WT/TPR/S/52 Trade Policy Review
Page 14
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES
(1) INTRODUCTION
1. On 1 July 1997, in accordance with the 1984 Sino-British Joint Declaration1, Hong Kong,
previously a British dependent territory, became a Special Administrative Region of the People's
Republic of China (HKSAR).  Since the transfer of sovereignty, the Basic Law, which was adopted in
April 1990 by China's Seventh National People's Congress, has served as the principal constitutionalinstrument governing the  HKSAR.  The Basic Law stipulates the principle of "one country, two
systems", that is, while being a local administrative regional, which comes directly under the
Government of the People's Republic of China (Central People's Government), the HKSAR enjoys a
high degree of autonomy except in foreign affairs (excluding foreign trade) and defence.  The
previous capitalist system and way of life are to be maintained for at least 50 years after 1997, thelegal, economic and social systems operating during the British period will be continued, and the
HKSAR's courts are endowed with independent judi cial power, including that of final adjudication.
(2) I
NSTITUTIONAL SETTING
2. The transfer of sovereignty did not affect Hong Kong's legislation, except in a few rare
instances where it contravened the Basic Law.  These instances do not pertain to trade or trade-relatedpolicies.  The Government of the HKSAR is headed by the Chief Executive, who replaced the
Governor of Hong Kong appointed by the British Government.  The Chief Executive is appointed by
the Central People's Government after being selected by an Election Committee.
2  The term of office
of the Chief Executive is five years, with a maximum of two terms.  The Chief Executive is formally
empowered to conduct, on behalf of the Governme nt of the HKSAR, external and other affairs as
authorized by the Central People's Government, including the power to conclude and implement
multilateral, regional and bilateral trade agreements with foreign countries and regions and relevantinternational organizations.
3  The Chief Executive is accountable to the Central People's Government
and the HKSAR in accordance with the provisions of the Basic Law.  There does not appear to be any
specific provision empowering the Central People's Government to instruct the Chief Executive.
3. The Chief Executive is advised by an Executive Council (ExCo) in policy-making.  The
Council currently consists of 14 Members, who are appointed from among principal officials of the
                                                     
1Details of Hong Kong's institutional setting before the transfer of sovereignty can be found in GATT
(1994).
2Article 45 of the Basic Law provides that "the method for selecting the Chief Executive shall be
specified in the light of the actual situation in the Hong Kong Special Administrative Region and in accordancewith the principle of gradual and orderly progress.  The ultimate aim is the selection of the Chief Executive byuniversal suffrage upon nomination by a broadly representative nominating committee in accordance withdemocratic procedures".  The specific method for select ing the current Chief Executive is prescribed in the
"Decision of the National People's Congress on the Method for the Formation of the First Government and the
First Legislative Council of the Hong Kong Special Administrative Region" adopted by the Seventh National
People's Congress at its third session on 4 April 1990.  The method for selecting subsequent Chief Executives isdescribed in the Annex I of the Basic Law.
3Article 48 of the Basic Law stipulates the powers and functions of the Chief Executive, including:  to
lead the Government;  to be responsible for the implementation of laws;  to sign Bills passed by the legislatureand to promulgate laws;  to decide on government policies and to issue executive orders;  to nominate and report
to the Central People's Government for appointment of certain principal officials;  to appoint and remove judges
of the courts at all levels, and holders of public offi ce, in accordance with legal pr ocedures;  to implement the
directives issued by the Central People's Government in respect of the relevant matters provided for in the BasicLaw;  to conduct external and other affairs as authorized by the Central People's Government;  and to approvethe introduction of motions regarding revenue or expenditure to the legislature.Hong Kong, China WT/TPR/S/52
Page 15
executive authorities, Legislative Council (LegCo) members and public figures4;  their appointment or
removal is decided by the Chief Executive, who chairs meetings of the ExCo.
4. The LegCo serves as the HKSAR's legislature.5  It currently consists of 60 elected members.
LegCo ceased to have ex officio members in 1995.  The term of office of the first LegCo is two years,
from 1998 to 2000;  subsequent terms will be four years.  The President of the LegCo is elected by,
and from among, its members.
5. Members of the LegCo may introduce, individually or jointly, Bills that do not relate to public
expenditure or to the political structure or the operation of the Government.  All Bills relating to
government policies need the written consent of the Chief Executive before being introduced into the
LegCo.  Proposals for Bills or regulations are usually initiated by the Government Bureaux in charge,
following discussions with the departments involved, relevant panels of LegCo advisory boards andcommittees, and after public consultations.  The Department of Justice if responsible for drafting all
legislation initiated by the Government, according to drafting instructions by the relevant policy
bureaux.
6. Bills passed by the LegCo become laws (ordinances) only after being signed and promulgated
by the Chief Executive.
6  If the Chief Executive considers that a Bill passed by the LegCo is not
compatible with the overall interests of the HKSA R, it may be returned to the LegCo within three
months for reconsideration.  If the LegCo passes the original Bill again, by not less than a two-thirds
majority of all Members (i.e. 40 of the total of 60 members), the Chief Executive must sign and
promulgate it within one month.  If the Chief Executive refuses to do so, or if the LegCo refuses to
pass a budget or any other important Bill introduced by the Government, and if consensus cannot be
reached after consultation, the Chief Executive may dissolve the LegCo.7  Laws enacted by the LegCo
must be reported to the Standing Committee of th e National People's Congress for the record;  the
reporting does not affect the entry into force of such laws.
7. The primary rules governing Hong Kong's trad e in goods are laid down in the Import and
Export Ordinance and its subsidiary legislation, together with other relevant ordinances applicable to
the specific commodity items.
                                                     
4As provided in the Basic Law, the Chief Executive must consult the ExCo before making important
policy decisions, introducing Bills into the LegCo, making subordinate legislation, or dissolving the LegislativeCouncil.  If the Chief Executive does not accept a majority opinion of the ExCo, he must put the specificreasons on record.  Members of the ExCo shall be Ch inese citizens who are permanent residents of the HKSAR
with no right of abode in any foreign country.
5Article 66 of the Basic Law.  The LegCo elected in September 1995 was dissolved on 1 July 1997
upon the lapse of the Letters Patent and the Royal Instruction – the constitutional instruments which applied toHong Kong when it was a British dependent territory.  It was then replaced by a Provisional LegCo.  The firstelection to LegCo after the transfer of sovereignty took place on 24 May 1998.  The composition of the currentLegCo is 30 members returned by functional constitue ncies, ten members returned by the Election Committee,
and 20 members returned by geographical constituencies through direct elections.  These proportions are to be
changed for the second and the third terms, according to the Annex II of the Basic Law.  The Basic Law
stipulates that the method for forming the LegCo is to be specified in the light of the actual situation in theHKSAR and in accordance with the principle of gradual and orderly progress, with the aim of electing all themembers by universal suffrage (Article 68).
6During the term of office of the Provisional LegCo, all 63 Bills passed by the Council were signed by
the Chief Executive.
7Article 50 of the Basic Law.  The Chief Executive is allowed to dissolve the LegCo only once during
each term of his or her period of office.  The Chief Executive must resign if the new Legislative Council againpasses the original Bill by a two-thirds majority of all members and if he/she still refuses to sign it.  The same
applies to a situation where the new LegCo still refuses to pass the original Bill in dispute.WT/TPR/S/52 Trade Policy Review
Page 16
8. Regarding policy-making on the provision of municipal and regional services, including
public hygiene, recreation, and culture, the Provisional Urban Council, the Provisional Regional
Council and 18 Provisional District Boards were set up on 1 July 1997 to replace the former district
organizations.  These bodies were established as a transitional arrangement before elections could be
held to form the first district organizations of the HKSAR.  The members of these provisional bodies
were appointed by the Chief Executive.  It is envisaged that their term of office will end no later than31 December 1999.
9. With the transfer of sovereignty, the Court of Final Appeal was established to replace the
Privy Council in London as the final appellate cour t for the HKSAR.  The court has essentially the
same function and jurisdiction, subject only to the Basic Law, as the Judicial Committee of the Privy
Council in relation to Hong Kong prior to the transfer of sovereignty.
(3) T
RADE POLICY FORMULATION AND IMPLEMENTATION
10. Under the Basic Law, the HKSAR remains a separate customs territory;  it may use the name
"Hong Kong, China" and participate in the relevant international organizations and international trade
agreements, such as WTO Agreements.  The Basic Law stipulates that the HKSAR may, on its own,
maintain and develop relations and conclude and implement agreements with foreign States andregions and relevant international organizations in the appropriate fields, including the economic,
trade, financial and monetary, shipping, communications, tourism, cultural and sports fields (Article
151).  The Basic Law also stipulates that the HKSAR "shall maintain the status of a free port" (Article
114), "pursue a policy of free trade and safeguard the free movement of goods, intangible assets and
capital" (Article 115), and that it "may issue its own certificates of origin for products in accordance
with prevailing rules of origin" (Article 117).
(ii) Government bureaux and departments
11. The Chief Secretary for Administration, the Financial Secretary, and the Secretary of Justice
are the three most senior officials in the executive branch of the Government under the Chief
Executive.  The Financial Secretary is responsible for fiscal and economic policies.
12. The HKSAR's administration is organized in to Government Secretariat bureaux and
departments.  In principle, Government Secretariat bureaux formulate policies and make legislativeproposals;  the major functions of departments include implementation of laws and policies and the
provision of direct services to the public.
13. Currently, there are 15 bureaux under the Chief Secretary for Administration and the
Financial Secretary.  Five of these, dealing with fiscal and economic policies, are headed by the
Financial Secretary:  namely, Economic Services Bu reau, Finance Bureau, Financial Services Bureau,
Trade and Industry Bureau, and Works Bureau.  Each bureau is headed by a policy secretary, who is
normally selected from officers in the Administrative Service of the Government (Chart II.1).
8
14. The Trade and Industry Bureau is responsible for trade policy formulation and review.  The
Trade Department, under the Trade and Industry Bureau, is responsible for HKSAR's commercial
relations with foreign countries, implementation of trade policy and agreements, and the conduct ofimport and export licensing and origin certification.  The Director-General of Trade advises the
Secretary for Trade and Industry on matters affecting trade policy and is also the Government's chief
trade negotiator.  The Industry Department deal s with, among other things, matters concerning
promotion of investment.  The Intellectual Pr operty Department focuses on matters relating to
                                                     
8The Administrative Service comprises about 500 administrative officers.Hong Kong, China WT/TPR/S/52
Page 17
intellectual property protection.  The portfolio of the Customs and Excise Department includes
trade-related enforcement activities, in such area as intellectual property rights.
15. Unlike many of its counterparts abroad, the HKSAR administration that deals with external
trade and industrial development is not organized along sectoral lines.  A number of statutory bodies
are involved in promoting trade and industry at home and abroad, including the Hong Kong Trade
Development Council (HKTDC), the Hong Kong Export Credit Insurance Corporation (ECIC), theHong Kong Productivity Council and the Hong Kong Industrial Estates Corporation (Chapter III.(3)).
Their boards are normally composed of government officials and private sector representatives.
16. The structure and function of the Independe nt Commission Agains t Corruption (ICAC),
which was established in 1974, have remained the same since the transfer of sovereignty.  The ICAC,
comprising some 1,200 officers at the end of 1997, is independent of the public service;  theCommissioner of the ICAC is responsible directly to the Chief Executive.  Its role is to tackle
corruption, either in public or private cases, through law enforcement, education and prevention.
9  The
ICAC receives complaints, initiates investigations and prosecutions, and conducts studies on
corruption-prone areas.  In 1997, some 3,000 corruption cases were reported to the ICAC, some 2,200
investigations were carried out, and about 300 persons were prosecuted and 200 convicted.
17. Only Chinese citizens permanently resident in the HKSAR with no right of abode in any
foreign country may fill the principal official posts of the Government.10  For other Government posts,
foreign nationals previously serving in the Hong Kong public service, or those holding permanent
identity cards of HKSAR may be employed.
(iii) Advisory and review bodies
18. Various bodies exist to advise the Government in specific areas of work, including economic
matters, education, labour, housing, social welfare, transport, consumer rights, and the operation ofsecurities and futures markets.
19. Important advisory bodies within the purview of the Trade and Industry Bureau include the
Trade Advisory Board;  the Textiles Advisory Board; and the Rice Advisory Committee which
advises the Director-General of Trade on the technical aspects of the operation of the Rice Control
Scheme and on all aspects of the rice trade.  The Industry and Technology Development Council isthe highest advisory body to the Government on matters related to industrial and technological
development in Hong Kong.  There is also an Economic Advisory Committee, which advises the
Government on general economic policy matters.  In addition, the Chief Executive chairs a
Commission on Strategy Development, which advise s on long-term development issues and looks
into various matters including world trends, human resources, education, housing, environment andHong Kong's relations with China (mainland).
20. The Consumer Council was established in 1974 as a government-financed autonomous body
and prepares policy submissions on a wide range of  consumer-related issues.  The Council comprises
a Chairman, a Vice-Chairman and not more than 20 other members;  they are all appointed by the
Chief Executive.  Recent council initiatives include a survey and recommendations regardingcompetition policy, both in general terms and in the form of sectoral surveys of telecommunications,
energy and retail sectors.
                                                     
9Relevant laws include the Prevention of Brib ery Ordinance, Independent Commission Against
Corruption (Treatment of Detained Persons) Order, Independent Commission Against Corruption Ordinance,
Acceptance of Advantages (Governor's Permission) Notice 1992, and Prevention of Bribery (Appeal againstConfiscation Order) Rules.
10Article 101.  As of 10 August 1998, these posts are:  Chief Secretary for Administration, Financial
Secretary, Secretary for Justice, the Secretaries of  15 bureaux, Commissioner of Customs and Excise.WT/TPR/S/52 Trade Policy Review
Page 18
Chart II.1
Structure of the HKSAR Government, June 1998
Chief Executive
Independent
Commission
Against
Corruption
Chief
Secretary of 
AdministrationFinancial
SecretarySecretary
for JusticeAudit
CommissionOffice
 of the
Ombudsman
Central
Polic y Unit
Chief Executive,
Hong Kong
MonetaryAuthoritySecretary for
Economic
Services
Economic
Services
BureauSecretary for
Financial
Services
Financial
Services
Bureau
Secretary for
Trade and Industry
Trade and
Industry BureauSecretary for
Works
Works BureauSecretary for
the Treasury
Finance Bureau
Industry 
DepartmentOverseas Economic 
and Trade OfficesTravel Agents
Registry
Customs and
Excise
DepartmentTrade 
DepartmentIntellectual
Property
Department
Source : HKSAR Government.Policy 
BureauxPublic Service
CommissionHong Kong, China WT/TPR/S/52
Page 19
21. Appointments of individuals to government bodies apparently take into account abilities,
expertise, experience, integrity and commitment to community service.  According to the authorities,
nationality is not a consideration and foreigners have been appointed to serve on government advisorybodies.
11
(4) TRADE POLICY OBJECTIVES AND ARRANGEMENTS
22. The HKSAR's trade policy objectives are:  to promote a free, open and stable multilateral
trading system;  to safeguard HKSAR's rights and fulfil its obligations under multilateral, regional,
and bilateral trade and trade-related agreements and arrangements;  and to secure, maintain and
improve access for HKSAR's exports.
(i) Multilateral agreements
23. Hong Kong signed and ratified the Marrakesh Declaration to become a founding member of
the WTO on 1 January 1995;  it had been a GATT contracting party in its own right since April
1986.12  It is also party to the WTO Agreement on Government Procurement (GPA).13
24. All Uruguay Round Agreements were accepted without having to go through internal
ratification procedures.14  Any necessary amendments to the relevant Hong Kong legislation were
debated and enacted by the Legislative Council.  Among the legal changes that have been made since
the last Trade Policy Review of Hong Kong, were the enactment of laws related to intellectual
property rights, including an omnibus bill, enacted in May 1996, to amend laws in respect of trade
marks, patents and copyrights, to meet HKSAR's obligations under the Agreement on Trade-RelatedAspects of Intellectual Property Rights (TRIPS).  No other changes to the domestic legislation were
required to implement the Uruguay Round Agreemen ts.  Since the completion of the Uruguay Round,
Hong Kong has actively participated in subsequent multilateral negotiations, including those on
financial and maritime services and on basic telecommunications.  As a result of the 1997 financial
services negotiations, the HKSAR revised its Schedule of Specific Commitments.  Furthermore, it
made further commitments in negotiations on basic telecommunications services, concluded in
February 1997 (Chapter IV (4)).  At the WTO Singapore Ministerial Conference in earlyDecember, 1996, Hong Kong was party to the Ministerial Declaration on Trade in Information
Technology Products (the Information Technology Agreement (ITA)), which will eliminate most
tariffs in the information technology sector by the year 2000.
25. The HKSAR participates in the WTO Working Groups on Transparency in Government
Procurement, Interaction between Trade and Competition Policy, and Relationship between Trade and
Investment, which were established in 1997 pursuant to the Singapore Ministerial Declaration.  In the
                                                     
11Officials from Singapore have been appointed to some of the advisory bodies, including the Advisory
Council on the Environment, the Employees Retraining  Board, the Vocational Training Council, the Action
Committee Against Narcotics and the Standing Committee on Language Education and Research.  The
appointment is part of an exchange programme between Hong Kong and Singapore.
12Hong Kong was also a signatory to the Arrangement Regarding International Trade in Textiles (the
Multifibre Arrangement), and to all Tokyo Round Agreements and Arrangements except the 1979 Agreementon Trade in Civil Aircraft, the International Dairy Agreement, and the International Bovine Meat Agreement.
13Hong Kong acceded to the GPA on 20 May 1997.  The GPA entered into force for Hong Kong on
19 June 1997.
14Under the common law system practised in Hong Kong, China, international agreements do not
automatically form part of Hong Kong, China's domestic legislation.  If an international obligation cannot beimplemented by administrative measures or existing legislation, new legislation will be enacted to implementsuch an obligation.  No enabling legislation was necessary to implement the WTO Agreement, except for theamendments to certain laws related to intellectual property rights.WT/TPR/S/52 Trade Policy Review
Page 20
context of implementing its Uruguay Round commitments and in support of multilateral disciplines,
the HKSAR has made notifications under a number of WTO Agreements (Table II.1).
Table II.1
Principal notifications by Hong Kong, China under WTO Agreements, as at February 1998
Agreement Document reference Requirement/Contents
Agreement on Trade-Related
Aspects of Intellectual PropertyRights (TRIPS)IP/N/2/HKG/1, 19 July 1995 Article 1.3:  Notification that Hong Kong will not apply in
respect of phonograms the criterion of fixation as providedunder Article 5 of the Rome Convention, etc.
Agreement on Agriculture G/AG/N/HKG/1, 15 February 1996
G/AG/N/HKG/2, 14 November 1997
G/AG/N/HKG/3, 14 November 1997
G/AG/N/HKG/4, 24 July 1998G/AG/N/HKG/5, 27 July 1998Articles 6 and 9.1:  Notification concerning domestic
support and export subsidies.
Article 6:  Notification concerning domestic support.
Article 9.1:  Notification concerning export subsidies.Article 6:  Notification concerning domestic support.
Article 9.1:  Notification concerning export subsidies
Agreement on Textiles and
ClothingG/TMB/N/7, 1 March 1995 Article 6.1:  Notification that Hong Kong does not wish to
retain the right to use the provisions of the said article.
G/TMB/N/106 and G/TMB/N/148,
27 June 1995 and 6 March 1996Article 2.2: Hong Kong's observation in relation to the U.S.
notification under Article 2.1
G/TMB/N/194, 13 November 1996 Article 2.17:  Notification concerning an agreement with
Canada.
Agreement on Trade-Related
Investment Measures (TRIMs)G/TRIMs/N/2/Rev.3 & Corr.
1,17 April 1998 and 24 April 1998Article 6.2:  Notification that Hong Kong, China does not
have any publications related to TRIMs
Agreement on Implementationof Article VI of the General
Agreement on Tariffs and Trade
1994 (Agreement on Anti-Dumping Practices)G/ADP/N/1/HKG/1, 24 March 1995
G/ADP/N/14/Add.1, 5 August 1996
G/ADP/N/2/Add.1, 4/Add.1,9/ Add.1,
16/Add.1, 22/Add.1,29/Add.1 and
35/Add.1, 12 July 1995,
12 December 1995, 19 April 1996,9 October 1996, 21 April 1997,
14 October 1997 and 20 March 1998Article 18.5:  Notification that Hong Kong has no laws or
regulations relevant to the Agreement.
Articles 16.5:  Notification of Hong Kong's competent
authority to initiate and conduct investigations referred to
in Article 11.
Semi-annual report under Article 16.4: Notification that
Hong Kong has not taken any anti-dumping action during
the semi-annual period indicated.
Agreement on Implementationof Article VII of the GATT 1994
(Agreement on CustomsValuation)G/VAL/N/1/HKG/1,  31 January 1996 Article 22.2:  Notification that no laws, regulations or
administrative procedures exist for valuing goods for
customs purposes in Hong Kong, where levy customsduties are not levied.
Agreement on Rules of Origin G/RO/N/1/Add.1, 22 June 1995
G/RO/N/10, 16 August 1996Article 5.1 and paragraph 4 of Annex II: Notification on
Hong Kong's non-referential rules of origin; Hong Kong
does not have any preferential rules of origin.
Article 5.2:  Notification concerning modifications of Hong
Kong's rules of origin.
Agreement on Subsidies andCountervailing MeasuresG/SCM/N/1/HKG/1, 10 March 1995 Article 32.6:  Notification that Hong Kong has no laws or
regulations relevant to this Agreement.
G/SCM/N/18/Add. 1, 5 August 1996
G/SCM/N/3/HKG,
G/SCM/N/16/HKG and
G/SCM/N/25/HKG, 9 October 1995,5 July 1996 and 30 June 1997Article 25.12:  Notification that Hong Kong does not have
competent authorities to initiate and conduct investigations
referred to in Article 11.
Article 25 of this Agreement and Article XVI:1 of the
GATT 1994:  Notification that Hong Kong maintains no
subsidies notifiable under these provisions.
Table II.1 (cont'd)Hong Kong, China WT/TPR/S/52
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Agreement Document reference Requirement/Contents
G/SCM/N/4/Add.1, 7/Add.1,
12/Add.1, 19/Add.1, 23/Add.1,
30/Add.1 and 35/Add.1, 14 July 1995,8 December 1995, 18 April 1996 and
9 October 1996, 22 April 1997, 13
October 1997 and 20 March 1998Semi-annual report under Article 25.11: Notification that
Hong Kong has not taken any countervailing duty action
during the semi-annual period indicated.
Agreement on Safeguards G/SG/N/1/HKG/1, 20 March 1995
G/SG/N/2/HKG (G/SG/N/3/HKG),
12 March 1996Article 12.6:  Notification that Hong Kong has no laws,
regulations and administrative procedures relating to
safeguard measures.
Article 10 and Article 11.1 (b):  Notification that Hong
Kong maintained neither safeguard measures nor voluntary
export restraints or similar measures.
Agreement on Import LicensingProceduresG/LIC/N/1/HKG/1, 6 May 1996
GLLIC/N/1/HKG/4, 17 June 1998
G/LIC/N/1/HKG/2
(G/LIC/N/2/HKG/1) and
G/LIC/N/1/HKG/3(G/LIC/N/2/HKG/2), 19 November
1996 and 9 February 1998
G/LIC/N/3/HKG/1, 1/Rev.1 and
1/Rev.2, 16 January 1996, 13 October
1996 and 3 October 1997Notification under Articles 1.4 (a) and 8.2 (b)
Notification under Article 8.2(b)
Notification under Articles 5 and 8.2 (b)
Notification under Article 7.3.
Agreement on Technical Barriers
to TradeG/TBT/Notif.95.73, 93, 120, 152,
152/Add.1, 152/Rev.1, 339, 345,  and345/Add.1, G/TBT/Notif.96.38, 57,
78, and 206, G/TBT/Notif.97.152,
153, 154, 217, 420, 687, and 730, and
G/TBT/Notif.98.83, 17 March 1995, 3
April 1995, 3 May 1995, 12 May1995, 9 June 1995, 18 May 1995, 30
November 1995, 21 December 1995,
22 December 1995, 29 February 1996,19 March 1996, 3 April 1996, 8 July
1996, 22 April 1997, 22 April 1997,
22 April 1997, 22 May 1997, 16September 1997, 17 October 1997,
1 December 1997, and 24 February
1998
G/TBT/CS/N/89, 90 and 91,
23 January 1998Notification under Article 10.6
Notification under Paragraph C of the WTO TBT Code of
Good Practice
Agreement on the Application ofSanitary and PhytosanitaryMeasuresG/SPS/N/HKG/1 and 1/Add.1, 8 May
1995 and 19 June 1995
G/SPS/N/HKG/2, 13 June 1996Article 7:  Notification concerning proposed amendments
to the Food & Drugs (Composition & Labelling)Regulations
Article 7:  Notification concerning the emergency measures
to suspend the import of British frozen/chilled beef
Understanding on theInterpretation of Article XVII of
the GATTG/STR/N/1/HKG, 2/HKG and
3/HKG, 5 July 1995, 19 June 1996
and 19 November 1997Notification that Hong Kong has not maintained any state
trading enterprises.
Source: WTO Secretariat.
26. Under the WTO Dispute Settlement Understanding, there have been no complaints filed against
Hong Kong, China.  On 12 February 1996, Hong Kong requested consultations with Turkey, stating that
Turkey's quantitative restrictions on imports of textile and clothing products violated Turkey'sWT/TPR/S/52 Trade Policy Review
Page 22
obligations under GATT Articles XI and XIII.  It also stated that GATT Article XXIV did not entitle
Turkey to impose new quantitative restrictions in the present case, in relation to a recently concluded
customs union agreement between Turkey and the Europe an Union.  Hong Kong has also participated in
various panel processes as a third party.15
(ii) Regional cooperation initiatives
27. While the HKSAR does not belong to any customs unions, free-trade areas or other preferential
regional agreements, it does promote close regional cooperation in the Asia and Pacific region and is a
leading member of the Asia-Pacific Economic Cooperation forum (APEC).
28. Hong Kong has been participating in the APEC since November 1991.16  Hong Kong, China is
of the view that in pursuing "open regional coop eration", APEC's liberalization measures should be
applied on an MFN basis to non-members, thus ma intaining consistency with WTO principles.  Hong
Kong, China has participated actively in the work of the APEC, including the drafting of the Osaka
Action Agenda of November 1995;  the Agenda set out principles and measures to implement the Bogor
Declaration, which announced the objective of achieving a free and open trade and investment
environment by 2010 and 2020, respectively, for industrialized and developing members.  Under the
Agenda, each member was required to compile an Individual Action Plan (IAP) setting out the actionsthat would be taken to implement trade and investment liberalization and facilitation (TILF) during the
period from 1997 to 2010/2020.  Accordingly, Hong Kong submitted its first Individual Action Plan in
October 1996 and, as the HKSAR, a revised version in October 1997.  The latter includes deregulatory
measures in services sectors, e.g. opening up its local basic telecommunications services market with
effect from 1 January 1998, and other commitments, including tariff bindings for all imports by the year2010.  These commitments go beyond Hong Kong's Uruguay Round commitments.
(iii) Bilateral agreements
29. The HKSAR is a party to a number of bilateral agreements with various countries.  These
include investment promotion and protection agreements
17 and air services agreements.18  Although the
HKSAR is party to an arrangement for the avoidance of double taxation in respect of airline income19, it
has not yet concluded any comprehensive double taxation agreements with other countries.  However, itis in the process of identifying a few countries with which to negotiate comprehensive agreements,
where this is considered to be in Hong Kong's overall interest.
30. Certain exports from Hong Kong still enjoy preferential treatment in Australia, Canada, Japan,
and Norway, under GSP schemes, although such treatment has been diminishing (Table II.2).
20  While
                                                     
15These include the complaint against the United States by India, Malaysia, Pakistan and Thailand, on the
import prohibition of certain shrimp and shrimp products (panel established in February 1997), and the complaintagainst Turkey by India on restrictions on imports of textile and clothing products (panel established inMarch 1998).
16APEC was established in 1989.  In 1997, APEC members accounted for 83.8% of Hong Kong, China's
imports, 76.3% of its re-exports, and 77% of its domestic exports.
17With Australia, Austria, Belgium/Luxembourg, Denmark, France, Germany, Italy, Japan, Korea, the
Netherlands, New Zealand, Sweden, Switzerland and the United Kingdom.
18With Australia, Bahrain, Belgium, Brazil, Canada, France, Germany, India, Indonesia, Israel, Japan,
Korea, Lithuania*, Luxembourg, Malaysia, Maldives*, Mauritius, Myanmar, the Netherlands, New Zealand,Pakistan, the Philippines, Singapore, Sri Lanka, Switzerland, Thailand, Turkey, the United Arab Emirates, the
United Kingdom and the United States (*denotes Air Service Transit Agreement).
19With Belgium, Canada, Germany, Israel, Korea, Mauritius, the Netherlands, New Zealand and the
United Kingdom.
20On 1 May 1998, Hong Kong products ceased to benef it from the EU GSP scheme in accordance with
the country graduation provision.  GSP benefits to Hong Kong products under the Swiss GSP scheme wereHong Kong, China WT/TPR/S/52
Page 23
Hong Kong is estimated to have exported GSP-eligible goods worth HK$1,861 million in 1997 (to
countries other than Australia);  only 3.5% of its total exports of such goods to these countries actuallybenefited from preferential access.
21
Table II.2
GSP schemes covering exports from Hong Kong, China
Donor Timeframe Preference granted Rules of origin Exclusions
Australia Since 1966
(replaced by the
Australian System
of Tariff Preference
for Developing
Countries in 1986).5% preferential tariff
margin.(a) The final manufacturing
process must have been
carried out in the beneficiary
country; and
(b) Labour and/or material
inputs of one or moredeveloping countries must
represent at least half of the
total factory or works costs.Cumulation is possible
among all beneficiaries.Since 1 July 1992, Australia has
been phasing down the preferential
margins, alongside its general tariff
reduction programme, on all imports
from Hong Kong, Republic ofKorea, Singapore and Chinese
Taipei.  As from 1 July 1996, there
is no margin of preference forHong Kong and the three other
Asian suppliers except for some
sugar and some rubber articles,
including tyres.
Canada Since 1974
(extended on
30 June 1994 for
another 10 years,
i.e. to
30 June 2004).Complete duty-free
entry for selected
agricultural and most
industrial products.
Different preferentialrates for other eligible
items.Wholly obtained in the
beneficiary country; or
originated in that beneficiary
country with the value of the
imported inputs includingmaterials, parts or products
originating outside the
country or in anundetermined location and
used in the manufacture or
production of the goodsamounting to no more than
40% of the ex-factory price
of the goods as packed for
shipment to Canada.Certain agricultural products, certain
textiles, rubber footwear, products
of chemical, plastic and allied
industries, specialty steels, electron
tubes, and inner tubes of rubber of akind used on construction
machinery, etc.
EuropeanUnionSince 1971
(terminated on
1 May 1998).4-tier reduced
preferential rates
based on the products'sensitivity to the EU's
domestic industry.Wholly obtained in the
beneficiary country or have
undergone sufficient
working or processing.All except certain electrical
machinery, mechanical appliances,
plastic articles and footwear.
Japan Since 1971 (Japan
partially graduatedHKSAR from the
scheme on
1 April 1998.  Thecurrent scheme will
expire by 2001).For agricultural
products between10% and 100%, for
industrial products
50% or 100 cent tariff
reductions.Wholly obtained or subject
to sufficient working orprocessing in the beneficiary
country.27 industrial products (including
certain textile yarns) and nearly all
agricultural items.
Norway Since 1981 (no
time-limit).Duty free. Wholly obtained in the
beneficiary country or haveundergone sufficient
working or processing.21 product groups including
clothing, plastic products and leatherproducts on top of other exclusions
generally applied for all
beneficiaries.
Switzerland Since 1972
(terminated on
1 March 1998).At reduced
preferential rate.Wholly obtained in the
beneficiary country or have
undergone sufficient
working or processing.Textiles, clothing, footwear and
lampshades on top of other
exclusions generally applied for all
beneficiaries.
Source: HKSAR Government.
                                                                                                                                                                    
terminated on 1 March 1998.  Two products (PVC tubes and hoses, and fur garments) from the HKSAR have been
graduated from Japan's GSP scheme under its "partial graduation" arrangement.
21The donor countries include Canada, the European Union, Japan, Norway and Switzerland.  Data for
Australia is not available.