/Civil Engineering from
a Hong Kong Polytechnic, a
Hong Kong recognized traininginstitution or equivalent andtwo years local workingexperience in building works;or(ii) Ordinary Certificate in Civil
Engineering from a Hong
Kong polytechnic, a Hong
Kong recognized traininginstitution or equivalent andtwo years local workingexperience in the relevantcategory of works;  or
(iii) at least ten years local working
experience in building works.(iii) at least ten years working
experience in the relevantcategory of works.
Cont'd -/-WT/TPR/M/52
Page 69
Group/Status Buildings Port Works, Roads and Drainage,
Site Formation, Waterworks
Group B (probationary orconfirmed)Top management (Notes 2, 3 and 4) Top management (Notes 2, 3 and 4)
At least one member of the resident top
management shall have a minimum ofthree years local experience inmanaging a construction firm obtained
in the past five years.At least one member of the resident
top management shall have aminimum of three years localexperience in managing a
construction firm obtained in the past
five years.
Technical staff (Notes 3 and 4) Technical staff (Notes 3 and 4)
At least one person with  the following
qualificationsAt least one person with the
following qualifications
(i) Higher Certificate in Building
Studies/Civil Engineering froma Hong Kong polytechnic, aHong Kong recognized training
institution or equivalent and
two years local workingexperience in building works;or(i) Higher Certificate in Civil
Engineering from a HongKong polytechnic, a HongKong recognized training
institution or equivalent and
two years local workingexperience in the relevantcategory of works;  or
(ii) Ordinary Certificate in Building
Studies/Civil Engineering from
a Hong Kong Polytechnic, aHong Kong recognized traininginstitution or equivalent andthree years local working
experience in building works.(ii) Ordinary Certificate in Civil
Engineering from a Hong
Kong polytechnic, a HongKong recognized traininginstitution or equivalent andthree years local working
experience in the relevant
category of works.
Group C (probationary orconfirmed)Top management (Notes 2, 3 and 4) Top management (Notes 2, 3 and 4)
At least one member of the resident top
management shall have a minimum of
five years local experience in managing
a construction firm obtained in the pasteight years.At least one member of the resident
top management shall have a
minimum of five years local
experience in managing aconstruction firm obtained in the pasteight years.
Top management (Notes 3 and 4) Top management (Notes 3 and 4)
At least two persons with a relevant
degree from a Hong Kong university or
equivalent with at least five yearspost-graduate local experience inbuilding works.At least two persons with a relevant
degree from a Hong Kong university
or equivalent with at least five yearspost-graduate local experience in therelevant category of works.
Notes:
1. There are no Group A contractors for the Port Works and Site Formation categories.
2. Top management shall be the President, Chairman, Directors, Managing Direct or, Executive Director, or
General Manager etc.
3. The top management and the technical staff must be two individual persons.4. For admission, retention, confirmation or promotion in more than one category, the contractor is required to
employ a minimum of one experienced technical staf f for each category regardless of the number specified
in the above table.  The experience and qualifications of the technical staff shall be as specified for theappropriate group and category in the above table.WT/TPR/M/52
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Attachment 2:  Responses to questions from Japan
Registration of Health Care Professionals
In Hong Kong Special Administrative Region
MEDICAL PRACTITIONER
All medical graduates wishing to register as a medical practitioner with the Medical Council
of Hong Kong (the council), with the exception of local medical graduates, are required to pass the
Council's Licensing Examination and successfully complete a period of pre-registration internshiptraining in approved hospital or institution.
To be eligible for taking the Licensing Examination of the Council, a person must satisfy the
Council:-
(i) that at the time of the application he has satisfactorily completed not less than five
years full time medical training of a type approved by the Council and is the holder of
a medical qualification acceptable to the Council;  and
(ii) that he is of good character.For the purpose of (i), the five years full time medical training shall include a specified period
of internship training as approved by the Council.
DENTIST
Any person wishing to register as a dentist with the Dental Council of Hong Kong (the
Council), with the exception of local graduates, is  required to pass the Licensing Examination of the
Council.  For the purpose of allowing a person to sit the Licensing Examination, the person should
furnish to the Council evidence of:-
(i) having undergone a minimum dental academic  training period (excluding the basic
sciences) of 4 years;  and
(ii) being a person of good character.The Council may prohibit a person from sitting the Licensing Examination if the person has
sat any part of the Licensing Examination five consecutive times and has failed each time.
SUPPLEMENTARY MEDICAL PROFESSIONS
The Supplementary Medical Professions consist of five professions, namely the medical
laboratory technologists, the physiotherapists, the occupational therapists, the optometrists and the
radiographers.  Each of those professions is under the control of a statutory Board which isempowered to register and to hold examinations.
A person is qualified for registration as any of the above five professions if:-(i) he holds a local qualification recognized by the Board;  or
(ii) he holds an overseas qualification recognized by the Board;  or
(iii) he holds a certificate from the relevant Board that he has passed an examination
conducted by the Board.WT/TPR/M/52
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For the purpose of allowing a person to sit the examination, the person should furnish to the
relevant Board, evidence of having received such kind of training.  The Board would then draw
reference to the local training for each individual application.
PHARMACISTS
Any person who wishes to register as a pharmacist with the Pharmacy and Poisons Board (the
Board) must first meet one of the following two criteria:-
(i) he should hold a local pharmacy degree after the completion of a full-time course of
study at a local university;  or
(ii) he must be registered or be professionally qualified to be registered as a pharmacist,
normally in the country in which he has completed his studies in pharmacy.
Then the person must pass the written examinations organized by the Board in those subjects,
namely Pharmacy Legislation in Hong Kong, Phar macy Practice and Pharmacology;  and complete a
relevant pre-registration training and/or post-registration experience for an aggregate period of not
less than one year.  Local graduates may be exempted from the examination.
REGISTERED NURSE
Any person who wishes to register as a registered nurse with the Nursing Board of Hong
Kong (the Board) must either:-
(a) (i) attain the minimum age of 21 years;
(ii) be of good character;  and
(iii) have completed such training as may be prescribed and have passed such
examinations as may be required by the Board;
or
(b) possess a valid certificate to practise nursing issued by such certifying body, as may be
recognized by the Board from time to time as  constituting sufficient evidence of his
competency to practise nursing.
The Board may require the person to prove his competency in nursing by examination
conducted by examiners appointed by the Board and, if required, to undergo such further training as
the Board may specify.
ENROLLED NURSE
Any person who wishes to apply for enrolment as an enrolled nurse with the Nursing Board of
Hong Kong (the Board) must either:-
(a) (i) attain the minimum age of 20 years;  and
(ii) have completed such training as may be prescribed and have passed such
examinations as may be required by the Board;
or
(b) possess a valid certificate to practise nursing issued by such certifying body, as may be
recognized by the Board as constituting sufficient evidence of his competency to practisenursing.WT/TPR/M/52
Page 72
The Board may require the person to prove his competency in nursing by examination
conducted by examiners appointed by the Board and, if required to undergo such further training as
the Board may specify.
MIDWIVES
Any person who wishes to register as a midwif e with the Midwives Board of Hong Kong (the
Board) must either:-
(a) (i) attain the minimum age of 21 years;
(ii) be a woman of good character;  and
(iii) have completed such training as may be prescribed and have passed such
examinations as may be required by the Board;
or
(b) possess a certificate to practise as a midwife issued by such certifying body, as may be
recognized by the Board from time to time.
The Board may require any applicant for registration to prove her competency is midwifery by
examination conducted by examiners appointed by the Board, and if required, to undergo such further
training as the Board may specify.WT/TPR/M/52
Page 73
Attachment 3:  Responses to questions from Norway
The Textiles Quota Control SystemPrinciple of Quota Allocation
Quotas are allocated according to the basic principle of past performance, i.e., they go to
those companies which have demonstrated their ability to export the particular products to the marketsconcerned.  This means that quotas have to be earned, and will be lost unless they are re-earned by
export performance.  This allocation principle of past performance provides certainty and stability to
traders which hold quotas since they could expect to receive the same amount of quota as in the
preceding year as long as they are able to keep up their export performance.  The principle also
contributes towards the optimum utilization of the restraint limits.
Transfer of Quotas
Quotas are transferable so as to:
- Facilitate optimum utilization of quotas by Hong Kong as a whole by providing
flexibility to the trade;
- provide the opportunity for companies with no or insufficient quotas to obtain them,
thereby creating a channel for newcomers;  and
- encourage the movement of quotas from th e hands of those who are no longer able to
use them to those who are.
There are two types of quota transfers.  Perman ent transfers enables the transferee to obtain
the use of quota for the year in question and receives a quota allocation in the following year based on
its performance against the transferred quantity.  For temporary transfers, while the transferee obtainsthe use of quota for the year in question, the performance against the transferred quantity is attributed
to the transferor.
With a view to monitoring the transfer activitie s, all transfer transactions must be registered
with the Trade Department.  There are also rules to guard against excessive quota transfer activitiesand improper use of quotas to ensure that the flexibility of quota transfers is not abused.  The rules
include:
- Rules regarding permanent transfers - any trader who has permanently transferred in
quotas in any category is not allowed to permanently transfer out any quotas in thatcategory in the year of transfer and the immediate following year;  and
- rules regarding temporary transfers - an y quota holder who, temporarily transfers out
on a temporary basis 50% or more of its quota holdings in any group of categories
will be liable to have its quota allocation reduced in the following year.  Themaximum reduction is 40% of its total transfers-out amount in that group for the
market concerned.
On the other hand, traders which are able to utilize all temporarily transferred-in quotas in
addition to its own quota will be given an extra amount of quota in the succeeding year as an
encouragement.WT/TPR/M/52
Page 74
Other Flexibility Provisions
The flexibility provisions in the ATC are extended to quota holders in order to provide the
greatest flexibility to the trade under the system.  These provisions include swing and anticipation of
quotas.  Swing is the exchange of quota in one category in return for an equivalent quantity of quota
in another category.  Traders must surrender a portion of their quota in one category in hand in
exchange for an equivalent quantity of quota in another category.  On the other hand, anticipation of
quotas allows quota holders to borrow a portion of their quota allocations for the succeeding year foruse in the current year.  Anticipated quotas will be debited from the traders’ allocations in the
subsequent year.
Free Quotas
In general, free quota is the quota which remains after allocation is made to all eligible traders
based on past performance.  Free quota enables companies with insufficient quotas (including
newcomers) to obtain quotas for export.  They also facilitate the gradual movement of quotas to
traders with ability and genuine need to use them, and ensure optimum utilization of quotas for Hong
Kong as a whole.  Traders may apply for free quotas through applications under free quota schemesoperated throughout the year.  All applicants under the free quota schemes must demonstrate their
ability and undertake to utilize the free quotas they apply for.  Other conditions are put in place to
ensure that this arrangement will not be abused, e.g. the requirements that the manufacturers must
perform the principal processes of manufacture of the goods and that free quotas obtained may not be
transferred out.
Licensing System
Licensing Control
All textiles exports and imports, with minor exceptions, are subject to licensing under the law,
unless exemption has been otherwise provided for.  Exemptions are principally provided for under aTextiles Traders Registration Scheme (TTRS).  A trader registered under the TTRS may be exempted
from licensing arrangements in respect of all textiles imports, all re-exports and domestic exports to
non-restrained markets provided that he submits to the Trade Department a notification containing
information pertaining to the consignment in question through the carrier at the time of importation or
before exportation.  The coverage of the TTRS was also extended to domestic exports of properlymarked and mutilated samples to the USA market with effect from December 1996.
All goods (other than re-exports) covered by export licences must be of Hong Kong origin.
As a condition of issue of an export licence, the declared manufacturer is required to sign a
declaration that the relevant goods covered by the licence application meet such a requirement.
In addition, where Hong Kong quota is used, the quota supplier must comply with a number
of quota utilization conditions in order to ensure  that he is genuinely involved in the export or
manufacture of the consignment in question and that goods exported under Hong Kong quota are of
Hong Kong origin.
Textiles Controls Registration
Traders participating in the exports of restrain ed textiles have to be registered with the
Department under the Textiles Controls Registration system.  Companies applying for registration
must have valid Business Registrations and must be actively involved in the textiles trade.
Companies must be registered under this system before they can be a quota holder.WT/TPR/M/52
Page 75
The Department has the right to refuse to register any company or to cancel the registration of
any company where it deems appropriate for the pu rposes of upholding the reputation of Hong Kong
among her international trading partners and safeguar ding the integrity of the Textiles Export Control
System.
Factory Registration
All manufacturers and subcontractors which are engaged in the production of restrained
products and appeared on export licences of any restrained markets are required to possess a valid
Factory Registration.
Enforcement and Sanctions for Malpractices
To ensure the integrity of the textiles ex port control system, documentation and physical
checks are conducted to ensure that textiles exports are covered by valid export licences or
notifications, and to verify the accuracy of particulars declared on the licences.
The Department takes a very serious view of companies which breach any of the conditions
of the textiles export control system.  In addition to prosecution under the Import and Export
Ordinance, which provides for a maximum pe nalty of a fine of HK$500,000 and two years'
imprisonment, the Department may impose administrative actions against these companies.  Such
administrative actions may involve permanent surrender of quota, debarment from all export licensing
facilities, denial of certification facilities or de-registration of the manufacturer for certification
purpose.  Through vigorous enforcement and application of the sanctions, the Department has been
able to maintain a high integrity and good efficacy of the system.WT/TPR/M/52
Page 76
Attachment 4:  Responses to questions from Switzerland
PATENTS
PART IX
Government use of Patented Inventions
68. Declaration of extreme urgency
The Governor in Council may, for the purposes of applying sections 69 to 71, by regulation
declare a period of extreme urgency whenever he considers it to be necessary or expedient in the
public interest for the maintenance of supplies and se rvices essential to the life of the community or
for securing sufficient supplies and services essential to the life of the community.
69. Government use of patents during period of extreme urgency
(1) During a period of declared extreme urgency a public officer authorized in writing by the
Governor or any person authorized in writing by such public officer may in relation to:-
(a) a patented invention, without the consent of the proprietor of the patent;  or(b) an invention in respect of which an application for a patent has been filed, without the
consent of the applicant, do any act in Hong Kong in relation to the invention as
appears to the public officer or person authorized to be necessary or expedient in
connection with the urgency giving rise to the declaration under section 68.
(2) Any act done in relation to an invention by virtue of this section is in the following provisions
of this section referred to as use, or Government use, of the invention;  and "use", in relation to an
invention, in section 70 to 72 shall be construed accordingly.
(3) Government use may include any act which would, apart from this section, amount to an
infringement of the patent concerned or, as the case may be, give rise to a right under section 88 tobring proceedings in respect of the application for a standard patent.
(4) Any Government use of the invention made at any time either
(a) after the publication of an application for a standard patent or the grant of a
short-term patent for the invention;  or
(b) without prejudice to paragraph (a), in consequence of a relevant communication made
otherwise than in confidence:-
(i) after the deemed date of filing of the application for the standard patent for the
invention or the date of filing of the application of the short-term patent for theinvention, as the case may be;  or
(ii) Where priority was claimed, after the date of priority, shall be made on such
terms as may be agreed, either before or after the use by the Government and
the proprietor of the patent or as may in default of agreement be determined bythe court on a reference under section 72.
(5) Where an invention is used by virtue of this section at any time after publication or an
application for a standard patent for the invention but before such a patent is granted, and the termsWT/TPR/M/52
Page 77
for its use agreed or determined as mentioned in subsection (4) include terms as to payment for the
use, then (notwithstanding anything in those te rms) any such payment shall be recoverable only:-
(a) after such a patent is granted;  and
(b) if (apart from this section) the use would, if the patent had been granted on the date of
the publication of the application, have infringed not only the patent but also the
claims (as interpreted by the description and any drawings referred to in thedescription or claims) in the form in which they were contained in the application as
published.
(6) The authority of a public officer in respect of an invention may be given under this section
either before or after the patent is granted, and may be given to any person whether or not he isauthorized directly or indirectly by the proprietor of the patent to do anything in relation to the
invention.
(7) Where any Government use of an invention is made by or with the authority of a public
officer under this section, then the public officer shall notify the proprietor of the patent as soon aspracticable, and furnish him with such information as to the extent of the use as he may from time to
time require.
(8) A person acquiring anything disposed of in the exercise of powers conferred by this section,
and any person claiming through him, may deal with it in the same manner as if the patent were held
on behalf of the Government.
(9) Any reference in this section to a patented in vention, in relation to any time, is a reference to
an invention to which a patent has before that time been, or subsequently, granted.
(10) In this section "relevant communication", in relation to an invention, means a communication
of the invention directly or indirectly by the proprietor of the patent or any person from whom hederives title.
(11) Subsection (4) is without prejudice to any rule of law relating to the confidentiality of
information.
70. Rights of third parties in respect of Government use
(1) The provisions of any licence, assignment or agreement specified in subsection (3) are of no
effect in relation to:-
(a) any Government use of an invention by a public officer, or a person authorized by a
public officer, by virtue of section 69;  or
(b) anything done for Government use to the order of a public officer by the proprietor of
a patent in respect of a patented invention or by the proprietor of an application inrespect of an invention for which an application for a patent has been filed and is still
pending, so far as those provisions:-
(i) restrict or regulate the working of the invention, or the use of any model,
document or information relating to it;  or
(ii) provide for the making of payments in respect of, or calculated by reference to,
such working or use.WT/TPR/M/52
Page 78
(2) The reproduction or publication of any model or document in connection with a working or
use referred to in subsection (1) shall not be deemed to be an infringement of any copyright or
protected layout-design (topography) subsisting in the mode or document.
(3) The licence, assignment or agreement referred to in subsection (1) is any licence, assignment
or agreement which is made, whether before or after the date of commencement of this Ordinance,
between any person who is a proprietor of or an a pplicant for the patent, or anyone who derives title
from any such person whatever other than the Government (on the other hand).
(4) Where an exclusive licence granted otherwise than for royalties or other benefits determined
by reference to the working of the invention is in force under the patent or application concerned,
then:-
(a) section 69(4) applies in relation to anything done in respect of the invention which,
but for this section and section 69(1), would be an infringement of the rights of the
licensee, with the substitution in those provisions of reference to the proprietor of the
patent with reference to the licensee;  and
(b) section 69(4) does not apply in relation to anything done in respect of the invention
by the licensee by virtue of an authority given under section 69(1).
(5) Subject to subsection (4), where the patent, or the right to the grant of the patent has been
assigned to the proprietor of the patent or application in consideration of royalties or other benefits
determined by reference to the working of the invention, then:-
(a) section 69(4) applies in relation to any Government use of the invention as if
reference to the proprietor of the patent included a reference to the assignor, and any
sum payable for Government use under that subsection shall be divided between
those persons in such proportion as may be agreed on by them or as may in default of
agreement be determined by the court on a reference under section 72;  and
(b) section 69(4) applies in relation to any act done in respect of the invention for
Government use by the proprietor of the patent or application to the order of a public
officer, as if that act were use made by virtue of an authority given under that section.
(6) Where section 69(4) applies to any use of an invention and a person holds an exclusive
licence under the patent or application concerned (other than such a licence as is mentioned in
subsection (4)) authorizing him to work the invention, then subsections (8) and (9) shall apply.
(7) In subsections (8) and (9) "the section 69(4) payment" means such payment (if any) as the
proprietor of the patent or application and the Government agree under section 69, or the court
determines under section 72, should be made by the public officer concerned to the proprietor in
respect of the use of the invention.
(8) The licensee shall be entitled to recover from the proprietor of the patent or application such
part (if any) of the section 69(4) payment as may be agreed on by them or as may in default of
agreement be determined by the court under section 72 to be just having regard to any expenditure
incurred by the licensee:-
(a) in developing the invention;  or(b) in making payments to the proprietor in consideration of the licence, other than
royalties or other payments determined by reference to the use of the invention.WT/TPR/M/52
Page 79
(9) Any agreement by the proprietor of the patent or application and the Government under
section 69(4) as to the amount of the section 69(4) payment shall be of no effect unless the licensee
consents to the agreement;  and any determination by the court under section 69(4) as to the amountof that payment shall be of no effect unless the licensee has been informed of the reference to the
court and is given an opportunity to be heard.
(10) In this section "the public officer concerned", in relation to any Government use of an
invention, means the public officer by whom or on whose authority the use was made.
71. Compensation for loss of profit
(1) Where Government use is made of an invention, the Government shall pay:-
(a) to the proprietor of the patent;  or
(b) if there is an exclusive licence in force in respect of the patent, to the exclusive
licensee,
compensation for any loss resulting from his not be ing awarded a contract to supply the patented
product or, as the case may be, to perform the patented process or supply a thing made by means of
the patented process.
(2) Compensation is payable only to the extent that such a contract could have been fulfilled from
the existing manufacturing or other capacity of the proprietor or licensee;  but is payable
notwithstanding the existence of circumstances re ndering him ineligible for the award of such a
contract.
(3) In determining the loss, regard shall be had to the profit which would have been made on such
a contract and to the extent to which any manufacturing or other capacity was under-used.
(4) No compensation is payable in respect of any failure to secure contracts to supply the
patented product or, as the case may be, to perform the patented process or supply a thing made by
means of the patented process, otherwise than for Government use.
(5) The amount payable shall, if not agreed between the proprietor or licensee and the
Government, be determined by the court on a reference under section 72, and is in addition to any
amount payable under section 69 or 70.
72. References of disputes as to Government use
(1) Any dispute as to:-
(a) the exercise by a public officer, or a person authorized by a public officer, of the
powers conferred by section 69;
(b) terms for Government use of an invention under section 69;
(c) the right of any person to receive any part of a payment made in pursuance of section
69(4);  or
(d) the right of any person to receive a payment under section 71,WT/TPR/M/52
Page 80
may be referred to the court by either party to the dispute after a patent has been granted for the
invention.
(2) In determining under this section any disput e between the Government and any person as to
the terms for the Government use of an invention, the court shall have regard:-
(a) to any benefit or compensation which that person or any person from whom he
derives title may have received or may be entitled to receive directly or indirectlyfrom any public officer in respect of the invention in question;
(b) to whether that person or any person from whom he derives title has in the court's
opinion without reasonable cause failed to comply with a request of the public officer
concerned for Government use of the invention on reasonable terms.
(3) On a reference under this section the court may refuse to grant relief by way of compensation
in respect of Government use of an invention:-
(a) during any further period specified under section 33(4), but before payment of the
maintenance fee and any additional fee prescribed for the purposes of that section;  or
(b) during any further period specified under section 39(4) or 126(5) (as the case may
be), but before the payment of the renewal fee and any additional fee prescribed for
the purposes of that section.
(4) Where an amendment of the specification of a patent has been allowed under this Ordinance
or has been recorded under section 43(2), the court shall not grant relief by way of compensation
under this section in respect of any such use before the decision to allow the amendment or the
recording of the amendment unless the court is satisfied that the specification of the patent as
published was framed in good faith and with reasonable skill and knowledge.
(5) If the validity of a patent is put in issue in proceedings under this section and it is found that
the patent is only partially valid, the court may, subject to subsection (6), grant relief to the proprietor
of the patent in respect of that part of the patent which is found to be valid and to have been used in
Government use.
(6) Where in any such proceedings it is found that  a patent is only partially valid, the court shall
not grant relief by way of compensation, costs or e xpenses except where the proprietor of the patent
proves that the specification of the patent was framed in good faith and with reasonable skill and
knowledge, and in that event the court may grant relief in respect of that part of the patent which is
valid and has been so used, subject to the discretion of the court as to costs and expenses and as to thedate from which compensation should be awarded.
(7) As a condition of any such relief the court may direct that the specification of the patent shall
be amended to its satisfaction upon an application made for that purpose under section 102, and an
application may be so made accordingly, whether or not all other issues in the proceedings have beendetermined.
(8) In considering the amount of any compensation for government use of an invention after
publication of an application for a standard patent for the invention and before such a patent is
granted, the court shall consider whether or not it would have been reasonable to expect, from a
consideration of the application as published that a patent would be granted conferring on the
proprietor of the patent protection for an act of the same description as that found to constitute thatWT/TPR/M/52
Page 81
use, and if the court finds that it would not have been reasonable, it shall reduce the compensation to
such amount as it thinks just.
(9) Where a person becomes the proprietor or one of the proprietors or an exclusive licensee of a
patent (the new proprietor or licensee) by virtue of a transaction, instrument or event to which section
52 applies, then unless:-
(a) an application for registration of the prescribed particulars of the transaction,
instrument or event is made before the end of the period of six months beginning with
its date;  or
(b) the court its satisfied that it was not practicable for such an application to be made
before the end of that period and that an application was made as soon as practicablethereafter,
the new proprietor or licensee shall not be entitled to any compensation under section 69(4) (as it
stands or as modified by section 70(4) or to any compensation under section 71 in respect of any use
of the patented invention by a public officer or a person authorized by a public officer under section69 after the date of the transaction, instrument or event are registered.
(10) One of two or more joint proprietors of a pa tent or application for a patent may without the
concurrence of the others refer a dispute to the court under this section, but shall not do so unless the
others are made parties to the proceedings;  but any of the others made a defendant shall not be liable
for any costs or expenses unless he enters an appearance and takes part in the proceedings.WT/TPR/M/52
Page 82
Attachment 5:  Responses to questions from Switzerland
Seizure Statistics – Trade Descriptions
Type Quantity Value
(96) (97) (96) (97)
Clothing 1,065,178 nos. 2,143,155 nos. $81,262,244 $152,305,600
Leather Goods 42,448 nos. 24,405 nos. $7,907,815 $5,667,100
Watch & accessories 550,086 nos. 322,537 nos. $15,423,078 $12,861,000
Computer & accessories 8,408 nos. 5,080 nos. $9,511,298 $1,570,700
Pharmaceutical products &
medicine85,756 nos. 680,743 nos. $330,636 $1,262,000
Foodstuff 65,733 nos. 9,928 nos. $2,458,158 $324,500
Electrical & electronic goods 72,904 nos. 407 nos. $3,984,560 $128,800
Others NA NA $30,741,280 $36,164,900
Total $151,619,064 $210,285,200WT/TPR/M/52
Page 83
Export of Watches*
HK$Mn
Domestic Export Re-export Total Export
1998 (Jan - Sept) 3,706 17,024 20,730
1997 5,851 23,629 29,480
1996 6,534 23,027 29,561
1995 7,429 20,914 28,343
1994 7,201 18,257 25,458
*   Including mechanical and electrical watches.
Source:  Census and Statistics Department, HKSARG.
Major Domestic Export Markets for Watches in 1997
HK$Mn
Domestic Export:
USA 1,469
Japan 618
Germany 570
UK 328
Panama R 257
UAE 218
France 191
Italy 189
Spain 150
Turkey 142
Others 1,719
Total: 5,851
Source:  Census and Statistics Department, HKSARG.
Major Re-export Markets for Watches in 1997
HK$Mn
Re-export:
USA 7,127
Japan 2,242
Germany 1,394
UAE 1,322
Singapore 1,210
UK 1,027
Spain 852
Panama R 708
Italy 629
France 602
Others 6,516
Total: 23,629
Source:  Census and Statistics Department, HKSARG.
Import of Watch Movements from Switzerland
HK$Mn
Mechanical1Electrical2Total
1997 98
2nd largest supplier  (24%)*146
6th largest supplier  (2.2%)*244
(3.5%)
1996 131 213 344
1995 291 230 521
1994 254 192 446
*  Figures in bracket denote percentage share of total import of mechanical or electrical watch movements.
Source:  Census and Statistics Department, HKSARG.
__________
                                                     
1HS Codes 9108.20, 9108.91 and 9108.99.
2HS Codes 9108.11, 9108.12 and 9108.19.