WORLD TRADE
ORGANIZATIONWT/TPR/M/82
24 April 2001
(01-2042)
Trade Policy Review Body
TRADE POLICY REVIEW
MACAU, CHINA
Minutes of Meeting
Chairperson:  H.E. Mr. Pekka Huhtaniemi (Finland)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3
II. OPENING STATEMENT BY THE REPRESENTATIVE OF MACAU, CHINA 4
III. STATEMENT BY THE DISCUSSANT 7IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 9V. REPLIES FROM THE REPRESENTATIVE OF MACAU, CHINA AND
ADDITIONAL COMMENTS 15
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 18
ANNEX ADVANCE WRITTEN QUESTIONS AND PRELIMINARY RESPONSES BY THE
DELEGATION OF MACAU, CHINA 21
ANNEX TABLES 47WT/TPR/M/82
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I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The second Trade Policy Review of Macau, China was held on 19 and 21 March 2001.  The
Chairperson welcomed the delegation of Macau, China, led by the H.E. Mr. Francis P.Y. Tam,
Secretary for Economy and Finance, and the discussant, Ms. Margaret Liang (Singapore).  As usual,
the discussant would speak in her personal capacity only.  In accordance with established procedures,the discussant had made available in advance a broad outline of the themes she intended to raise
(document WT/TPR/D/61).
2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of
the procedures of the meetings.  The Report by the Government of Macau, China was contained in
document WT/TPR/G/82 and that of the Secretaria t in document WT/TPR/S/82.  Copies of advance
written questions, submitted by Japan;  Hong, Kong, China;  the European Union;  Canada;  and the
United States were transmitted to the delegation of Macau, China.  Written replies by theMacau, China delegation to these and other questions are reproduced in the Annex.WT/TPR/M/82
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II. OPENING STATEMENT BY THE REPRESENTATIVE OF MACAU, CHINA
3. The representative of Macau, China expressed his satisfaction at participating in the first
Trade Policy Review of Macau, China after the establishment of the World Trade Organization.
4. He referred to the most important historical event that had taken place in Macau, China
during the six-year review period.  On 20 December 1999, the Macau Special Administrative Region(SAR) of the People's Republic of China had been established under the "one country, two systems"
principle.  According to the Basic Law of Macau, China, the mini-constitution of the SAR, Macau's
socio-economic system and way of life was to be maintained.
5. The Basic Law had been designed in such a way that it incorporated most of Macau, China's
traditions and social values.  As far as the economic system and the foreign trade policies were
concerned, Chapter V of the Basic Law ensured the continuity of Macau's longstanding free-trade
traditions and market economy policy, through the following:  autonomy of the SAR's economic
policies;  maintenance of the Macau pataca as the legal tender;  absence of foreign exchange controls;
free flow of goods and capital;  and the maintenance of its free port status.  Moreover, since the
Macau SAR was a separated customs territory, it had also kept its fiscal independence, operating its
own fiscal system, without having to transfer tax revenues to the Central Government.
6. With respect to Macau SAR's participation in the international communities, notwithstanding
its non-sovereign status, the Basic Law accorded the Macau SAR the right to autonomously conduct
external affairs that were consistent with its own provisions.  In this connection, the Macau SAR
could, under the name of "Macau, China", maintain and develop relations, and conclude international
agreements with foreign States and international organizations in a wide-range of fields.  The
continuation of Macau, China's participation in this multilateral trading system was such a case.According to the Basic Law, Macau, China continue d to be, on its own, a Member of the WTO, and
was fully committed to all its rights and obligations.  In this regard, he stressed, once again, that
Macau, China had full international legal personality in international economic affairs.
7. The economy of Macau, China had encountered some difficulties recently.  The wrenching
aftermath of the Asian financial crisis had adversely affected the performance of SAR's tourism andgaming industry, as these depended heavily on the demand of the neighbouring economies and
countries in the region.
8. Thanks to the SAR's currency peg regime and strong demand from industrial countries,
performance of Macau, China's merchandise trade had been stable since the Asian financial turmoil.
The SAR's currency board system, through which the Macau pataca (MOP) was pegged to the
Hong Kong dollar (HKD) and indirectly to the U.S. dollar (USD), had provided a relatively stable and
highly predictable monetary environment for Macau, China and its trading partners.  This system hadhelped to alleviate uncertainty during the upheavals of the Asian financial crisis.  However, the
currency board system, which required a rigorously fixed exchange rate, was not a panacea and had
its side-effect;  it limited the scope for demand policy to smooth out external shocks to the economy
by rendering most monetary policy tools impotent in influencing domestic economic conditions.
9. Despite the limitations of monetary policy, which, nevertheless, secured a high degree of
stability in the financial system, Macau, China believed that the currency board system should be
maintained given that Macau, China's mini-economy was highly dependent on stable external trade
and investment.  These, in turn, needed a highly predictable trading environment.  Over the last
decades, the system had proved that it could provide for a stable and predictable environment for
smooth economic development.
10. Since the establishment of the SAR, Macau, China had focused on policies that strengthened
economic fundamentals and promoted long-run growth.  Judging from the latest available statisticalWT/TPR/M/82
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information, the results were encouraging;  the tourism sector had rebounded remarkably.  Visitor
arrivals had hit an historical record of over nine million in 2000, representing an increase of 20% over
the previous year, and equivalent to approximately 20 times the total population of Macau, China.
Moreover, manufacturing exports had grown by 16% in 2000 and the trade surplus had reached
P 2.3 billion, an expansion of 78% compared to 1999.
11. In addition, the macroeconomic environment in Macau, China had been gaining momentum
since last year.  GDP growth was expected to re ach 4% in 2000.  Deflation had been narrowing down
since February 2000, posting around -1% at the end of that year.  The unemployment rate had eased
from a peak of 7% to 6.4% in January 2001;  domestic homebuyers and foreign investors were
currently absorbing oversupply in the real estate  market;  and, in the year 2000, the total number of
registered new companies had grown by 63% compared to 1999.
12. Macau, China's free-trade commitments in the multilateral trading system of the WTO could
be traced back to the Uruguay Round when it bound all tariffs on agriculture products and some
industrial goods at zero per cent;  that is, a total of around 24% of its 1997 tariff lines.  The free-trade
commitments had also been extended to a new area, the services sector, as Macau, China had offered
three sectors in its schedule of commitments during the Uruguay Round services negotiations;  of
which two were of particular significance, namely tourism, and financial services.  In fact,Macau, China had offered more than it had requested during the Uruguay Round negotiations.
13. In the 1996 Singapore Ministerial Conference, Macau, China became a member of the
Information Technology Agreement (ITA) and, in addition, bound all tariffs on products covered by
this Agreement at a zero rate in one step.  Notwithstanding the legal status of bound tariffs, the
applied rates for all imported products entering into Macau, China from any source had been at zero,and such free-port policy was not expected to change.
14. Regarding services, there were no barriers to market access in most services sectors in
Macau, China, except a number of public utilities and services, which were considered to be natural
monopolies.  These utilities and services were normally granted under concession by the Government
for a well-defined period of operation, and two aspects had been taken into consideration with regardsto the granting of such public services.  First, the relatively small size of domestic market, with a total
population of around 450,000 and an area of only 23.8 km².  Second, the guaranteeing of a supply of
goods to safeguard the normal industrial operations and to maintain the basic needs of the community.
15. After the establishment of the Macau SAR, a process of liberalization was started.
Telecommunications was the first sector to be liberalized in 2000, with the creation of a new
regulatory body (the Office for the Development of Telecommunications and Information
Technology) to oversee telecom activities and set up the regulatory framework for the sector's future
development.  The telecommunications market would be further liberalized.
16. The air transport sector was also liberalized in 2000.  The SAR was open to exchange fifth
freedom traffic rights in addition to third and fourth freedom traffic rights with other countries and
regions.  This flexible approach was reflected in th e Air Services Agreements already signed with the
United States and Singapore.  Macau, China would ope n up its gaming sector this year.  Development
in this sector was expected to foster the MICE business (Meeting, Incentive, Conference and
Exhibition) in Macau, China.
17. To exploit further the gains from trade, the SAR Government would strengthen regional
cooperation with the neighbouring Guangdong province, namely the western part of the province.
Given its comparative advantage in the region, Macau, China believed, it would serve the region as acommercial hub, providing business back-up and managerial support to investors in Mainland China.WT/TPR/M/82
Page 6
18. On the implementation of the TRIPS Agreement, which entered into force for Macau, China
as of  1 January 2000, the SAR's new comprehensive IP regime was not only in compliance with the
TRIPS obligations, but would also modernize and upgrade legislation currently affecting international
trade.  The new regime comprised two specific laws regulating the areas of industrial property and
copyright and neighbouring rights.  Implementation and enforcement of other TRIPS obligations wereenshrined in a number of other legal provisions, namely the Civil Code, Civil Procedure Code,
Criminal Code, Criminal Procedure Code, Commerc ial Code, and Administrative Procedure Code, in
force in the SAR.  Macau, China had already been  under review at the TRIPS Council meeting held in
June 2000 in pursuance of Article 63.2 of the Agreement.
19. Regarding the ongoing and future trade round negotiations, Macau, China was open, and
willing to offer more commitments on a reciprocity basis, taking into account the needs and concerns
of developing country Members.  As one of the smallest Members in the multilateral trading family,Macau, China's free-trade tradition and liberal stance in trade issues were well known, demonstrating
Macau, China's free-trade belief in an affirmative manner.
20. In the new millennium, Macau, China's foreign trade regime and policies would certainly go
ahead in a liberal direction, inspired by the fundamental WTO principles.  Macau, China was firmly
committed to promoting trade and investment in an environment of transparency, non-discriminationand free market access.
21. To conclude, the representative said that despite the difficulties or challenges ahead,
Macau, China was determined to preserve its free-trade traditions and continue to promote a
harmonious society.WT/TPR/M/82
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III. STATEMENT BY THE DISCUSSANT
22. The discussant (Ms. Margaret Liang) said that the Secretariat Report had highlighted two
main events that had occurred since the last Review of Macau, China, in 1994.  The most important
was Macau's reversion to the People's Republic of China on 20 December 1999 and its designation as
a Special Administrative Region (SAR), with a high degree of autonomy for 50 years in theadministration of all its affairs, except defence and foreign policy, under the Basic Law.  The second
event was the outbreak of the financial crisis in As ia in 1997.  She agreed with the observation in the
Secretariat Report that neither the Asian crisis, nor Macau's reversion to the PRC had materially
altered the Territory's trade and investment regime, which remained among the most open in the
world.  Another positive development had been the success achieved by the authorities in sharply
reducing crime, to the benefit of tourism.
23. The financial crisis had, however, seriously impaired Macau China's economic performance.
Since the last Review, Macau China's GDP had been contracting consistently, from a 4.3% growth
rate in 1994 to a negative growth rate of 2.9% in 1999.  This was accompanied by increased
unemployment, reaching 7.1% in mid 2000.  But with recovery of the Asian economies, there were
signs of economic revitalization.  The MSAR forecasted growth of 4% in 2000.  While the delegation
of Macau, China explained that the MSAR's currency regime had provided a relatively stable andhighly predictable environment for Macau, China and its trading partners, the pegging of the pataca to
the Hong Kong dollar nonetheless limited the authorities' scope for controlling money supply, and
therefore interest rates.  The outcome was relatively high interest rates, which could constitute a
potential impediment to Macau's economic recovery.
24. Since its last Review, there had been few major trade-policy changes in Macau, China, other
than those related to commitments made in the Uruguay Round.  One important development in this
respect were the changes made to Macau's intellectual property regime in 1999.  In particular,
Macau, China had established a comprehensive legal framework for protecting intellectual property
rights to ensure compliance with the TRIPS Agreement.  The authorities had also demonstrated a
commitment to improved enforcement.  The MSAR Report had highlighted the measures adopted bythe MSAR authorities to enforce IPR legislation.  Th ere had been a significant increase in the number
of seizures of pirated goods in the last three years.  These results demonstrated the efforts of the
MSAR authorities in combating counterfeiting and other related activities.
25. Macau, China continued to maintain a very open economy.  The high degree of openness was
indicated by the duty-free entry of all imports.  Applied tariffs were zero and non-tariff measures were
almost absent.  However, roughly three quarters of tariff lines remained unbound.  Given the openness
of its economy and the fact that all applied tariffs were already zero, she asked whether it would notbe possible for Macau, China to expand the scope of its bindings.
26. The Report also noted that although Macau, China maintained an open foreign investment
regime, with few restrictions on inbound or outbound investment, in practice, both domestic and
foreign investments were prevented in some key service areas owing to the MSAR's granting of
exclusive rights to certain companies in the form of concessions.  She asked Macau, China tocomment on this, and asked if there was scope for further liberalization so as to introduce greater
competition in the services market.
27. On sectoral issues she noted from the MSAR Report that there was a significant shift under
way in Macau, China, away from manufacturing to wards a service-based economy, with the objective
of developing Macau as the regional service centre.  However, she also noted that judging from theSecretariat Report, there seemed to be a lack of competition in Macau, China's services market in
general, as most public services, including telecommunications, water, electricity, and transport were
provided by private companies with exclusive rights under government concessions.  In this respect,WT/TPR/M/82
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the lack of competition in these services sectors coul d act as an impediment rather than help facilitate
the development of Macau, China as a regional services centre.
28. Textiles and clothing continued to be Macau, China's key industrial activity, accounting for
some 85% of its merchandise exports.  To reduce Macau, China's heavy dependence on textiles and
clothing, the Macau SAR Government had introduced a range of tax incentives to promote theestablishment of high-value-added industries.  She sought details on how these measures had
facilitated the diversification of the manufacturing industries away from textiles and clothing.
29. She noted that Macau, China's economic growth relied increasingly on the services sector.
Tourism accounted for 40% of GDP in 1999, with the gambling industry very closely related to the
MSAR's tourism.  However, gambling services had remained a private monopoly since 1961,
although this concession was scheduled to expire in 2001.  She asked whether there were any plans to
introduce greater competition in this sector.  She also enquired whether there were other initiatives todiversify the economy, especially away from gambling into other services.
30. The MSAR's decision to unilaterally open up telecommunication activities, such as mobile
telephony services, Internet services and satellite TV, was a welcome move.  Macau, China had made
no commitments in the area of telecommunications;  nor did it participate in the WTO negotiations on
basic telecommunications.  Public telecommunications  continued to be exclusively provided by CTM.
She asked whether the Macau SAR Government saw scope for further liberalization in this sector in
the ongoing services negotiations.
31. Regarding financial services, it was noted in the MSAR Report that the Macau SAR
Government intended to place particular emphasis on the development of Macau, China as a regional
financial centre.  The discussant asked which long-term strategies the Macau SAR Government wouldpursue to achieve this objective.  It was also noted that for historical reasons, banks with capital
originally from Mainland China and Portugal had occupied approximately 77% market share of the
total banking system.  She enquired whether there would be scope for further liberalization of the
banking and financial services sector under the ongoing negotiations.
32. In conclusion, she congratulated Macau, China on its open and liberal trade regime and its
commitment to move in a liberal direction in the new millennium.WT/TPR/M/82
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IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
33. The representative of Japan noted that, since its reversion to China, the Territory had been
promoting domestic reform by enacting legislation including commercial laws, as well as improving
transparency and simplifying administrative procedures, thus making its trade policy consistent with
WTO Agreements.  Japan was pleased with Macau, China's economic development even after itsreversion, and that it continued to allow market forces to allocate resources.  Japan hoped that
Macau, China would continue its liberalization of trade and investment, and its commitment to the
strengthening of the multilateral trading system.
34. Regarding tariffs, according to the Secretariat Report, although no tariffs were applied to
imports into Macau, China, only 23.9% of tariff lines, had been bound.  Japan considered the
expansion of bindings necessary to improve the certainty and predictability for foreign exporters.  She
enquired whether Macau, China was planning to expand the coverage of tariff bindings.
35. According to the Secretariat Report, Macau, China had no laws or regulations governing
anti-dumping (AD) and countervailing (CV) duti es, though it had taken some anti-dumping actions
before 1998, and some countervailing actions before 1996.  Japan considered that neither AD, nor CV
duties should be invoked arbitrarily;  thus, she requested Macau, China to enact laws concerning AD
and CV duties.
36. Japan supported Macau, China's active efforts to protect intellectual property rights.  She
commended the adoption of new laws, aimed, in particular, at ensuring compliance with the TRIPS
Agreement, which were introduced in 1999.
37. Macau, China was a large service-based economy.  However, key services, such as electricity,
water, telecommunications, and transport were currently provided by private companies withexclusive rights under government concessions.  Such restraints on competition enabled suppliers to
charge higher prices not only to consumers but also to firms as users of such services.  According to
the Secretariat Report, its commitments under GATS were confined to several sectors, mainly
financial services, and no commitments were made in  important services such as communications and
transport.  Japan requested Macau, China to expand the coverage of its commitments under GATS inthe ongoing services negotiations.
38. She hoped to work together with Macau, China towards the launching of a new round.
39. The representative of Hong Kong, China said that since the last TPR of Macau in 1994,
Macau, China had reunified with the People's Republic of China;  the transition had been smooth and
successful.  As stated in the Government's Report (para. 9), the principle of "one country,
two systems" was enshrined in the Basic Law of the Macau Special Administrative Region.  A high
degree of autonomy in executive, legislative, and in dependent judicial power including that of final
adjudication had been guaranteed under this mini-constitution.
40. Macau, China and Hong Kong, China were close neighbours.  They shared the same cultural
heritage;  a similar status as Special Administrative Regions;  and separate customs territories of
China.  As in the case of Hong Kong, China, the Basic Law of Macau, China provided that, using the
name "Macau, China", the Macau Special Administrative Region could participate in the relevantinternational organizations and agreements such as the GATT, and now the WTO.  Both
Macau, China and Hong Kong, China were faithful disciples of free and open trade, as demonstrated
by their free-port status.  They were therefore natural trade partners.
41. Notwithstanding the fact that Macau, China was only one tenth of the size of Geneva,
Hong Kong, China was Macau, China's third largest trading partner (after the United States andMainland China), while Macau, China was Hong Kong, China's 26
th largest.  Macau, China was alsoWT/TPR/M/82
Page 10
one of the most popular tourist destinations in Asia with a remarkable record of nine million visitors
in 2000.  Half of these came from Hong Kong, China.  Hong Kong, China was also the largest source
of external direct investment to Macau, China.  Thus, Hong Kong, China was encouraged by
Macau, China's commitment to continued trade liberalization.
42. Macau, China, like many other Asian economies, was hard-hit by the Asian financial crisis in
the late 1990s.  Growth rates were negative for several years in the run-up to 2000, leading to a
considerable cumulative drop in GDP.  The unemployment rate rose to over 7% but had now dropped.
Despite these difficulties, Macau, China consistently adhered to its WTO commitments and continued
to support the multilateral trading system.  During the economic downturn, no tariff rates had been
imposed on any imports nor trade remedies imposed, and liberalization was continued in some
important sectors.  He expressed satisfaction at seeing Macau, China's economy perking up in 2000:
the number of visitors rose, manufacturing exports increased, and the number of companies registeredgrew.
43. He referred to two issues mentioned in the Secretariat Report.  First, the Report suggested that
the linked exchange rate system might have hampered both Macau, China's economic recovery and
the Government's efforts to diversify the economy.  The representative disagreed, since he believed
that what Macau, China needed most was a stable currency in which investors could have confidence.Second, he did not agree with the Secretariat's interpretation that Macau, China's Basic Law provision
on being a free port "precluded increases in applied rates for those tariff lines that are unbound".
Hong Kong, China's understanding was that the free-port concept was just that, and not a prohibition
on any action involving new or increased tariffs.  He  made this point as one of principle, and did not
intend to suggest that Macau, China sought to apply rates above zero.
44. Through the years, Macau, China had emerged from being a manufacturer of textiles and
toys, to a major regional hub of tourism and services.  Tourism alone contributed to 40% of
Macau, China's income;  90% of its economy was now service based.  It was therefore disappointing
that Macau, China had only made three commitments in services under the GATS.  Hong Kong,
China hoped to see more and deeper commitments in the current round of negotiations.
45. In this regard, he noted that Macau, China's banking and insurance sectors were growing
rapidly, following some institutional and liberalization reforms.  He looked forward to Macau, China's
initiatives in further liberalizing its services, in  particular in such areas as telecommunications,
e-commerce, etc.  He also noted with interest Macau, China's plan to liberalize the franchise of casino
operations this year through the granting of more licences.  In this regard he thought that the
Secretariat comment about the adverse effects of some exclusive rights agreements might not have
fully taken account of Macau, China's particular situation.  He hoped that all the initiatives beingtaken by the Government would place Macau, China in a good position to diversify its services sector.
46. Textiles and clothing remained the major manufacturing sector.  Macau, China had expressed
concern on the full implementation of the Agreement on Textiles and Clothing by major importing
Members.  This concern was also shared by Hong Kong, China.
47. The representative of the European Union  said that EU-Macau relations were based formally
on a Trade and Cooperation Agreement concluded on 14 December 1992.  This agreement covered
not only trade promotion, but also industrial, scient ific, and technical cooperation.  A regular dialogue
between the EU and Macau, China, in areas under  the SAR's responsibility (such as economy and
trade) was conducted through Macau's Economic and Trade Office (METO) in Brussels, which was
accredited to the European Communities.
48. The EU was Macau, China's second largest trading partner and absorbed roughly 30% of its
total annual exports, while 9.3% of Macau's imports came from the EU in 2000.  Macau, China's
membership of the WTO and its liberal economic system offered favourable conditions for EUWT/TPR/M/82
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investments.  The EU was the third biggest investor in Macau, China after Mainland China and
Hong Kong, China, with 36 Europ ean firms investing in the SAR.
49. The EU was supportive of Macau, China's economic and trade policy under the SAR
Government.  The EU welcomed the Government's commitment to continue its free-trade tradition
and market economy policies, and Macau, China's active presence in the WTO.
50. He sought information on:  Macau's views on the further improvement of the macroeconomic
scenario;  long-term strategies for the diversification of Macau's manufacturing base;  and the
existence of possible infrastructure development or large-scale construction projects.
51. On the regulatory framework for TRIPS, the EU welcomed the efforts that Macau, China had
made in developing its intellectual property legislation.  He asked how the different agencies and
departments dealing with enforcement of IPR coordinated their actions, and whether there were any
plans to improve the enforcement of intellectual property rights.
52. As a unified customs service would be established in the future, further elaboration on the
concrete plans for the creation of such a service was requested.  He also sought information on any
recent or expected developments likely to affect production patterns in the textile, clothing, and
footwear sectors.
53. He expressed his belief that Macau, China probably shared the EU's view that for small
economies, such as the SAR, an international tradin g system with a single, clear and enforceable set
of rules at the multilateral level could only be beneficial.  In line with the Government's Report, he
believed it would be especially important for Macau, China in the years to come to strengthen its
economy by promoting trade and attracting investment  through constant improvements to the business
environment.  New comprehensive trade negotiations should help to achieve these objectives.
54. In the framework of the current preparations for the next WTO Ministerial Conference in
Qatar, he encouraged Macau, China, to cooperate mo re closely with the EU by supporting its efforts
to move the multilateral trading system forward.  New areas, such as investment, competition,
environment, and trade facilitation needed to be addressed in a multilateral framework.
Macau, China, as a small but active and committed player in the WTO system, clearly had a part toplay in this respect.
55. The representative of Canada noted that while the value of its merchandise trade with Macau,
China was relatively small, Canada and Macau, China enjoyed positive trade and investment
relations.
56. Since Macau, China's last Review in 1994, there had been substantial political and economic
changes in the region, not least of which was the return of Macau, China to Chinese sovereignty at the
end of 1999.
57. Canada commended Macau, China for maintaining an open and transparent market
throughout the Asian financial crisis, and its efforts to facilitate trade through the simplification of
import and export declarations and implementation of electronic data interchange systems.  She
encouraged Macau, China to simplify further its licensing procedures and approvals to enhance the
efficiency of its customs procedures.
58. Canada also welcomed Macau, China's efforts to strengthen intellectual property rights
protection, as well as the Government's efforts to simplify government procurement procedures and
enhance transparency to attract more competitive bids.  Macau, China planned to become more
involved in the Working Group on Transparency in Public Procurement and she encouraged
Macau, China to also become party to the Agreement on Government Procurement.WT/TPR/M/82
Page 12
59. Services was a sector of growing importance in Macau, China's economy.  With recent major
investment in services infrastructure including a new international airport, improved port facilities,
and enhanced telecommunications, the potential for increased growth in this sector was significant.
Like other Members, Canada encouraged Macau, China to make further commitments in other
services under the GATS, as these would improve the transparency and predictability of theTerritory's trade and investment regime.
60. The representative of the United States supported Macau, China's unique character and
continued to value its special feature as a home to citizens of different ethnic and cultural
backgrounds.  Although Macau, China's economy and market were small, they had their strengths:
low rents, a convenient new airport, reasonable warehouse facilities, and easy access to the booming
Pearl River Delta.
61. The United States remained fully engaged with the Macau SAR Government and the people
of Macau, China.  The United States was Macau, China's largest trading partner
62. Since its last Trade Policy Review in 1994, Macau, China had maintained its liberal trade
policies.  There had been few major changes other than those related to commitments made in the
Uruguay Round.  Despite the Asian crisis and changes related to Macau, China's reversion to the
People's Republic of China, Macau, China's trade policy had stayed the course.  She recognized thestrong commitment of the Macau SAR Government to expand these liberal trade policies, and looked
forward to continuing to work closely with it to help in these efforts.
63. She encouraged Macau, China's participation in the built-in agenda negotiations.  During the
Uruguay Round, Macau, China bound at zero all agricultural products listed in Annex 1 to the
Agreement on Agriculture.  Macau attached great importance to the liberalization of certain servicessectors, such as tourism, telecommunications, and e-commerce.  In addition, Macau, China indicated
that it was examining the possibility of binding more tariff lines for industrial products in future
negotiations.
64. She observed that while Macau, China's commitments under GATS were limited primarily to
financial services, the Government had indicated that it would liberalize some other servicesunilaterally, including telecommunications.  She encouraged Macau, China to expand its GATS
commitments and increase its competitiveness in the global economy by lowering costs and
strengthening the transparency and predictability of its trade and investment regime.
65. The United States commended Macau, China for amending its copyright laws in 1999 with
the intention of making them TRIPS-compatible, a nd for taking steps to implement a decree to require
the use of only licensed software by government offices.  However, more needed to be done about
enforcement of intellectual property rights in the copyright area.
66. With no tariffs applied on imports, Macau, China had one of the most open trade regimes in
the world.  However, the business climate could be improved.  Macau, China also needed to diversify
its exports.  While the Macau SAR Government had begun to address some of these problems, certain
practices continued to limit the attractiveness of Macau, China to trade and investment.
67. She noted that the authorities had succeeded in sharply reducing crime, much to the benefit of
tourism, one of Macau's major foreign exchange earners.  She also observed that the Government was
committed to tackling corruption issues.  However, she expressed the belief that more could be done
in these areas and on other important issues such as money laundering.
68. While Macau, China had strengthened its IPR legislation and increased enforcement, it had
failed to achieve convictions and impose deterrent sentences for suspected pirate manufacturers.Strong intellectual property rights protection, including a serious and sustained enforcement effort,WT/TPR/M/82
Page 13
were essential to Macau, China's efforts to attract foreign investment and to develop high technology
industry and services.
69. Macau, China had done much to control illegal trans-shipments of textiles, which damaged
Macau, China's legitimate manufacturing enterprises and took jobs away from Macau, China.  The
United States appreciated the increased cooperation that had been possible under the MOU;  the truetest would be in the SAR's commitment to fulfil the terms of the MOU and toughen penalties for
convicted trans-shippers, including denying them future export licences.
70. Increased competition and de-regulation was also desirable to attract investment.  She noted
Macau, China's decision to liberalize the mobile telephone market and hoped this would be followed
by similar liberalization of other telecom sectors.  She urged Macau, China to improve competition in
telecom and other basic services.
71. Increased transparency would also be helpful.  The share of public expenditure was estimated
at 20% of GDP.  She urged Macau, China to take steps to increase transparency in government
procurement and to introduce legislation to protect the right to collective bargaining.  Some
streamlining of the "red tape" involved in doing business would also be welcomed.  Improvements in
these areas would make Macau, China an even more attractive place to invest and do business.
72. The representative of India noted the two major developments that had taken place since the
last Trade Policy Review in 1994:  Macau, China's reversion to the People's Republic of China;  and
the outbreak of financial crisis in the region. The latter had seriously impaired Macau, China's
economic performance, with real GDP contracting in four successive years and the unemployment
rate more than doubling.  He sought details on the steps being taken by the Government to ensure that
the economy would not be affected by shocks of this nature in future.
73. Although Macau, China allowed all imports into its territory duty free, only 23% of the tariff
lines had been bound.  He asked the delegation of Macau, China to explain the low level of tariff
bindings.  He noted that, according to the Secretariat Report, the Basic Law governing Macau, China's
integration with the Mainland China appeared to pr eclude any increase in the applied rates for tariff
lines that were unbound.
74. Paragraph 6 of the Summary Observations in the Secretariat Report indicated that while there
were no exchange controls in line with the Basic Law stipulation that neither foreign exchange nor
capital controls could be used, an obligation had been imposed on exporters to convert 40% of their
foreign currency export proceeds into local currency.  He requested the delegation of Macau, China to
explain the reasoning behind this requirement.  While noting that Macau, China had not altered its
trade and investment regime and remained a very open economy, even in the face of the Asian
financial crisis, paragraph 11 of the Summary Observations mentioned that, in practice, both domesticand foreign investments were prevented in some key services in view of concessions granted to
certain companies.  It was noted, however, that initiatives were under way for improving competition
in certain services, notably telecommunications.  He sought additional information on whether
Macau, China had any plans for withdrawing these concessions in other sectors.
75. Macau, China was largely a service-based economy.  This trend was likely to continue given
the increasing investment in infrastructure.  However, Macau, China's commitments under the GATS
were still confined mainly to financial services, and paragraph 18 of the Summary Observations noted
that further commitments in other services could foster economic development by reinforcing the
Government's efforts to diversify the economy, esp ecially away from gambling into other services.
He asked Macau, China to comment in this regard and also for their views on the on-going services'negotiations.WT/TPR/M/82
Page 14
76. Finally, he congratulated Macau, China for rema ining firm in its commitment to continue to
remain an open economy against all odds;  for fulfilling its obligations under the WTO;  and for
remaining committed to the multilateral trading system.  He hoped that in the years to come,
Macau, China would be able to meet the challenges mentioned in the Government Report.
77. The representative of Norway commended Macau, China's initiative to open the
telecommunications sector to competition, and encouraged further liberalization.  He noted that
liberalization of the telecommunications sector in Norway had contributed to the emergence of a
strong and competitive domestic communications sector, and allowed consumers and businesses to
take advantage of a greater range of choice, lower prices, and innovative services and applications.WT/TPR/M/82
Page 15
V. REPLIES FROM THE REPRESENTATIVE OF MACAU, CHINA AND
ADDITIONAL COMMENTS
78. The Chairperson invited the representative of Macau, China to focus his responses on three
main themes:  (i) economic environment;  (ii) trade policies and measures;  and (iii) sectoral policies
and measures.
(i) Economic environment
79. The representative of Macau, China appreciated that the many reforms implemented in
Macau, China since its previous Trade Policy Review in 1994 were seen by Members as reinforcing
its reputation as one of the most open, liberal, and well-regulated economies in the WTO.  He was
pleased that Macau, China's efforts to address earlier criticisms, in areas such as the protection of IP
rights, had been recognized.  He took note of the areas where Members had indicated a wish for
further progress.
80. Macau, China had moved into positive figures after a few consecutive years of negative
growth and showed signs of consolidating this turnaround.  The Asian financial crisis had been
particularly severe for a small and open economy like Macau, China;  it had weathered the storm, and
its prospects were encouraging.  The crisis had accelerated economic and structural reforms in
Macau, China.  These reforms made Macau, China better equipped to face future challenges.
81. The most remarkable change over recent years had been the diversification of Macau, China's
economy, in particular the gradual shift from manufacturing to services.  Macau, China had succeeded
in upgrading and modernizing its regulatory and administrative framework, and had achieved a stable
and predictable system within which market forces could operate to secure a steady increase in
productivity and growth.  Macau, China was truly "open for business" and welcomed newinvestments in all sectors and from all sources.
82. The Government had taken a number of measures to assist the private sector in obtaining the
greatest benefit from the new environment.  A number of major construction projects had been
completed in recent years;  these included the Macau international airport, major land reclamations,
the bridges between Macau and Taipa Island, improvements in Macau, China's road system, andmajor recreational facilities.  Further projects were planned, including major sports facilities for the
East Asian Games in 2005.  All of these had undoubtedly given a boost to Macau, China's economy.
Public utilities, including telecommunications, were increasingly open to competition.  However, as a
small and exposed economy, Macau, China had a fundamental responsibility to ensure the security of
essential services to its residents, in vital areas such as telecommunications and public utilities.  An
appropriate balance was necessary between these social obligations and Macau, China's international
commitments.
83. The discussant thanked the Secretary for his thorough replies.
(ii) Trade policies and measures
84. The representative of Macau, China stated that reunification with China had given
Macau, China a long-term stability combined with the continuation of its market economy and
free-trade traditions.  No change was envisaged in this regard.  Macau, China's valued status as a freeport shaped its policy on tariffs and related issues.  Macau, China intended to further bind tariff lines;
the introduction of legislation in customs valuation was not envisaged.  Given Macau, China's limited
manufacturing base, there was no requirement for introducing comprehensive standards legislation.
Macau, China recognized international standards for imports.WT/TPR/M/82
Page 16
85. The representative shared the view expressed by Hong Kong, China that, legally, tariffs could
be introduced or increased on products where tariffs were unbound, although Macau, China had no
legislation to introduce tariffs.  Historically, Macau, China had been a free port, and no change in this
status was envisaged.  As a free port, Macau, China attached great importance to its customs
procedures being simple, rapid, and efficient;  the unified Customs Service to be established this yearwould achieve this aim and strengthen Macau, China's law enforcement capabilities, in preventing
illegal trade activities.
86. On public procurement, Macau, China was reviewing its legislation and considering whether
to join the GPA in due course.  Macau, China's law and practice was already substantially aligned
with the GPA.  Transparency already existed.  A new measure introduced in November 1999
simplified procurement procedures for public works in line with GPA principles.  Preferences for
local suppliers had been eliminated and mechanisms allowing non-resident companies to bid had beenestablished.
87. Exports of manufactures had been crucial to the Macau, China economy, despite the shift to
services. Macau, China's written answers detailed various measures that had been introduced, in full
respect of its international commitments, to assist its manufacturers to explore new export
opportunities.  In general, these measures encouraged diversification, both of products and exportmarkets.
88. The representative was pleased that Members recognized that a great deal had been achieved,
both in enacting and in enforcement of legislation on trade-related intellectual property;  unlawful
activities in this area had dropped dramatically.  More remained to be done and improvements were in
the pipeline.  In addition to the establishment of the new Customs Service, the logistical supportwould be provided by the Government for the first intellectual property association to be established
in Macau, China.
89. The discussant said that the information provided by Macau, China provided a better
perspective of Macau, China's future direction of trade policy;  she noted its intention to further
liberalize and its willingness to bind more tariff lines in future negotiations.  She welcomedMacau, China's initiatives in its IPR regime.
90. The representative of the European Union congratulated Macau, China for its detailed replies.
He appreciated the transparency and information provided by Macau, China, and was pleased with the
direction of its trade policy towards further liberalization, extension of bindings, and greater
transparency, especially on incentives.
91. The representative of the United States had no further questions given the thorough answers
provided by Macau, China, particularly concerning its progress in IPR enforcement and customs
services.
(iii) Sectoral policies and measures
92. The representative of Macau, China stated that Macau, China's policy on textiles, clothing,
and footwear industries was to increase their competitiveness and productivity, by upgrading
machinery and technology.  A number of new manufacturing facilities for footwear had beenestablished.  Various incentives available in Macau, China to attract new investment of all kinds and
in all sectors, both manufacturing and services, had been explained.
93. Macau, China, like other Members, was guided by the GATS disciplines in regard to its
services trade.  Macau, China's existing commitments were relatively limited, which was not
surprising given the recent structural changes in its economy, notably the gradual shift frommanufacturing to services.  In areas such as telecommunications, public utilities, and transportation,WT/TPR/M/82
Page 17
Macau, China intended to pursue a policy of liberalization on a gradual basis, taking into account the
need to ensure security of supply in Macau, China and the basic needs of its residents.  In
telecommunications, for example, Macau, China had already liberalized Internet services, mobile
telephony, and other value-added services.  These were important steps to improve the competitive
environment.
94. The unique features that characterized the Macau, China economy imposed certain limitations
on its scope for liberalizing all service sectors without distinction.  Nonetheless, Macau, China intend
to address the possibility of further liberalization measures, both on its own initiative and in the
context of WTO negotiations.
95. On financial services, a crucial sector given Macau, China's aspiration to develop itself as a
regional hub for trade and investment, Macau, China already had a modern regulatory and supervisory
framework.  This had received international re cognition, for example, in the IMF and OECD.
Macau, China would faithfully implement its WTO commitments in this area.  Macau, China's future
policies would be guided by the need to:  continue its existing currency board arrangement to ensure
the convertibility of Macau patacas;  continue to adapt its regulatory and supervisory standards to
"international best practice";  continue to diversify from traditional to more technology-based
financial services, so that Macau, China could become a regional financial centre;  and continuecooperation with other supervisory authorities, including information exchange on cross-border
financial activities, as well as combating financial crimes such as money laundering.
96. The MSAR Government was firmly committed to the development of Macau, China's
aviation industry through an open and liberal aviation policy.  As a result of the small domestic
market and as a newcomer in this very competitive industry, Macau, China was aware that thedevelopment of its aviation industry might only be achieved by attracting foreign airlines to operate
to, from, and through Macau, China, promoting Macau International Airport as an aviation gateway in
the region.  Given Macau, China's geographical location, liberal trading policies and non-congested
airport, cargo would be the focus of development in the industry.  To accommodate the expansion of
the air cargo business in the years to come, the Government would prepare the legal environment andcreate multi-modal infrastructure to ensure that the MSAR could develop as a regional cargo hub.
Notwithstanding the exclusive rights granted to Air Macau and to the Macau International Airport
Company through their concession contracts, the MSAR Government would strive to keep an open
and liberal environment for the air transport industry , with a view to better serving the development of
Macau, China's economy and the travelling public.
97. The discussant acknowledged the constraints faced by a small economy like Macau, China,
and the need to ensure the supply of goods and services.  Nevertheless, Macau, China intended to
pursue further diversification of its economy, from manufacturing to services, and consider the scope
for liberalizing further the services sector.  All these efforts contributed positively to WTO future
negotiations.  She hoped to work closely with Macau, China on the preparations for the Qatar
Ministerial meeting.
98. The representative of Hong Kong, China thanked Macau, China for its comprehensive replies.
On the investment regime, he asked if investment incentives were granted on a national treatment
basis.  He welcomed the gradual liberalization of services in Macau, China and its plans to continue
this process.  On tariffs he stressed that, according to the Basic Law, Macau, China could legally raise
tariffs.
99. In response, the representative of Macau, China said that any company was entitled to these
incentives.WT/TPR/M/82
Page 18
VI. CONCLUDING REMARKS BY THE CHAIRPERSON
100. This review has provided us with much greater insight into the trade policies, practices and
measures of Macau, China.  Members commended Macau, China for the fact that neither the Asian
financial crisis, which erupted in 1997, nor its reversion to the People's Republic of China in 1999 has
materially affected the Territory's liberal trade and trade-related policies.  The trade and investmentregime of Macau, China continues to be among the most open in the world.  The Government's
approach has long been to let free and open markets be the main determinant of the allocation of
resources within the Territory and thus its economic development.  This approach to economic policy
is to continue into the foreseeable future under the Territory's Basic Law, which provides for "one
country, two systems" and ensures the continuity of its long-standing free-trade tradition.
101. Members welcomed the continuing commitment of Macau, China to the primacy of the WTO,
in which it had actively participated.  They also expressed their appreciation of efforts byMacau, China to undertake economic and administrative reform.  While the linked exchange rate
system might have limited the scope for controlling the money supply, the system had maintained
currency stability.
102. Members welcomed the free-port status of Macau, China, but observed that only some 24%
of all tariff lines are bound.  They encouraged Macau, China to increase tariff bindings so as toenhance the confidence of traders and investors.
103. Questions were raised about non-tariff measures, with attention being focused on the
simplification of customs procedures and the import licensing regime.  The use of sanitary and
phytosanitary measures was also queried.  Although Macau, China has no laws or regulations
governing anti-dumping or countervailing actions, and no such action has been taken during theperiod under review, Members asked about the legal basis of any such measures that might be
imposed in the future.  While there is no legislation regarding safeguard measures, the Chief
Executive is empowered nevertheless to prohibit, restrict, attach conditions to, or impose levies on
goods whose admission into the Territory is "not advisable".
104. Members sought clarification on the use of tax incentives to encourage exports and to
promote investment.  The rationale for using a system for leasing government-owned land as a
potential instrument of economic policy was also queried.  Some Members expressed the view that
industrial policy should not undermine the Territory's open trade policy, which has served the
economy so well.
105. Members acknowledged that Macau, China has made important efforts to implement the
TRIPS Agreement through the amendment of its laws;  nonetheless, they urged it to take further steps
to improve the enforcement of these laws.  Members welcomed efforts by Macau, China to simplifyits government procurement procedures and transparency, as well as its plans to become more
involved in the Working Group on Transparency in Government Procurement.
106. Macau, China is a service-based economy and the authorities' objective is to develop the
Territory into a regional services centre.  However, Members expressed concern that the granting by
the Government of exclusive rights to private companies could impair competition and thus hamperthe economic development of Macau, China.  At the same time, Members noted and welcomed the
Territory's recent efforts to liberalize specific services (notably telecommunications).  The paucity of
commitments made by Macau, China in the services negotiations was also noted;  Members requested
Macau, China to expand its commitments under GATS in the ongoing services negotiations.  With
textiles and clothing continuing to be the key industrial activity and major contributor to merchandiseexports, Macau, China also has incentives to promote the establishment of high-value-added
industries;  Members sought information on the nature and effect of these incentives.WT/TPR/M/82
Page 19
107. Members also sought additional details on a number of other policies and measures,
including:
− efforts to increase labour productivity;
− the status of the creation of a new customs service and the implementation of a
computerized system for customs clearance;
− steps taken to encourage export diversification;
− efforts to reduce the trans-shipment of textiles and clothing and the possibility of
denying export licences to companies convicted of illegal trans-shipment;
− clarification of the extent to which foreigners are allowed to participate in the
provision of services;  and
− criteria for the granting of licences for the establishment of financial institutions in
Macau, China.
108. Members expressed their appreciation for the written and oral responses provided by the
delegation of Macau, China to advance questions as well as those posed during the meeting.
109. To conclude, I feel that we should commend Macau, China for maintaining an open market
throughout the Asian financial crisis.  Despite the economic difficulties, Macau, China hasconsistently adhered to WTO principles and continued to support the multilateral trading system.
Macau, China also expressed its willingness to offer more commitments in ongoing and future trade
negotiations, noting that the needs and concerns of developing country Members should be taken into
account.  Finally, I am sure that the maintenance by Macau, China of one of the world's most liberal
trade and investment regimes will undoubtedly contribute to the Territory's economic recovery and itsfuture prosperity.WT/TPR/M/82
Page 21
ANNEX
PRELIMINARY RESPONSES BY THE DELEGATION OF MACAU, CHINA
TO ADVANCE WRITTEN QUESTIONS
Questions from Canada
Secretariat Report (WT/TPR/S/82)IV. Trade Policies by Sector;  (1) Introduction;  para. 3
1. The Secretariat report states that while the Government has announced plans to liberalize
unilaterally some telecommunications activities, making additional commitments under the GATS in
these fields would tend to enhance the transparency and predictability of the territory's trade and
investment regime, and move the liberalization process forward in the services sector, much to the
benefit of the MSAR economy as a whole.  Does Macau plan to make commitments on
telecommunications under the GATS?
With the exception of the services mentioned in the Concession Contract, the MSAR
Government has made substantial efforts to liberalize the telecommunications market.  This was
demonstrated by the licensing of mobile and Internet services operators in 2000.  Furthermore, the
gradual upgrading of telecommunications legislation, to bring it into line with the objectives and
disciplines set out in the GATS, will help to promote a liberalized market on the basis of non-discrimination, transparency, optimal regulation, and the protection of competition.
IV. Trade Policies by Sector;  (3) Services;  i) Financial services;  a) Banking;  para. 22
2. According to para. 22, a licence from the Mone tary Authority and an authorization from the
Secretary for Economic and Finance Affairs of the Macau Special Administrative Region (MSAR) are
required for any financial institution wishing to operate in Macau.  What criteria are used by theSecretary in determining whether an authorization will be granted?  Are these criteria based in
legislation?
Yes.  These criteria are based on legislation.  The authorization is granted on a case-by-case
basis on advice from the Monetary Authority of Macau (AMCM).  In the evaluation of the
application, the following factors are taken into consideration by the AMCM:
a) the suitability of the qualifying shareholders and of the members of the institution's
boards;
b) the group structure within which the institution operates;
c) the possibility for the institution to guarantee the safety of the funds deposited with
the institution;
d) the adequacy of the technical and financial resources in relation to the type and
volume of operations that the institution manages;
e) whether the aim of the applicant matches the economic and financial policies pursued
by the competent authorities of Macau;
f) whether the applicant can operate in the modern, internationalized banking system to
reinforce the status of Macau as an international financial centre and to diversify its
business and to provide a better quality of service;WT/TPR/M/82
Page 22
g) the benefit to the Macau SAR as a result of the licences granted;
h) in balancing "competition vs. stability", ensuring (especially banking) fair
competition between institutions and the stability of the global financial system are
equally important;
i) for institution incorporated abroad as su bsidiaries or joint ventures, the following
elements are taken into consideration:
- the legal status of the supervisory authority of the home country and the
possibility of effective supervision on a consolidated basis;
- reciprocal treatment;  and
j) any other information deemed necessary by the AMCM for a full analysis of the
application.
3. The report states that a licence will be granted "so long as the goal of the operation is
consistent with the economic and financial policies pursued by the MSAR Government".  What
criteria are used to determine whether the goals of the operation are consistent with MSAR's
economic and financial policies?
In general, the feasibility study and business plan submitted by the applicant are evaluated for
their contribution to the development of the economy and financial services.  The other criteriamentioned in response to Question 2 are also taken into account.
IV. Trade Policies by Sector;  (3) services;  i) Financial services;  a) Banking;  para. 26
4. According to para. 26, the Chief Executive of MSAR may authorize Offshore Financial
Institutions (OFIs) to grant credit or provide guar antees to residents of Macau "so long as the goal of
the operation is in the interest of the Government."  Are there specific criteria, based in legislation orregulation, which govern these decisions, or are the decisions made based on ad-hoc criteria?
Basically, the Offshore Regime for OFI does not encourage these institutions to conduct
onshore business.  More generally, the same criteria set out under Question 2 will also be applied to
OFI.  Therefore, authorization for OFI to conduct onshore business will only be given on a case-by-
case basis.  As with all authorizations granted in the financial services sector, Macau's aim is to ensurethat international best practices are complied with.
IV. Trade Policies by Sector;  (3) Services;  i) Financial services;  a) Insurance;  para. 31
5. According to para. 31, a licence is required from the Monetary Authority of Macau (AMCM)
to provide insurance services in Macau.  Please explain the procedures for obtaining such a licence?
Licence Application Procedures to Transact Insurance Business in Macau
A. A company with head office in Macau
Invested capital (Article 17 of Macau Insurance Ordinance, Decree-Law No. 27/97/M of
30 June)
The required share capital for a non-life and a life insurer formed in Macau cannot be less
than MOP 15,000,000 and MOP 30,000,000 respectively.WT/TPR/M/82
Page 23
Conditions and criteria for the granting of authorization (Article 19 of Macau Insurance
Ordinance)
1. The granting of the authorization shall be based on the needs of the local market or the
economic and financial benefit that would revert to the Macau SAR as a result of such a
formation of the new insurer.
2. The appraisal of the petition for authorizati on would be related to the opportunity and
convenience of setting up of an insurer and the following factors would be considered:
a) Possibility of the applicant to improve the variety or the quality of the services
rendered to the public;
b) Integrity of the founder members which may influence the local insurance activities
and management of the insurer;
c) Integrity, qualification and professional experience of the persons who effectively
manage the insurer;
d) Sufficiency of technical and financial support to back up the activity in the classes of
insurance that the applicant intends to transact;
e) Compatibility between the development prospects of the insurer and the maintenance
of healthy competition in the insurance market.
Authorization procedures – submission of necessary documents (Article 22 of Macau
Insurance Ordinance)
1. The applicant should submit the following documents:
a) Memorandum, indicating the reasons for the formation of the insurance company;
b) Indication of the name of company should be  in the official languages of the Macau
SAR, using the form which suggests that its sole object is the carrying on of
insurance activity;
c) Draft of the memorandum and Articles of Association;
d) Personal and professional identification of the founder members indicating their share
in the capital and a well-founded memorandum on the suitability of the shareholdingstructure for the stability of the insurer;
e) No Criminal Record Certificate for each of the founder with qualified shareholding
(equal to or greater than 10% of shareholding);
f) Declaration, under oath, from the found er members with qualified shareholding
certifying that at no time neither they nor any of the companies or firms under their
control or of which they were administrators, directors or managers, were declared
insolvent or bankrupt;
g) Details of material, technical and human resources to be utilised;
h) Indication of the general conditions and the respective technical basis of the policies
under the class of insurance the applicant intends to transact.WT/TPR/M/82
Page 24
2. Where the founder members are corporate entities, each of them are required to submit the
following documents:
a) Memorandum and Articles of Association;
b) Reports and accounts of the last three financial years;
c) Identification of the members of the administrative bodies together with biographical
details;
d) Composition of share capital and list of shareholders with 10% or more of the said
capital;
e) List of other companies in whose capital the corporate entities hold a qualified
shareholding and the structure of the respective group.
3. Business plan has to be submitted and contains at least the following information:
a) Reinsurance programme and the respective business strategy;b) Estimation of organization and preliminary expenses;
c) Estimation of the activity for the first three year of business and includes the
following particulars:
1
st – Administrative expenses;
2nd – Number of employees by place of recruitment and their respective salaries;
3rd – Premiums, claims and technical reserves;
4th – Half yearly cash position;
5th – Solvency margin position;
6th – Financial resources to guarantee the responsibilities assumed.
4. AMCM may request the applicant to submit additional document if necessary.
5. After verifying the required technical and legal conditions for the formation of an insurance
company, AMCM shall submit the respective appl ication, together with its report, to the
Chief Executive of the Macau SAR for decision.
B. A branch of an overseas insurance company
Establishment Fund (Article 37 of Macau Insurance Ordinance)Instead of share capital, the branch of an overseas insurance company is required to have an
establishment fund of an amount not less than five million patacas in the case of non-life business and
seven and a half million patacas in the case of life business.
Conditions and criteria for the granting of authorization (Article 35 of Macau Insurance
Ordinance)WT/TPR/M/82
Page 25
1. Authorization for the establishment of insurers with head office overseas shall depend
whether they have been in operation for at least five years and their respective share capital is
not less than the minimum fixed, as mentioned above, for insurers constituted in Macau.
2. The granting of the authorization depends on the criteria of opportunity and convenience,
namely the following:
a) Possibility of the applicant to improve the variety or the quality of the services
rendered to the public;
b) Economic and financial data of the applicant relating to the historical development of
the company in terms of underwriting, capital, reserve and surplus, application of
funds and retention capacity;
c) Type of level of controls in the area of supervision, coordination and inspection of
insurance activity in the  country where its head office is located;
d) Level of economic and financial ties between Macau and the country where the head
office of the applicant is located;
e) Adequate reinsurance programme for its operations in Macau;
f) Geographical distribution of insurers based on their place of origin.
3. The minimum conditions for the granting of any authorization shall cover the following areas:
a) effective establishment of business in terms of own office premises, technical
assistance,  financial and human resources;
b) Recruitment of local staff to fill the majority of the vacancies created by the new
business and guaranteeing the continued technical training of such staff;
c) Cooperation with other entities of the Territory in order to improve the quality of
services connected with insurance activity.
Authorization procedures – submission of necessary documents (Article 38 of Macau
Insurance Ordinance)
1. In addition to the documents required under the paragraph 1 a) and h) of the authorization
procedures for the formation of insurer in the local territory, the applicant has to submit thefollowing documents:
a) Authorization to establish in Macau from the general assembly of partners or
shareholders or from the legal representatives of the insurer who have sufficient
powers for such purpose;
b) Memorandum detailing the world wide activities of the applicant;
c) Indication of the name of the company in Chinese;
d) Identification of the members of the administrative bodies together with biographical
details;WT/TPR/M/82
Page 26
e) Memorandum and Articles of Association, and annual reports and accounts for the
preceding three years;
f) Certificate, issued by the appropriate entity of the country or territory where the head
office of the insurer is located, declaring that  the applicant is legally incorporated and
organised under the provisions of the laws in force in such country or territory andthat the said applicant holds a valid licence to carry on the classes of insurance which
the insurer intends to transact in Macau;
g) Identification of the general representati ve, vested with sufficient powers, who is
responsible for the operation of the branch set up;
h) Any information which AMCM may consider necessary.
2. The applicant has to submit a business plan similar to the one mentioned above.
C. The above information shall be submitted in the original language, accompanied by the
respective translation into any one of the official languages of the territory, unless expressly
exempted by AMCM.
IV. Trade Policies by Sector;  (3) Services;  (iii) Transport;  (a) Air Transport;  para. 44
6. According to para. 44, airport access applications must be approved by the Civil Aviation
Authority.  What are the procedures and policies which govern the approval of such an application?
Any person wishing to use an aircraft in Macau for scheduled or non-scheduled air services
must obtain a permit from the Chairman of the Civil Aviation Authority.   Approvals shall be granted
in accordance with the following procedures and policies:
1. Scheduled air services
The authorization to perform a scheduled air service is granted in accordance with the
relevant air services agreement between the MSAR Government and the government of the country of
the air operator requesting the authorization.
2. Non-scheduled air services
The rules for the approval of application to perform non-scheduled air services in Macau are
set out in a legal instrument (Portaria No. 232/95/M ) published in the Macau Official Gazette.  These
rules are also published in the Aeronautical Information Publication of Macau and available to any
operator interested in operating to or from Macau International Airport.  A summary of these rules
follows.
2.1. Conditions governing the operation of non-scheduled air services
2.1.1. Applications for non-scheduled air services for the carriage of passengers or cargo will be
approved if the Chairman of the Civil Aviation Authority is satisfied that corresponding scheduled
services cannot satisfy a genuine demand by providing the service or capacity required.
2.1.2. Authorizations for non-scheduled services are granted on condition that the holder does not
advertise such services for sale direct to general public.
2.2. ApplicationsWT/TPR/M/82
Page 27
The following information and documents must be submitted:
a) A valid air operator's certificate or equivalent document issued by the applicant's
national aeronautical authorities;
b) Documentary evidence from the operator's insurance company to show that the
aircraft to be used carry or carries appropriate third party insurance cover for any oneaccident;
c) Details of the proposed charter flight (i.e. the type of charter to be operated, the
proposed operating schedule, etc.);
d) Justification for the charter flight.
The application must be submitted at least three working days before the anticipated
arrival/departure date of the flight in Macau.
Since Macau International Airport started its operations, no operation request for non-
scheduled air services has been refused on commercial grounds.  Authorizations were refused only
when the Civil Aviation Authority was not convinced that the operator has the technical capacity to
ensure the safe operation of aircraft or the aircraft to be used did not meet the environmental
protection requirements.
Questions from the European Union
Government Report (WT/TPR/G/82)
Recent Economic Developments
7. (p. 9) The EC notes that, after the severe pr essure following the Asian financial crisis the
macroeconomic scenario in Macau, China has been constantly improving.  Does Macau, China have
more concrete indicators for the positive expectations made for the current year?
Please refer to Annex Tables containing the most recent economic and financial indicators.
8. Does the Government of Macau, China have any long-term strategy to diversify its
manufacturing base?
Macau, China's long-term strategy to diversify its manufacturing base has been in force for
nearly 20 years.  This has been implemented through various fiscal incentives and interest ratesubsidies covering a range of economic activities.
As for future prospects, the MSAR Government has been focusing its efforts on
diversification especially in service sectors.  In this context, a number of measures are already in place
to develop sustainable growth such as upgrading the education system and training and retraining
personnel, in order to develop a more advanced technological base in the MSAR.
9.  Does Macau, China foresee any long-term infr astructure development plans or large-scale
construction projects for the near future?
The Macau SAR Government has several large-scale construction projects planned for the
near future, such as:
- completion of land reclamation between the Islands of Taipa and Coloane;WT/TPR/M/82
Page 28
- sporting facilities such as an Olympic swimming pool, a new sports stadium and the
renovation of existing sports facilities to prepare for the East Asian Games in 2005;
- feasibility study underway for a third bridge between Macau and Taipa Island;
- improvement of the road system in Macau and the Islands.
10. (p. 10, para. 31) Could Macau, China give more detailed information about her plans for
strengthening economic and trade links with the neighbouring countries?
Macau, China does not make any distinction in respect of countries of destination for its
capital, products or services.  However, Macau, China attributes great importance to its growing role
as a regional hub and is therefore committed to strengthen its economic and trade links.  Furthermore,
the SAR Government is committed to strengthen links with neighbouring regions and countries,
namely Western Guangdong province in mainland China and with the EU through existing
entrepreneurial exchange programmes, such as EUREKA and the Asia-Invest Programme.
More generally, Macau, China has a very liberal economic system which welcomes
investment from any origin.
Trade Environment
11. (p. 11, para. 36 ) The Government has announced that customs functions which are presently
exercised by Marine Police and Customs among other administrative bodies will in the future betaken over by a unified Customs Service.  Could Macau, China please elaborate on the plans for the
creation of such a service including the timetable?
The unified Customs Service of Macau, China, which will be established within this year, will
incorporate some functions currently undertaken by the following departments: Marine Police and
Customs, Macau Economic Services, Macau Post Office, Statistics and Census Services and MacauJudicial Police.  The new functions to be undertaken would concern: border controls for imports and
exports and enforcement actions, namely for the protection of IP rights and against illicit trade
activities.  However, there is as yet no firm decision whether these functions will be implemented as
currently described.  Please refer to Question 47.
12. Macau, China presently has not so far introduced a dual use products export control system.
Are there any plans to introduce such a system once the unified customs service is set up?
The MSAR Government will consider the need for a dual-use regulatory system when the
new Customs Service is established.
Trade policy:  Regulatory framework for trade in goods, textiles and clothing
13. (p. 13, para. 49) With view to the expiry of the ATC in 2005, has Macau, China already
foreseen a timetable relating to specific measures in this sector?
The MSAR has already implemented several policies to increase the competitiveness of
textiles and clothing companies and to upgrade their machinery and technology.  These measures will
help to cushion the effect of the ATC's expiry in 2005, although the MSAR Government believes that
market forces will facilitate the restructuring of the sector.  Please refer to Questions 33 and 54.WT/TPR/M/82
Page 29
Trade policy:  Regulatory framework for trade in services
14. (p. 14, para. 55) The Government report states that it is crucial that supervisory authorities
have the legal and practical means to prevent irre gularities, including money laundering and other
forms of financial crime.  Could Macau, China plea se elaborate on the means in force to deal with
these issues and inform about the agencies involved in preventing financial crime?
As regards controls on money laundering, a number of decree-laws have been passed in the
last ten years, not only on drugs control and organized crime, but also on the use of the financial
system for money laundering.
The Financial System Act of Macau passed in 1993 provided for the consolidated supervision
of credit institutions, the identification of founder shareholders, character references for management
(the "fit and proper person test") and the maintenance of records on the identity of customers and
related transactions.  The Financial System Act also  allows the exchange of information between the
Monetary Authority of Macau and other supervisory bodies.  In addition, derogations from banking
secrecy requirements can be made by judicial order in the case of criminal proceedings.
In 1996, anti-money laundering guidelines were issued under the Act.  These required
banking institutions to establish proper controls on money laundering including the identification of
customers, keeping accounting records, training  of staff and reporting of suspected cases.
Under Decree law No. 5/91/M on drugs control, any value, including money and deposits
with banks, acquired or in the possession of those convicted of drug-related crimes is subject to
forfeiture.  For this purpose, information may be requested from any entity and cannot be refused on
the grounds of professional secrecy, including banking secrecy.
In November 1995, Decree law No. 58/95/M (Criminal Code) was passed, under which all
assets or gains obtained through criminal activities are to be confiscated.  If these assets were replaced
by other assets, the latter are to be confiscated, or if this is not possible, an equivalent amount of
money must be paid to the Government.
Under Decree law No. 6/97/M (Criminal law of Organized crime) of 30 July 1997, penalties
are imposed on illegal conversion, transfer or counterfeiting of goods or illicit products.
Under Decree law No. 24/98/M of 28 January 1998 (the first truly comprehensive measure in
this area) on compulsory reporting of suspicious transactions, preventative measures were taken on
the conversion or transfer of the proceeds of criminal activities.  The relevant entities shall notify to
the Judicial Police and the relevant supervisory authority suspected cases of conversion, transfer or
counterfeiting of goods or illicit products.
In order to combat money laundering through underground operations, the AMCM is now
considering a new guideline for the reporting of suspected cases involving small moneychangers andremittance houses.  Macau is also planning similar guidelines for casinos and cash dealers.  The
AMCM is actively involved in updating methods to combat money laundering.  The Financial Action
Task Force (FATF) on Money Laundering has blacklisted 15 financial centres in June 2000, for
failing to improve their anti-money laundering laws and lack of cooperation in the fight against
money laundering.  Macau is not on the list.  Recently, the Macau SAR Government has applied tothe Asia Pacific Group on Money Laundering (APG) in March 2001 to become a full member of the
Group.  A mutual evaluation program is being conducted by the APG.WT/TPR/M/82
Page 30
Trade policy and regulatory framework for TRIPS
15. (pp. 19, 20) The EU welcomes the efforts displayed by Macau, China in developing its
Intellectual Property legislation.  It has been noted on the report that there are a number of agencies
and administrative departments dealing with enfor cement of IPR.  Could Macau, China explain how
these departments and agencies coordinate their actions?  Has it been considered giving allresponsibilities to a single department?
The main Government departments dealing with intellectual property law issues are the
Macau Economic Service, through its Industrial Property Department and the Economic Activities
Inspection, and the Marine and Customs Police.  The Industrial Property Department is in charge of
the registration of industrial property rights and the Economic Activities Inspection monitors
production and retail locations.  Both are under the Macau Economic Services.  Finally, the Marine
and Customs Police, as the authority in charge of monitoring borders, controls imports and exports.The Economic Activities Inspection enforcement actions are done in cooperation with the police as
necessary.  Whenever crime is suspected, the police may of course intervene.  The current structure
and allocations of responsibilities may change due to the customs reorganization which is now being
considered.
16. (p., 21, para. 91) The table on Action against Counterfeiting shows that there has been a very
sharp increase in cases relating to clothing, leather goods and watches between 1998 and 2000.
Could Macau, China elaborate on her efforts concerning piracy of these types of goods which are
extensively exported by EU Producers?
The increase in legal proceedings and seizures was the result of the vigorous response of the
Macau SAR Government to an increase in the coun terfeiting of clothing, leather goods and watches
detected in 1999.  Cooperation received from industry representatives in Hong Kong was also
decisive for the success of the operation.  The Macau Economic Services continue to closely monitor
manufacturing and retail sectors to ensure that their progress is maintained.
Future prospects
17. What means does Macau, China use to make it s trade policy supportive of sustainable
development?  To what extent does Macau, China use or intend to use instruments such as the
sustainability impact assessments, as a tool in this sphere?
Macau, China plans to develop services sectors, especially tourism.  In this sector, alongside
gambling, the MSAR Government is taking steps to promote Macau, China as a centre for tourism,
taking advantage of the local rich cultural heritage.
Education is also a priority of the MSAR Government, especially where new technologies are
concerned.  A new University of Science and Technology has been set up to ensure progress in thisarea.
Another priority of the Government concerns training and re-training of the workforce, in
order to meet the challenge of new technologies.  The Macau Productivity and Transfer of
Technology Centre (CPTTM) is a special instit ution dedicated to this area, which rewards
improvements in various fields by issuing ISO certificates to companies and businesses that excel intheir operations (cf. Secretariat Report, Section III, para. 105).
Finally, environmental protection has been a Government priority in order to ensure
sustainable development. Macau, China is endowed with a Solid Waste Incineration Plant, low
pollution levels, town planning and reforestation scheme. The Environmental Council, which is aWT/TPR/M/82
Page 31
Government department, is also in charge of monitoring and assessing the environmental impact of
new developmental projects.
Secretariat Report (WT/TPR/S/82)
Summary Observations
18. (p. vii, para. 2) Exporters are required to convert 40% of foreign currency earning into
domestic currency.  Could Macau, China explain why this applies only to merchandise exports and
not to foreign currency earned on invisible (i.e. services) transactions?
As stipulated by the Basic Law, the Macau pataca must be fully backed by a currency reserve
fund.  Therefore, under Macau's monetary policy, the exchange rate is pegged at 1.03 to the Hong
Kong dollar and hence indirectly to the US dollar, under the currency board arrangement.  Thus, the
foreign exchange reserve fund is a crucial factor in the stability of Macau's financial system.
On the other hand, in order to encourage the circulation of the Macau patacas and taking into
account the fact that merchandise exports are the major foreign currency earnings of the Macau SAR,
exporters must convert 40% of their export proceeds in foreign currency into patacas.  Other than this,
there are no restrictions imposed either on capital fl ows or foreign exchange operations.  This legal
requirement is not applied to tourism services, as it  would be costly, if not impossible, to distinguish
tourist’ expenditure from residence expenditure.
19. (p. viii, para. 9) The secretariat report states that the consumption tax is levied on
domestically manufactured and imported goods alike.  It falls, however, disproportionately on imports
because there is little local production of such goods. Could Macau, China give further comments in
this regard?
The apparent disproportion reflects the fact that Macau, China has very little local production
of such goods.
Macau, China only levies consumption taxes on the following goods:
- Wine and other alcoholic beverages;
- Tobacco;
- Fuels and lubricants;- Motor vehicles and motorcycles.
For more complete details on the products in the above categories, please refer to Table III.1
on consumption taxes and exemptions, 2000 in the Secretariat's Report.
20. (p. ix, para. 14) Tax incentives are offered to projects that encourage exports to new markets.
Has Macau, China considered how this policy accords with the WTO Subsidies Agreement?
Macau, China's tax incentives are consistent with the Agreement on Subsidies and
Countervailing Measures as they are neither export subsidies nor import substitution subsidies asdefined in the WTO Agreement.
Macau, China would refer Members to the Secretariat Report on this matter.  The main
factors for eligibility for tax incentives, in accordance with Macau, China's legislation (Law No. 1/86
as amended by Decree-Law No. 35/93/M) are to:WT/TPR/M/82
Page 32
- Promote industrial diversification;
- Encourage search for improved access in new markets;
- Increase value-added in production chains;
- Contribute to technological modernization;
- Improve environmental conditions;- Create employment opportunities.
Macau, China would like to stress that, for the purpose of tax concessions, it does not
differentiate between local and foreign producers.
21. (p. ix, para. 14) Macau's tax system is a relatively complex one with different taxes subject to
different tax regimes.  The weight of direct taxes from gambling is very important in relative and
absolute terms.  Is there any reform foreseen in the general tax system?
No general reform of the tax system is foreseen.  However, some of the tax regulations such
as corporate tax, property tax and property transfer tax are under review. The property transfer tax is
going to be changed to a stamp duty, but the regulation is still in the drafting process.
22. (p. ix, para. 14) Could Macau, China further explain the rationale for using its system for
leasing government-owned land as a potential instrument of economic policy (stimulate growth and
diversification)?
Two main factors impose the need for an efficient land allocation policy; the geographical
dimension of Macau (around 23.8 Km
2) and the relatively undiversified nature of its industrial
structure.
With these two factors in mind, the leasing applic ations for government land for industrial use
are considered on a case-by-case basis, according to the following criteria:
- Contribution to the diversification of Macau's industrial sector;
- Creation of employment opportunities;
- Environment-friendliness of the project;
- Economic and financial feasibility of the project;
- Contribution to the technological modernization and new know-how expertise
brought by the project;
- Promoting industries with more value-added and which are more oriented to export to
new unrestricted markets.WT/TPR/M/82
Page 33
III. Trade Policies and Practices by Measure
A. Measures directly affecting imports
Tariffs
23. (p. 24, paras. 20, 21) Macau, China is examining the possibility of binding more tariff lines
for industrial products in future negotiations.  However, the authorities of Macau, China considerthat, in practice, such a step is redundant, because the constitutional law (Basic Law) precludes
Macau, China from increasing tariffs because of  its free-port status.  Which wording does the
respective paragraph in the constitutional law have?
The paragraph in question corresponds to Article 110 of the Basic Law which states that:  "the
Macau Special Administrative Region shall maintain the status of a free port and shall not impose any
tariff unless otherwise prescribed by law".  But this does not mean that the MSAR is precluded from
changing rates from those tariff lines that are unbound.
Contingency measures:  Anti-dumping and countervailing duties, safeguards
24. (p. 29, para. 39) Macau, China has no laws or regulations governing anti-dumping or
countervailing actions, nor has she taken any anti-dumping actions since 1998, nor any
countervailing actions since 1996.  Could Macau, China please clarify on which legal basis it would,
if at all, impose anti-dumping or countervailing measures?
Macau, China has never taken any anti-dumping measures (AD) nor countervailing duties
(CVD).  In order to apply anti-dumping or anti-subsidy measures in future, new enabling legislation
would need to be introduced in Macau.
25. (p. 30, para. 40) The EU notes that Macau, China has no specific legislation relevant to
safeguard measures but that the Chief Executive may prohibit, restrict, condition or impose levies onimports of goods whose admission into the territo ry is proven to be inadvisable.  How does
Macau, China assure the conformity of such measures with WTO Agreements?  Could Macau, China,
confirm that the authority of the Chief Executive is not considered to be legislation on the basis of
which safeguard measures in the meaning of the WTO Agreement on Safeguard can be imposed?
At present, Macau, China maintains no specific legislation relevant to safeguard measures.
Any such measures which may be adopted in the future – whether by executive, legislative or judicial
action – would of course have to respect relevant WTO/GATT rules, especially under the WTO
Agreement on Safeguards.
Sanitary and Phytosanitary Requirements
26. (p. 33, para. 58) Could Macau, China further explain if her tolerance for any plant pests
discovered on import refers to the discovery of all pests?
As a general rule, when plant pests are discovered on imported plants, these must be returned
or destroyed.
27. (p. 33, para. 60) Does the prohibition of soil imports (with the exception of the Mainland
China) include soil attached to plants and other imports?
Importation of plants with soil attached is prohibited unless approved by the authorities in
advance.WT/TPR/M/82
Page 34
Government Procurement
28. (p. 34, para. 68) The EC welcomes that Macau, China is planning to become more involved
in the Working Group on Transparency in Government  Procurement.  What plan does Macau, China
have to join the GPA and to take the necessary step s to meet the terms of this agreement?  Would
Macau, China agree that some of her current practices in this field need to be revised?
The Macau SAR Government is currently reviewing its legislation and considering whether to
join the GPA in due course. Macau, China has worked  to align its law and practice with the standards
of the GPA.  Transparency already exists. Macau legislation on public procurement has gradually
been adapted to conform to GPA principles.  A recent example of this is Decree Law 74/99/M of 8
November 1999.  This measure simplified and amended procurement procedures for public works in
line with GPA principles.  Preferences for local suppliers have been eliminated and mechanisms
allowing non-resident companies to bid have been established.
B. Measures directly affecting exports
Export support
29. (p. 38, para. 88) The EC notes that according to Law No. 1/86/M one of the requirements to
obtain tax incentives is to contribute to the promotion of exports to new unrestricted markets.
(Cross-reference Tax Incentives).  Could Macau, China please explain the eligibility criteria and thenature of the tax incentive to be obtained, if any, under this provision?
With respect to tax incentives please refer to Question 33 for the answer on the Investment
Regime (cf. Fiscal Incentives) to Hong Kong, China.
C. Measures affecting production and trade
Competition policy and regulatory and trade
30. (p. 50, para. 146) The report states that a special committee has been set up to study the
future development and management of the gambling industry which has operated on a single-licence
or monopoly operation basis since 1961.  Could the Government of Macau, China please elaborate
on its plans to reform this industry?
The Macau SAR Government is currently working on the reform of the gaming sector.  These
reforms are to be contained in a Law to be approved by Macau SAR's Legislative Assembly during
the current legislative session, ending on 15 August 2001.  The main reform in the new legislation is
to guarantee that the gaming industry – like other sectors – is subject to healthy competition.  The
gaming industry is important in Macau's economic and social development, in terms of its impact on
GDP, its contribution to other related sectors and government revenue.  Any reforms in this sector
will inevitably have significant repercussions on the Macau economy and way of life.  The Macau
SAR Government has therefore been approaching this  issue cautiously.  Apart from setting up a local
special committee to study the development of the gaming industry, the MSAR Government has
obtained the services of a qualified consultancy firm with international expertise in the gaming
industry.  A number of studies and research papers have been undertaken to date in order to enable the
MSAR Government to find the best possible soluti on to reconcile the liberalization of the gaming
industry and the economic and social development of Macau.
IV. Sectoral Trade Policy Developments
31. European Union's imports for certain footwear products falling under Chapter 64 have more
than doubled during recent years.  Have there been changes in the production matters, modificationsWT/TPR/M/82
Page 35
in the industry structure or similar increases in the investments for this sector?  If this is the case,
could Macau, China give a short description of the present production capacity and its perspectives.
Macau, China has seen changes in its production chain for footwear between 1998 and 2000,
with the number of factories increasing from eight to twelve.  The latest units are bigger, which
accounted for about a 50% increase in exports.  Improved productivity in existing units accounted forthe remaining 50% of production.  Investment in this sector has also been increasing and two new
factories will come on stream in 2001.  Finally, manpower employed by the sector has increased by
36% from 1998 to 2000.
32. There are news reports that the Government of Macau, China is currently studying the
feasibility of liberalizing the present Outward Processing Arrangement for the clothing industry?
Could Macau, China please give further details on this?
As indicated throughout this Review, the Macau SAR has worked to simplify and streamline
procedures in respect of the import and export of goods.  These improvements as applied to the
Outward Processing Arrangements for the clothing industry will not affect Macau's respect for the
rules of origin defined by importing countries.
Questions from Hong Kong, China
Government Report (WT/TPR/G/82)Investment Regime
33. (p. 11, para. 38) It is understood that Macau, China uses investment incentives as a way to
attract investment.  In this connection, we are interested to know the details of the incentives and the
way in which they are granted.  For example, what are the investment incentives available to overseas
investors?  What are the criteria of granting such investment incentives?  Are there any targetedsectors?
Ever since the establishment of the Macau Special Administrative Region (SAR), there has
been a remarkable improvement in economic development and the investment climate.  The
Government's efforts in maintaining and enhancing a free, fair and open investment environment are
crucial to decision-making by potential investors.
Besides its liberal economic system characterized by low living and operating costs,
Macau, China also provides a series of incentives which are applicable, on a non-discriminatory basis,
to both local and foreign investors.  These incentives include tax exemptions, financial benefits and
land concessions.
I. Fiscal Incentives (Law No. 1/86/M)
Full or partial exemptions are granted to corporate, industrial, property, property transfer
(SISA), inheritance and donation taxes.  Such exemptions are used to encourage industrial
development in the Territory.  In order to qualify for these exemptions, projects must satisfy one of
the following criteria:
1. promote diversification;
2. contribute to export diversification;
3. promote higher added value within their own production chain;WT/TPR/M/82
Page 36
4. contribute to technological modernization;
5. create employment opportunities.
Type of tax Exemptions Features
Corporate Tax May be reduced by 50% Levied on net profit derived from any
commercial or industrial business.  Sliding-
scale tax, averaging 15% for revenue over
MOP$300,000 (US$37,500) and varyingbetween 2% and 15% for income below this
level.
Industrial Tax Total exemption is possible.
A 50% reduction may be granted for businesses
located on the islands (except for off-shore
banking operations)Charged on all individuals and companies
engaged in any commercial or industrialbusiness.  This is a fixed annual tax that varies
according to the nature of the business.  The
usual value is MOP300 (US$37.50).  This tax isapplied to each activity that the company
conducts, therefore the total yearly tax is a
cumulative of the tax for the various activities.
Property Tax Full exemption:
for real estate purchased exclusively for industrial
purposes
Partial exemption:
for a period of up to five years in Macau and ten
years on the islands, for new real estate rented for
industrial purposesThe tax is charged at 16% on the actual rental
income or 10% on the official rateable value ifnot rented.
Property Transfer Tax  (SISA) Real estate which is exempted from property tax,
is subject to 2% reduction of SISA.  A potential
50% reduction is also possible in the transfer ofreal estate intended purely for industrial use,
including shop premises, office buildings and
attached social premisesOn all transfers of property title involving
financial transactions, the tax is levied on 6%
for properties located in Macau and 4% forthose located on the islands of Taipa and
Coloane.
Inheritance and Donations Tax There is a possible 50% reduction in the transfer
of real estate intended purely for industrialpurposesLevied on gifts of property and real estate,
varying between 5% and 36%, depending onthe value of assets (net of liabilities).
Consumption Tax Fuel supplied to industrial units is free from tax Charged on : fuels and lubricants, tobacco and
alcohol.  The tax on some alcoholic drinks is
levied ad valorem  according to the CIF/Macau
value; on the remainder it is specific.
II. Financial Incentives (Decree Law No. 23/98/M)
Interest subsidies
Business operating in the Territory may apply for interest subsidies on MOP bank loans for
the purchase or leasing of new equipment, as well as for purchase, construction or leasing of industrial
buildings.
The objective of this programme is to support the following types of investments:- Contributing to diversification and modernization of economic activities;WT/TPR/M/82
Page 37
- Introducing technological innovation and transformation of companies in order to
develop production capacity, product quality, competitiveness and reduce
environmental damage;
- Promoting modernization of factory premises in terms of operation, safety and/or
health conditions.
The interest rate subsidies are as follows:
- 4%-5% for the purchase, construction or leasing of buildings;
- 6% for investment on improvements for working environment and safety;
- 4% for the purchase or leasing of new cargo vehicles;
- 5%-6% for the purchase of new equipment or up-grading of equipment.
The above rate subsidies may be granted for a maximum period of four years, starting from
the first credit refund.
Sectors/activities being targeted by this programme are:
- Fisheries;
- Manufacturing industries;
- Wholesalers and commercial operators;
- Cargo handlers;- Warehousing;
- Transportation and other related-ancillary operators;
- Cyber and cyber-related activities;
- Other services-providers.
III. Land Concessions
Land concessions will be granted to investors who possess a significant investment in the
Territory.  Applications are analysed by the relevant departments including the Macau Trade and
Investment Promotion Institute (IPIM), the Macau Economic Services (DSE), the Land, Public Works
and Transportation Services (DSSOPT) and the Land Committee (CT).  Land concessions are granted
on case-by-case basis.
IV. Governmental Assistance
Apart from the incentives set out above, a "One Stop Service" has been set up by Macau
Trade and Investment Promotion Institute (IPIM) to serve both local and foreign investors.  By
keeping close links with other government depa rtments through an Investment Committee, and by
providing notarial services within the Institute, pr ocedures for investors have been greatly simplified.
With this service, investors only have to cont act IPIM for all information and guidance concerning
setting up a business.  Besides information, investors can further utilize the Institute's notarial servicesfor company registration.  They also receive personal follow-up service from IPIM's staff andWT/TPR/M/82
Page 38
assistance in looking for business partners.  As a result, the feedback for the One Stop Service has
been positive and enthusiastic in the business community.
Secretariat Report (WT/TPR/S/82)
Import Licensing
34. (p. 26, para. 29) It is noted that under specific circumstances, the Chief Executive of
Macau, China may issue a decision altering the goods subject to import (and export) licensing
without legislative approval, and that the Government can issue a decree abolishing the system
without legislative approval.  Could Macau, China le t us know what the "specific circumstances" are?
The specific circumstances are related to the protection of public health, security and the
environment, reflecting Macau's rights and obligations under international agreements.  The Chief
Executive may issue a decision altering the content of the Tables annexed to Government Decision
No. 128/GM/98 (import and export licensing produ cts) and Decision No. 1/GM/99 (sanitary and
phytosanitary rules) and appoint the relevant entities to carry out such alterations without legislative
approval.  Examples of practice in this area  include Government Decisions No. 37/GM/98 and
80/GM/98, which were issued to protect and enfor ce intellectual property rights, with respect to
videograms, computer programs and phonograms and to prevent the illicit reproduction of these
products.  The goods covered by these two Decisions are optical discs, their manufacturing equipmentand raw materials.
Telecommunications
35. (p. 59, para. 36) It is noted that except for mobile telephony, internet services and other
value-added services, public telecommunications are provided exclusively by CTM.  Macau, China
made no commitments in this sector in the UR, nor did it participate in the WTO BasicTelecommunications Services negotiations.  We would like to hear Macau, China's assessment on the
possibilities of further liberalization in this sector in the ongoing negotiations.
The 20-year Concession Contract signed with CTM in 1981, has imposed some limitations on
the Government's ability to liberalize this sector.  However, the Government is well aware of the need
to liberalize the telecommunications sector, which in turn will bring benefits to the economy as awhole.  Having recognized the crucial contribution and development of value-added services, the
Government initiated the liberalization of mobile telephony, Internet Services and other value-added
services during the revision of the Concession Contract of CTM in December 1999.
Furthermore, as new technologies evolve, the Government will progressively adapt the
regulatory framework for telecoms, in order to promote competition.  Also, as stated in the new
Concession Contract, if appropriate and by agreement between contracting  parties, the Concession
Contract with CTM could be further revised in 2006.
Tourism
36. (p. 65, paras. 65 and 69) We would like to know more information on any new arrangement
regarding the operation of casinos after the expiry of the current casino franchise in 2001.
Separately, we would welcome further information on the types of tourist-related activities which
foreign suppliers would be allowed to provide.
As mentioned above in answering the written question 30, the present legislation regulating
casino gaming is currently under review.  The Macau SAR Government expects the new Casino
Gaming Law to be approved during the current legislative session.WT/TPR/M/82
Page 39
As regards the types of tourist activities open to foreign suppliers, the information provided
for in para. 69 of the Secretariat's Report is accurate.  In all tourist-related activities, foreign operators
are welcome to invest in Macau.  Only as regards travel agencies are foreign investors required to set
up a locally incorporated company in order to carry on their activities in the Macau SAR.
Questions from Japan
Secretariat Report (WT/TPR/S/82)
III. Trade Policies and Practices by Measure
(2) Measures Directly Affecting Imports
Customs valuation
37. (p. 23, para. 15) The Report states that "since no customs duties or fees are levied on imports
there are no general laws, regulations or administrative procedures for valuing goods for custom
purposes.  According to the authorities, if Macau, China were to impose import duties, valuation
would be in accordance with the Agreement and la ws would be amended accordingly".  Does this
mean that Macau, China has no plan to introduce im port duties at present, which would imply that no
plan has been made in order to introduce the laws?
Historically, Macau, China does not levy import duties.  This is legally underpinned by
Basic Law, Chapter V, Article 110 which provides that "The Macau Special Administrative Regionshall maintain the status of a free port and shall not impose any tariff unless otherwise prescribed by
law".  There are no plans to introduce import duties or related customs valuation laws.
Tariffs
38. (p. 24, para. 20) Although no tariffs are applied to imports into Macau, China, only 23.9% of
tariff lines have been bound.  Please provide the perspectives of Macau, China envisaged to expandthe coverage of tariff bindings.
Macau has historically been a free port with zero tariff rates on all imports from all sources.
In these circumstances, whether tariff rates are bound or not does not in practice affect the free flow of
goods imported into the MSAR.  Nevertheless, Macau, China is examining the way to bind more tariff
lines for industrial products in its Concession Sche dule (LXXXIX) in the future, for instance during
the next round of trade negotiations, provided that mutually satisfactory results can be achieved.
In addition, Macau, China is committed to bind tariffs on pharmaceutical products contained
in WTO documents L/7430 and G/MA/W/10 at zero.  Macau, China also intends to bind products to
be covered by ITA II.
Contingency measures
39. (p. 29, para. 39) According to the Report, Macau, China has no laws or regulations
governing anti-dumping (AD) and countervailing du ties (CVD) though it took some anti-dumping
actions before 1998, and some countervailing actions before 1996.  Japan considers that AD as well
as CVD shall not be invoked arbitrarily, thus, requests Macau, China to establish the laws concerning
AD as well as CVD.  What is the view of Macau, China in this respect?
Please see reply to Question 24 above.WT/TPR/M/82
Page 40
SPS
40. (p. 32, para. 54) According to the Report, Macau, China has regulations governing "the
observance of hygiene conditions during preparat ion, packaging, transporting and conservation, and
sale of food products".  Do these hygiene condi tions equally apply to both imported products and
domestic products?
Article 3 of the proposed Regulation on hygiene conditions to be observed during preparation,
packaging, transportation, conservation and selling of pre-packaged meat, provides that
establishments for preparing and packaging meat products can only make use of meat from the Macau
abattoir or imported products that have been inspected on their arrival.  No animals are reared in
Macau for meat producing purposes.
(4) Measures Affecting Production and Trade
Intellectual property rights
41. (pp. 46-47, paras. 122-124) Japan appreciates that Macau, China actively tackles the
protection of intellectual property rights such as improvising its legal structure to combat optical
media piracy.  Japan expects Macau, China to continue its efforts in taking effective measures for the
protection of intellectual property rights.
We note with appreciation Japan's comments on Macau, China's efforts to tackle the
protection of intellectual property rights.  Macau, China will continue its efforts in this field, including
its enforcement mechanisms.
Questions from the United States
Secretariat Report (WT/TPR/S/82)
Summary Observations(2) Macroeconomic Policies
42. (para. 7) The share of public expenditure in GDP has been increasing since 1994 and is
estimated at 20% in 2000.  The Secretariat's report notes that transparency with respect to
expenditures, especially in the area of government procurement could be improved.  What steps is the
Macau SAR Government taking to increase transparency in government procurement?
Please refer to the answer to Question 28.
(5) Outlook
43. After four years of negative growth, the Secr etariat notes that the Macau SAR Government
forecasts growth of 2.4 % for 2000.  Does the Government see a continuation of this growth in 2001?
The Government considers that this growth will continue in 2001 although there might be a
slight slowdown due to external factors.  The to urism sector might cool off due to a reduction in
visitor arrivals from mainland China, after the boom recorded since the handover.
Exports may also see a slight decline in view  of the expected slowdown in the US economy.
On the other hand, the Government will promote greater spending on infrastructures, thus boosting
the public works sector in order to encourage foreign investment and employment opportunities.WT/TPR/M/82
Page 41
Economic Environment
(2) Recent Economic Developments
(iii) Structural/Industrial Policies
44. (para. 11) Manufacturing accounts for only 9.3 % of GDP, but employs 20% of the workforce.
What are the Macau SAR Government and the private sector doing to try to increase labourproductivity?
The Macau SAR Government is working hard to promote Macau's economic development
and the rationalization of industry structures.  Many measures have either been taken or are in the
pipeline to upgrade the manufacturing sector and assist its expansion into sectors with greater
value-added.
More specifically, the Subsidized Interest Rates Regime to Loans Granted to Economic
Activities is available to manufacturing companies for renewing their production equipment ormodernizing their production technologies.  The Macau Production and Technology Transfer Center,
a non-profit organization set up between the Macau Government and the private sector, provides local
manufacturing with:
- vocational, technical and management training;
- a range of assistance;- services to support manufacturing by implementing quality management and
international management system certification;
- in-company consultancy and training;
- garment manufacturers with the means to assess technology which they cannot afford
to buy.
The aim is to help local manufacturing to increase the added value of products, thereby
enhancing their productivity and competitiveness.  In respect of expertise, the Macau SAR
Government is reinforcing basic education and vocational training to help workers to adapt to the
demands of the new high-technology economy.  In  addition, the Macau SAR Government seeks to
attract foreign expertise to make better use of high technology and to further increase labourproductivity.
The private sector in Macau is already using new technologies to improve the cost, efficiency
and quality of their production, moving towards higher value-added products.  Many companies have
developed links with Macau higher education institutes and reputed universities in Mainland China,
so that research can feed through into labour productivity and higher value-added production.
(3) Trade Developments
Composition of merchandise trade
45. (para. 12) The share of clothing and textiles in total exports increased from 73% to 85% from
1994 to 1999.  Is the Government considering taking steps to encourage greater product
diversification?WT/TPR/M/82
Page 42
As indicated throughout this Review, the Macau SAR Government has taken a number of
steps to promote the diversification of its economy, whilst allowing market forces to operate to the
maximum extent possible.
Trade Policy Regime:  Framework and Objectives
(3) Trade Policy Formulation and Implementation
46. (para. 11) The Secretariat's report notes that under the Basic Law, the constitutional
instrument which governs Macau, remains a separate customs territory and may participate in
international organizations and international trade agreements, such as WTO agreements.  Macau
may also, on its own, maintain and develop rela tions and conclude and implement agreements with
foreign States and regions and relevant internati onal organizations in the appropriate fields.  In
addition to our MOU on Textile Agreements with the U.S. has the Macau SAR Government recently
concluded or considered concluding new agreements in the trade area?
No.  The Macau SAR Government has no such plans for the time being.
47. We understand that Macau's Basic Law requires the establishment of an independent customs
service.  The Government has created a task for ce to determine the organization of the new customs
service and prepare legislation for this new body.  In creating a new customs service and prepare
legislation for this new body.  In creating a new customs service we urge Macau to ensure that thenew customs service is effective and sustains the progress that Macau Economic Services is making
on issues such as IPR protection and textile quota enforcement.  What is the status of this
re-organization?
The Chief Executive of Macau SAR has set up a working group to create a unified structure
of the Customs Services.  A report and legislative proposal was presented to the Chief Executive lastyear.  This proposal is currently in inter-departmental consultation and should be presented to
Executive Council and Legislative Assembly this year.  The Macau Customs Services should
therefore be established and operational by the end of this year.
(4) Trade Policy Objectives
48. (para. 16) We are pleased that with regard to the new round of trade negotiations, Macau
attaches great importance to the liberalization of certain sectors, such as tourism,
telecommunications, and e-commerce.  Is the Government considering supporting specific proposals
in these sectors?
Macau, China is committed to the principle of liberalization in service sectors and this is
demonstrated by the measures referred to throughout this Review.  As regards sectors such as tourism,
telecoms and e-commerce, in the context of the ongoing negotiations, it is clearly premature for
Macau, China to adopt any specific position.  Nevertheless, the objective of further progressiveliberalization is clear.
(7) Measures related to Foreign Direct Investment
49. (para. 26) The Secretariat's Report notes that the Government grants interest rate subsidies.
Can you please provide further details on these interest rate subsidies offered by Government?
Please indicate whether this programme is directed at specific sectors or is contingent on exportperformance.
In reply to the first and second part of the question, please refer to the answer already
provided for in Question 33, Section II.WT/TPR/M/82
Page 43
50. (para. 27) The Secretariat's Report notes that Macau signed a double taxation agreement
with Portugal in 1999 and a bilateral investment treaty with Portugal in 2000, but has no other
bilateral tax or investment agreement.  Is Macau considering negotiating other tax or investment
agreement?
The MSAR Government has a flexible policy on this issue.  Macau, China is currently
studying the possibility of a similar tax arrangement within the People's Republic of China and an
investment agreement with two WTO Members.
III. Trade Policies and Practices by Measures
(2) Measures Directly Affecting Imports
Procedures
51. (para 10) The Secretary's report outlines the importing procedures in Macau and indicates
that in addition to an import declaration, an import licence is required for certain imports.  Do the
product goods listed in Table III.2 represent a complete listing of the product groups requiring
licensing?  If not, please provide further information?
The products subject to the import licensing regime are exhaustively listed in Table III.2 of
the Secretariat's Report.
52. (para. 14) We understand that Macau has begun to implement a computerized system that
will allow the customs clearance process to be completed in 20 minutes.  When will the system be fully
operational?
We shall continue to pursue our best efforts to implement the system within 2001.
(iv) Other charges affecting imports
53. The Secretariat's report mentions both excise taxes and consumption taxes but only indicates
the coverage of consumption taxes in Table III.1  Ar e these two taxes actually one tax or are there two
separate taxes?  If the latter, what goods are affected by the excise tax?
The MSAR Government levies only a consumption tax.  The tax is collected on a limited
number of products (please refer to answer given to Question 19).
(3) Measures Directly Affecting Exports
(v) Export Support
54. (para. 88) The Secretariat's report states that the authorities maintain that Macau does not
provide any subsidies or tax concessions to exporters.  However, according to law No. 1/86/M one of
the requirements to obtain tax incentives is to contribute to new unrestricted markets.  Can you please
indicate how the programmes offered by the Government are used to encourage exports to new
markets?  Can you please provide further details on these programmes including names of the
programmes?
Most manufacturers in Macau are also engaged in export activities.  To encourage
diversification, the Government provides both financial benefits and tax exemptions.  These measures
include the following:WT/TPR/M/82
Page 44
1. Export incentives
Companies which have registered with the Macau Economic Services and engage in export
activities, are entitled to apply for assistance.  Financial support is usually available for trade
promotional activities organized by Macau Trade and Investment Promotion Institute (IPIM) and
subject to prior approval, and includes the following categories:
Costs which can be fully covered:
- rental exhibition space;
- construction, assembling and dismantling costs of exhibition booths;
- decoration costs of exhibition booths;
- assistance in operating exhibition booths during exhibition;
- costs of participation of trade associations, including delegates' travelling fees
(number of delegates determined by IPIM).
60% of the following costs are covered:
- publication costs up to US$5,000;
- production costs of audio-visual materials, up to US$8,750;
- cost of individual participation in fairs outside Macau (including stand rentals and
decoration), up to US$7,500.
50% of the following costs are covered:
- transportation costs of samples for exhibitions or trade delegations organized by
IPIM, up to 20 kg (air cargo) or 3m³ (sea cargo);
- two return tickets for every participating company, if purchased through local travel
agencies.
2. Tax Exemptions
To encourage the industrial development of Macau, full or partial exemptions are granted to
corporate, industrial, property, property transfer (SISA), inheritance and donation taxes (for details of
the tax exemptions, please refer to Question 33 – fiscal incentive table).  The objective of the
Government in providing these incentives is to diversify export markets and industrial sectors.  Morespecifically, the objective is to:
1. promote diversification
2. contribute to the promotion of exports to new markets
3. promote a higher added value within their own production chain
4. contribute to technological modernization
5. create employment opportunitiesWT/TPR/M/82
Page 45
(4) Measures Affecting Production and Trade
(ii) Non-tax incentive and other forms of assistance
55. The Secretariat's Report notes that the Government provides a series of incentives measures
aimed mainly at developing and diversifying the indu strial sector.  Such measures include incentives
to investments, interest subsidies on MOP bank l oans for the purchase or leasing of new equipment,
as well as for the purchase, construction or leasing of industrial buildings and concession on
government-owned land.  Can you please provide furt her information on these investment incentives?
What tax exemptions are offered?  What projects and industries are eligible for tax exemptions?  Can
you please provide further details on the types of interest subsidies available?  In what cases has the
concession of government-owned land?  Does Macau, intend to notify these programmes and
incentives to the WTO?
Please refer to Question 33, II Financial Incentives for the details on interest rate subsidies.
On the concession of government-owned land for industrial use, please refer to the answer to
Question 22.  As regards notifications to the WTO, it is Macau, China's policy to notify all measures
for which a requirement to this effect exists in WTO/GATT agreements.
(iii) Intellectual Property Rights
Enforcement and prosecution
56. (para. 139) Although Macau has strengthened its IPR legislation and increased enforcement,
it has failed to achieve convictions and impose deterrent sentences for suspected pirate
manufacturers.  The Secretariat Report notes that go vernment statistics indicate that fines decreased
in number and severity compared with 1998 and that while the number of criminal proceedings
instituted increase dramatically at the beginning of 2000, this was matched by a decrease in thenumber of criminal sentences.  What is the Gove rnment planning to do to impose deterrent penalties?
The main concern of the Government has been to curb the level of piracy by all the legal
means available, both administrative and judicial.  That aim was actually achieved, as a result of
legislative amendments and enforcement actions undertaken in the last few years.
The decrease in the number of fines imposed is a natural consequence of the decline in illegal
activities.  Taking into account the results that ha ve been achieved, it appears that the enforcement
actions taken by the Government have been successful and are an effective deterrent.
The Government remains fully committed to en forcing intellectual property laws and
monitoring compliance.  However, under Macau, China's Basic Law, the executive cannot interfere
with the functions of either the Courts or the Public Prosecutor, which are independent bodies.
IV. Trade Policies by Sector
(2) Manufacturing
57. (para 9) The Secretariat Report notes that the Macau Economic Services' Commerce
Department is in charge of allocating export textile quotas to individual firms and exporters.  Can this
Department or any other Government Department deny future export licenses to companies convicted
of illegal transhipping textiles?  What steps is the Government taking to solve the transhipment
problem and toughen penalties for convicted transshippers?WT/TPR/M/82
Page 46
The MSAR Government is intending to establish a system whereby companies convicted of
illegal trade practices will be denied future export licences.  This policy will  continue to be managed
by the Macau Economic Services' Commerce Department.
Macau, China now has comprehensive legislation and enforcement measures that are a firm
deterrent of illegal trade practices.  The Macau, China authorities will continue to work for furtherimprovements in cooperation with authorities in importing countries.
(3) Services
(ii) Telecommunications
58. (para. 36) We are please to note the Macau SAR Government's decision last fall to liberalize
the mobile telephone market.  We hope this will be followed by similar liberalization of other telecom
sectors.  What initiatives does the Macau SAR Government have under way to improve competition in
telecom and other basic services?
The liberalization of the mobile telephone market was followed by Internet services last year.
In order to consolidate the process and to promote fair competition, new telecommunications
legislation is being prepared, including a basic telecommunications law, accompanied by specific
regulations and licensing requirements for services which have been, or are to be, liberalized.WT/TPR/M/82
Page 47
ANNEX TABLES
SELECTED ECONOMIC AND FINANCIAL INDICATORS
Table 1 - Major Economic Indicators
Table 2 - Gross Domestic ProductTable 3 - Foreign Trade
Table 4 - Foreign Trade Indices
Table 5 - Exports of goods by main sectors and markets
Table 6 - Imports of goods by end-use categories and from main markets
Table 7 - Orders-on-hand in the manufacturing export sector
Table 8 - Business expectations for the manufacturing export sector (next six months)
Table 9 - Tourism Sector IndicatorsTable 10 - Construction Sector Indicators
Table 11 - Energy Sector Indicators
Table 12 - Monetary Indicators
Table 13 - Pataca Exchange Rates
Table 14 - Consumer Price IndexTable 15 - Public FinanceWT/TPR/M/82
Page 49
Table 1
Main Economic Indicators
1996 1997 1998 1999 2000
Population as of 31 December (1000s)*415.9 422.0 430.5 437.5*437.6d
Population by mid-year (1000s)*415.4 419.1 425.1 435.3 436.0
Nominal GDP (US$mn)**6,940.0 7,007.5 6,504.9*6,157.5#n.a.
Per capita GDP (US$)**16,705 16,729 15,259*14,145#n.a.
Unemployment rate (average) 4.3 3.2 4.6 6.4 6.8
Real GDP Growth (%) -0.4 -0.3 -4.6*-2.9#n.a.
Inflation, C.P.I. growth (%)a4.8 3.5 0.2 -3.2 -1.6
Exports of goods, f.o.b. (US$mn) 1,995.6 2,142.6 2,135.7 2,194.0 2,530.2
Textiles and garments 1,601.7 1,821.8 1,805.4 1,838.1 2,086.2
Other sectors 394.0 320.7 330.3 355.9 444.0
Imports of goods, c.i.f. (US$mn) 1,999.7 2,076.8 1,949.8 2,034.4 2,246.8
Trade Balance (US$mn)b-4.1 65.8 185.9 159.6 283.4
Balance of Current Accounts (US$mn)c2,203.4 2,158.4 1,954.2*1,711.8#n.a.
Pataca Exchange Rate (1 US$=) 7.967 7.976 7.979 7.992 8.025e
M1-I-2001
a Since the beginning of year 2000, the CPI includes rents.
b See footnote Table 3.
c Net exports of goods and services (based on GDP estimates).
d Provisional data.e Jan. - Nov. 2000.
# Preliminary estimates.
* Revised estimates.** Based on the recommendations of the (System of National Accounts 1993), the GDP from 1982 to 1998 were revised.
n.a. Not available.
Source: Research and Electronic Data Processing Department, Macau Ec onomic Services (based on data from the MSCS).ABREVIATIONS
MFS - Macau Finance Services
MSCS - Macau Statistics and Census Services
MMA - Macau Monetary AuthorityWT/TPR/M/82
Page 50
Table 2
Gross Domestic Product**
1999#
Current prices1997 1998*1999#
Million
patacasStructure
%93-99
Annual
average
% Real change %
Gross Domestic Product 49,210.2 100.0 -0.2 -0.3 -4.6 -2.9
Total Domestic Demand 35,552.5 72.2 -1.1 0.8 -4.6 0.1
Private Consumption 20,539.4 41.7 2.5 1.4 -0.9 1.7
Public Consumption 6,445.0 13.1 5.7 4.1 2.4 9.5
Gross Fixed Capital Formation 8,486.6 17.2 -8.5 1.9 -12.7 -9.2
Constructions 5,544.9 11.3 -11.7 0.7 -14.0 -19.8
Others 2,941.7 6.0 0.8 5.8 -8.7 20.4
Change in Stock Building 81.5 0.2 -24.7 -80.2 -165.8 215.5
Net Foreign Demand 13,657.7 27.8 2.5 -2.5 -4.7 -9.6
Exports of goods and services 39,057.7 79.4 1.1 -1.7 -2.5 0.9
Exports of goods 17,580.0 35.7 3.9 3.8 3.5 4.4
Exports of services 21,477.7 43.6 -0.8 -5.1 -6.6 -1.6
Imports of goods and services 25,400.0 51.6 0.3 -1.1 -1.0 8.1
Imports of goodsa19,976.1 40.6 0.0 -4.3 -1.0 7.8
Imports of services 5,423.9 11.0 1.6 13.9 -0.7 9.4
Implicit price deflator of GDP (1996=100) 101.4 98.7 96.3
M2-I-2001
a Import figures derived from foreign trade statistics were adjusted for some non-registered imports and exports.# Preliminary estimates.
* Revised estimates.** Based on the recommendations of the ( System of National Accounts 1993), the GDP from 1982 to 1998 were revised.
Source: Research and Electronic Data Processing Department, Macau Ec onomic Services (based on data from the MSCS).
Table 3
Foreign Trade
Growth rate %
Jan.-Dec. Annual average Annual Jan.-Dec.
1997 1998 1999 1999 2000 1985-90 1990-95 1995-2000 98/99 99/2000
Value*
(Million patacas)
Total Exports of goods, f.o.b. 17,129.2 17,083.6 17,580.0 17,580.0 20,380.4 13.7 3.5 4.6 2.9 15.9
Domestic 15,048.1 14,903.8 15,044.4 15,044.4 17,080.7 … … … 0.9 13.5
Re-exports 2,081.0 2,179.8 2,535.6 2,535.6 3,299.7 … … … 16.3 30.1
Imports of goods, c.i.f. 16,603.4 15,596.4 16,300.2 16,300.2 18,097.6 14,6 6.0 1.9 4.5 11.0
Trade balance 525.8 1,487.2 1,279.8 1,279.8 2,282.9 … … … … …
Exp./Imp. Ratio 103.2 109.5 107.9 107.9 112.6 … … … … …
M3-I-2001
* Total Exports of goods (1995 and before) = Definitive Exports + Re-exports.
Total Exports of goods (from January 1996) = Domestic Exports + Re-exports.
Imports of goods (1995 and before) = Definitive Imports + Temporary Imports.
... Not applicable.
Source: Research and Electronic Data Processing Department, Macau Ec onomic Services (based on data from the MSCS).WT/TPR/M/82
Page 51
Table 4
Foreign Trade Indices1996 = 100
Jan.-Sept.
1998 1999 1999 2000
Foreign Trade Index
Value Index
Total Exports 107.5 110.6 111.4 128.1
Total Imports 97.9 98.7 96.1 109.6
Quantum Index (Laspeyres)
Total Exports 106.8 111.4 113.4 125.9
Total Imports 99.4 102.5 101.1 110.5
Unit Value Index (Paasche)
Total Exports 100.6 99.3 98.2 101.7
Total Imports 98.5 96.3 95.1 99.1
M4-I-2001
Note: Starting from 1999, a new compilation method is used to calculate the Foreign Trade Indices.
"Laspeyres" and "Paasche" are used to calculate the Quantum Index and Unit Value Index, respectively.
Source: Research and E1ectronic Data Processing Department, Macau Ec onomic Services (based on data from the MSCS).
Table 5
Exports of goods by main sectors and markets
Growth rate (%)
Jan.-Dec.Annual
averageAnnual Jan.-Dec.
(Million patacas) 1997 1998 1999 1999 2000 1995-2000 1997-98 1998-99 1999-2000
Main Sectors
Textiles and garments 14,564.9 14,441.6 14,728.2 14,728.2 16,804.5 6.2 -0.8 2.0 14.1
Garments 13,298.3 13,046.2 12,924.4 12,924.4 14,623.0 5.9 -1.9 -0.9 13.1
Other sectors 2,564.3 2,642.0 2,851.8 2,851.8 3,575.9 -1.2 3.0 7.9 25.4
Toys 91.8 95.4 35.0 35.0 6.7 -58.9 3.9 -63.3 -80.7
Electronics 131.8 93.6 144.6 144.6 264.9 -8.2 -29.0 54.5 83.3
Footwear 323.1 383.4 503.0 503.0 640.9 14.4 18.7 31.2 27.4
Total 17,129.2 17,083.6 17,580.0 17,580.0 20,380.4 4.6 -0.3 2.9 15.9
Main Markets
North America 8,026.3 8,442.0 8,522.5 8,522.5 10,164.5 7.9 5.2 1.0 19.3
USA 7,747.3 8,140.7 8,249.1 8,249.1 9,836.7 8.0 5.1 1.3 19.2
EU (15) 5,632.0 5,210.0 5,303.7 5,303.7 5,789.6 2.6 -7.5 1.8 9.2
Asia-Pacific 3,210.8 3,174.4 3,516.6 3,516.6 4,103.0 0.4 -1.1 10.8 16.7
Hong Kong 1,315.3 1,300.7 1,195.2 1,195.2 1,329.8 -4.3 -1.1 -8.1 11.3
PRChina 1,111.1 1,157.1 1,616.5 1,616.5 2,079.8 4.0 4.1 39.7 28.7
M5-I-2001
Source: Research and Electronic Data Processing Department, Macau Ec onomic Services (based on data from the MSCS).WT/TPR/M/82
Page 52
Table 6
Imports of goods by end-use categories and from main markets
Growth rate (%)
Jan.-Dec.Annual
averageAnnual Jan.-Dec.
(Million patacas) 1997 1998 1999 1999 2000 1995-2000 1997-98 1998-99 1999-2000
By End-Use Categories
Consumer goods 4,276.0 4,024.2 4,340.4 4,340.4 5,318.1 2.4 -5.9 7.9 22.5
Raw-materials and semi-
manufactures9,375.9 9,067.6 8,781.1 8,781.1 9,429.8 1.8 -3.3 -3.2 7.4
Capital goods 1,881.1 1,515.4 2,166.6 2,166.6 1,978.4 -3.1 -19.4 43.0 -8.7
Fuels and lubricants 1,070.4 989.3 1,012.1 1,012.1 1,371.2 10.5 -7.6 2.3 35.5
Total 16,603.4 15,596.4 16,300.2 16,300.2 18,097.6 1.9 -6.1 4.5 11.0
From Main Markets
Asia-Pacific 13,258.5 13,046.1 13,220.4 13,220.4 15,243.7 4.2 -1.6 1.3 15.3
Hong Kong 4,176.5 3,697.0 2,945.0 2,945.0 2,758.3 -10.1 -11.5 -20.3 -6.3
PRChina 4,741.2 5,091.5 5,808.9 5,808.9 7,428.9 15.0 7.4 14.1 27.9
Japan 1,417.4 1,208.2 1,084.2 1,084.2 1,141.8 -8.0 -14.8 -10.3 5.3
Taiwan 1,537.3 1,537.1 1,550.1 1,550.1 1,719.6 7.9 0.0 0.8 10.9
EU (15) 2,052.1 1,641.3 2,102.8 2,102.8 1,738.1 -6.6 -20.0 28.1 -17.3
USA 1,042.3 733.2 830.7 830.7 819.6 -7.6 -29.7 13.3 -1.3
M6-I-2001
Source: Research and Electronic Data Processing Department, Macau Ec onomic Services (based on data from the MSCS).
Table 7
Orders-on-hand in the manufacturing export sector
Average number of months
Sectors Jan. 2000 Oct. 2000 Jan. 2001
1. Garments 4.9 4.4 4.1
2. Toys 2.4 2.5 2.4
3. Electronics 3.5 3.5 2.4
4. Footwear 3.5 2.9 3.9
Total* 4.7 4.1 3.9
M7-8-I-2001
* Total of Manufacturing Export Sector weighted by the sectors' exports.
Source: Quarterly Business Survey, Macau Ec onomic Services.
Table 8
Business expectations for the manufacturing export sector (next six months)
Jan-2001
Sectors Percentage of
strong growthPercentage of
moderate growthPercentage of
stagnationPercentage of
moderate reductionPercentage of
strong reduction
1. Garments 6.0 36.9 43.5 7.8 5.7
2. Toys - - 100.0 - -
3. Electronics - - 100.0 - -
4. Footwear - - 65.6 - 34.4
Total* 5.1 36.7 42.0 7.7 8.5
M7-8-I-2001
* Total of Manufacturing Export Sector weighted by the sectors' exports.
- Zero or negligible.
Source: Quarterly Business Survey, Macau Ec onomic Services.WT/TPR/M/82
Page 53
Table 9
Tourism Sector Indicators
% Change
Jan.-Dec. Jan.-Dec.
1997 1998 1999 1999 2000 1998-99 1999-2000
Visitor arrivals (1,000s) 7,000.4 6,948.5 7,443.9 7,443.9 9,162.2 7.1 23.1
By air 537.2 512.2 672.9 672.9 834.2 31.4 24.0
By land 1,624.6 1,749.3 2,334.7 2,334.7 3,137.5 33.5 34.4
By sea 4,838.6 4,687.1 4,436.3 4,436.3 5,190.5 -5.3 17.0
Visitors by main markets (1,000s)a
Hong Kong 4,675.9 4,721.8 4,229.8 4,229.8 4,954.6 -10.4 17.1
Mainland China 395.0 816.8 1,645.2 1,645.2 2,274.7 101.4 38.3
Taiwan 898.3 816.6 984.8 984,8 1,311.0 20.6 33.1
Others 1,031.2 593.3 584.1 584.1 621.8 -1.6 6.5
Hotel overnight guests (1,000s)b2,124.9 2,080.8 2,179.9 2,179.9 2,591.8#4.8 18.9
Length of stay (nights) 1.33 1.42 1.43 1.43 1.33 0.7 -7.0
Hotel occupancy rate (%) 52.1 53.1 55.4#55.4#59.2 2.3*3.7*
5, 4 and 3 star hotels 55.7 56.8 59.4#59.4#62.6 2.6*3.2*
Hotel room supply (No.)c8,324 8,320 8,848#8,848#8,611 6.3 -2.7
5, 4 and 3 star hotels 7,231 7,232 7,795#7,795#7,724 7.8 -0.9
M9-I-2001
a Visitors are classified according to their country of residence.  For the years of 1997 and before, the figures for visitors e ntry
through pier 14 and heliport are excluded.
b Visitors and residents.
c Number of rooms available in all Macau hotels at end-of-period.
* Percentage points.
# Figure rectified by the source.
Source: MSCS.
Table 10
Construction Sector Indicators
% Change
Jan.-Dec. Jan.-Dec.
1997 1998 1999 1999 2000 1998-99 1999-2000
Total gross area completed (1,000 sq.m) 1,150.0 969.2 668,8 668.8 370.3 -31.0 -44.6
Residential 576.9 559.5 307.7 307.7 230.1 -45.0 -25.2
Commercial 363.4 174.6 128.6 128.6 54.8 -26.4 -57.4
Industrial 0.0 39.6 33.9 33.9 0.0 -14.3 n.c.
Others 209.6 195.5 198.5 198.5 85.4 1.6 -57.0
Commencement of building construction
Licences issued 92 74 55 55 34 -25.7 -38.2
Gross construction area initiated in the
period (1,000 sq.m)853.3 570.0 417.2 417.2 202.8 -26.8 -51.4
Apparent consumption of cement (tons) 196,145 126,260 103,056 103,056 79,997 -18.4 -22.4
Sept.
Loans and advances to Construction and
Public Works (106 MOP)*8,982.8 8,698.6 9,187.3 9,276,5 9,718.2 5.6 4.8
Personal housing loans (106 MOP)*11,962.2 11,541.6 11,435.1 11,577.3 10,923.4 -0.9 -5.6
M10-I-2001
* Outstanding Balance, at the end of period.
n.c. Not calculated.
Source: MSCS and MMA.WT/TPR/M/82
Page 54
Table 11
Energy Sector Indicators
% Change
Jan.-Dec. Jan.-Dec.
1997 1998 1999 1999 2000 1998-99 1999-2000
Electricity
Net Domestic production (106 kWh) 1,248.1 1,377.0 1,365.7 1,365.7 1,408.3 -0.8 3.1
Electricity Billed
Quantity(106 kWh) 1,404.9 1,514.7 1,520.6 1,520.7 1,564.6 0.4 2.9
Value (106 MOP) 1,537.9 1,636.0 1,626.2 1,626.4 1,725.4 -0.6 6.1
Average price (MOP/kWh) 1.09 1.08 1.07 1.07 1.10 -1.0 3.1
Imports of Fuels*
Value (106 MOP) 911.4 826.4 839.3 839.3 1,197.4 1.6 42.7
% of total imports 5.5 6.2 5.1 5.1 6.6 ... ...
M11-I-2001
* Petrol, diesel, fuel-oil and petroleum gas.
... Not applicable.
Source: MSCS.
Table 12
Monetary Indicators
% Change
December Jan.-Nov. Dec. Jan.-Nov.
(106 patacas, end of period) 1997 1998 1999 1999 2000 1998-99 1999-2000
Money Supply (M2) 78,358 86,217 90,139 89,797 89,386 4.5 -0.5
of which:
Currency in circulation 1,518 1,555 1,820 1,634 1,687 17.0 3.2
Demand and Savings Deposits 17,435 18,617 19,226 19,092 19,068 3.3 -0.1
Short-notice and Time Deposits 59,401 66,045 69,094 69,071 68,631 4,6 -0.6
by currencies:
Patacas 24,180 25,796 28,169 27,728 23,903 9.2 -13.8
Hong Kong Dollars 41,599 45,530 46,702 46,228 47,460 2.6 2.7
Other currencies 12,579 14,891 15,268 15,841 19,024 2.5 13.8
Loans and other credit to residents#48,738 48,007 46,627 46,963 45,157 -2.9 -3.8
Public Sector 115 146 191 189 206 31.2 9.1
Firms and Individuals 48,622 47,862 46,436 46,774 44,952 -3.0 -3.9
Net Foreign Assets 42,814 52,882 58,847 58,409 69,196 11.3 18.5
MMA 20,223 19,657 22,879 23,004 26,246 16.4 14.1
Other Monetary Institutions 22,598 33,225 35,967 35,405 42,950 8.3 21.3
M12-I-2001
# Credit granted by the MMA and Other Monetary Institutions.
Source: MMA.WT/TPR/M/82
Page 55
Table 13
Pataca Exchange Rates
% Change
Annual average Jan.-Nov. Jan.-Nov.
1997 1998 1999 1999 2000 1998/99 1999-2000
Average exchange rates by 100 units of
foreign currency
US dollar – USD 797.5 797.9 799.2 799.1 802.5 0.2 0.4
German mark – DEM 460.6 454.2 436.1 438,1 380.1 -4.0* -13.2*
Sterling pound – GBP 1,306.9 1,322.4 1,293.0 1,293.1 1,220.6 -2.2* -5.6*
French franc – FRF 136.8 135.5 129.9 130.6 113.3 -4.1* -13.2*
European Currency – EUR#901.9 896.1 821.4 822.6 743.5 -8.3* -9.6*
Japanese yen – JPY 6.6 6.1 7.1 7.0 7.5 15.0 7.1
PRChina yuans – CNYa96.2 96.4 96.5 96.5 96.9 0.2 0.4
Monthly average Monthly average
Effective Exchange Rate Index Dec. Dec. Dec. Nov. Nov. Dec. Nov.
(24-28 Oct. 83=1 00) 1997 1998 1999 1999 2000 1998/99 1999/2000
Imports + Exports 112.9 110.5 111.5 111.3 116.7 0.9 4.8
Imports 130.2 127.1 123.8 124.3 127.7 -2.6 2.8
Exports 100.3 98.5 102.3 101.7 108.3 3.8 6.5
M13-I-2001
a Unofficially quoted currency.
* Minus sign:  pataca appreciation.# Quotations before 1 January 1999 were the ECU of the European Union.
Source: MMA.
Table 14
Consumer Price Index
% Change
Jan.-Dec. Jan.-Dec.
(July/1995-June/1996 = 100) Weighted
factors (%)1998 1999 1999 2000 1998/99 1999/2000
Goods and Services
Foodstuffs and Beverages 31.31 104.3 99.7 99.7 98.2 -4.4 -1.5
Clothing and Footwear 5.74 101.4 99.2 99.2 93.8 -2.2 -5.4
Rents, Maintenance and Housing Expenses 30.25 100.3 97.3 97.3 95.6 -3.0 -1.7
Alcoholic Drinks and Tobacco 1.42 105.5 105.3 105.3 104.5 -0.2 -0.7
Household Goods 4.09 98.9 96.3 96.3 94.7 -2.7 -1.6
Health 1.84 109.2 106.5 106.5 107.1 -2.5 0.6
Transport and Communications 10.12 100.0 97.9 97.9 96.3 -2.1 -1.6
Education, Culture and Leisure 9.22 104.7 101.9 101.9 101.0 -2.6 -0.9
Other Goods and Services 6.01 94.5 91.6 91.6 91.8 -3.1 0.2
All CPI Items 100.00 101.8 98.6 98.6 97.0 -3.2 -1.6
Tradeable goods and services (i)#36.00 97.6 93.2 93.2 91.4 -4.6 -1.9
Non-tradeable goods and services (ii)#57.05 104.9 101.7 101.7 100.2 -3.1 -1.5
Prices under administrative control#6.95 101.8 101.1 101.1 99.6 -0.7 -1.5
M14-I-2001
# Estimated by Research and Electronic Data Processing Department, Macau Economic Services (based on CPI).
(i) Tradeables are goods and services which are exportable or importable.
(ii) Non-tradeables are those which are produced and consumed locally (housing, bus and taxi fares, meals taken out etc.).
Source: Consumer Price Index, MSCS.WT/TPR/M/82
Page 56
Table 15
Public Finance
Jan.-Dec.
(Million patacas) 1997 1998 1999Budget
20011999 2000*Change
%
Government Revenue - Total 15,000.6 15,548.3 16,942.6 13,521.3 16,942.6 9,079.2 -46.4
(excluding Autonomous Funds) 10,472.8 10,457.5 9,859.0 9,649.1 9,859.0 8,815.9 -10.6
Current Revenue 10,035.1 8,658.7 9,073.8 9,058.4 9,073.8 8,441.2 -7.0
Direct taxes from gambling 6,013,1 4,770.9 4,335.7 5,568.8 4,335.7 5,467.8 26.1
Other direct taxes 1,577.4 1,584.4 1,651,6 1,447.1 1,651.6 1,427.6 -13.6
Indirect taxes 553.0 488.9 495.9 490.7 495.9 532.6 7.4
Revenue from equity and property 673.9 991.9 2,058.7 1,050.9 2,058.7 545.4 -73.5
Others 1,217.8 822.5 531.8 501.0 531.8 467.7 -12.1
Capital Revenue 416.5 1,781.2 755.9 570.7 755.9 337.4 -55.4
Sales of capital assets, capital transfers andother capital revenues16.5 210.8 355.9 10.4 355.9 31.0 -91.3
Surplus from previous fiscal years 400.0 1,570.4 400.0 560.3 400.0 306.4 -23.4
Public debt (borrowing) 0.0 0.0 0.0 0.0 0.0 0.0 ...
Reimbursements 21.1 17.6 29.3 20.0 29.3 37.3 27.4
Autonomous Funds 4,527.8 5,090.8 7,083.6 3,872.2 7,083.6 263.3 -96.3
Government Expenditure - Total 14,240.7 15,505.7 16,636.2 13,521.3 16,636.2 8,764.9 -47.3
(excluding Autonomous Funds) 9,712.9 10,414.9 9,552.6 9,649.1 9,552.6 8,501.7 -11.0
Current Expenditure 7,715.3 8,332.4 8,152.6 8,022.2 8,152.6 7,484.1 -8.2
Capital Expenditure 1,997.5 2,082.4 1,400.0 1,627.0 1,400.0 1,017.6 -27.3
Investment Plan 1,460.7 1,595.5 1,122.4 1,500.0 1,122.4 865.1 -22.9
Others 536.8 487.0 277.6 127.0 277.6 152.5 -45.1
Autonomous Funds 4,527.8 5,090.8 7,083.6 3,872.2 7,083.6 263.3 -96.3
Fiscal Surplus (deficit) 759.9 42.7 306.4 0.0 306.4 314.2 2.5
(excluding Autonomous Funds)
Jan.–Nov.
Public Sector Deposits (net domestic credits)a7,371.8 6,065.2 5,952.5 ... 6,232.0 6,347.6 1.9
M15-1-2001
a Balance, at the end of period, between the amount of public sector deposits with Macau's  banking system and that of domestic
credit granted to the public sector.
... Not applicable.
* Provisional data excluding Autonomous Funds.
Source: MFS and MMA.
__________