Required Report - Public distribution

**Date:** 8/6/2007

**GAIN Report Number:** HK7016

HK0000

**Hong Kong**

**Biotechnology**

**Annual**

**2007**

**Approved by:**

![](media/image1.wmf)Philip Shull

U.S. Consulate, Hong Kong

**Prepared by:**

Caroline Yuen

**Report Highlights:**

Hong Kong appears on the brink of establishing mandatory labeling for
biotech foods. Such a step could seriously undermine sales to this 9^th^
largest market for U.S. grocery products, which amounted to about \$610
million in 2006. U.S. products will be impacted because of the cost of
labeling and retailers' fear of consumer reaction. The Hong Kong
government released a set of guidelines on voluntary labeling for
biotech foods last year and will be conducting a survey to evaluate the
effectiveness of voluntary labeling. The trade said that there is
virtually no positive labeling of biotech foods, given the voluntary
nature of the guidelines. While the government has not announced its
decision to implement a mandatory labeling scheme, industry sources have
said they are certain the HKG is moving in this direction and will use
the survey result to support their initiative. Meanwhile, the
legislative drafting of the bill for the implementation of Cartagena
Protocol has halted pending the Protocol's developments of detailed
implementation requirements. Presently, Hong Kong does not have any
specific regulation regarding biotech foods.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Hong Kong \[HK1\]

\[HK\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[SECTION II. Biotechnology Trade and Production
4](#section-ii.-biotechnology-trade-and-production)

[SECTION III. Biotechnology Policy
5](#section-iii.-biotechnology-policy)

[Voluntary Labeling 6](#voluntary-labeling)

[Mandatory Pre-market Safety Assessment
7](#mandatory-pre-market-safety-assessment)

[Cartagena Protocol on Biosafety 7](#cartagena-protocol-on-biosafety)

[SECTION IV. Marketing Issues 9](#section-iv.-marketing-issues)

[SECTION V. Capacity Building and Outreach
9](#section-v.-capacity-building-and-outreach)

# Executive Summary

Hong Kong appears on the brink of establishing mandatory labeling for
biotech foods. Such a step could seriously undermine sales to this 9^th^
largest market for U.S. grocery products, which amounted to about \$610
million in 2006. U.S. products will be impacted because of the cost of
labeling and retailers' fear of consumer reaction.

The Hong Kong government released guidelines on voluntary labeling of
biotech foods in July 2006. There has been one year since the release of
the guidelines and the Hong Kong government is now preparing to conduct
a survey to evaluate the effectiveness of the voluntary labeling. The
survey is to be completed before the end of 2007.

Government sources revealed that the Hong Kong government will revisit
the biotech food labeling issue after the survey. While the government
has not announced its decision to implement a mandatory labeling scheme,
industry sources have said they are certain the HKG is moving in this
direction because the industry is virtually not practicing any positive
labeling for biotech foods. According to the guidelines, the threshold
level for labeling purpose is 5 percent and negative labeling is
discouraged.

In 2006, the United States exported a total of \$1.14 billion of
agricultural and food products to Hong Kong, ranking as the 11^th^
largest U.S. export market. Of the \$1.14 billion of exports, \$610
million were consumer-oriented products. Most of these products will be
most likely subject to the impact of mandatory biotech labeling as Hong
Kong's labeling policy applies to pre-packaged food only. The voluntary
guidelines, which were introduced last year, have not affected U.S.
exports to Hong Kong, because of their voluntary nature.

Currently, the Hong Kong government does not have any specific
biotechnology regulations with regard to the production or labeling of
biotech food products. The Hong Kong government makes no distinction
between conventional and biotech foods. All are subject to the same food
safety regulation.

In 2003, the Hong Kong government announced its intention to introduce
new legislation, which will provide a legal framework for the
implementation of the Cartagena Protocol on Biosafety. The Hong Kong
government has not set any deadline for the enactment of the new
legislation. It also claimed that the future legislation will adhere
strictly to the Protocol and would not set any requirements beyond those
of the Protocol.

It has been almost four years since the Hong Kong government's
announcement of incorporating the Cartagena Protocol on Biosafety by
enacting a new legislation. The drafting of the legislation has halted
because the Hong Kong government is waiting for Protocol's development
on implementation details. Government officials indicated that they will
attend the upcoming COP-MOP (Conference of the Parties serving as the
Meeting of the Parties) meeting and the future legislation will make
close reference from further international development on this subject.

According to the Protocol, Living Modified Organisms (LMOs) even
intended for direct use as food or feed, or for processing must fulfill
all documentation requirements. For LMOs which are intended for
introduction to the environment, the exporting party is required to give
advance notification to the competent authority of the importing country
and seek its approval in addition to fulfilling all documentation
requirements.

Hong Kong does not have any significant agricultural production, nor any
production of biotech crops. U.S. exports of agricultural products
carrying LMOs for intentionally released to the environment are
negligible if any. Hence, Hong Kong's new legislation should not have
any impact on U.S. exports in the context of advance notification.
However, the U.S. exports approximately \$13 million worth of corn and
soybeans to Hong Kong annually. These products may be subject to
documentation requirements covered by the new legislation, if they are
biotech modified and are considered "living" depending on the definition
of the future legislation.

**U.S. Exports of Agricultural and Food Exports to Hong Kong in 2006**

  ----------------------------- ------------- --------------------- -------------
  **Products**                  **US\$        **% of U.S. total     **Ranking**
                                million**     exports**             

  **Agricultural, Fish &        **1,137**     **1.4%**              **11**
  Forestry Total**                                                  

                                                                    

  1005 Corn (Maize)             11.9          0.2%                  32

  Soybeans                      1.09          0%                    39

  ***Sub-total***               ***12.99***   ***0.09%***           

                                                                    

  ***Consumer-Oriented Ag.      **610**       ***2%***              **10**
  Total***                                                          
  ----------------------------- ------------- --------------------- -------------

Source : U.S. Department of Commerce, Bureau of Census

# SECTION II. Biotechnology Trade and Production

Hong Kong does not commercially produce any biotechnology crops, nor
does it conduct field trials. There is no law prohibiting biotech crop
plantation.

Farming is insignificant in Hong Kong. The land use for vegetable,
flower, field crop, and orchard are 320 hectare, 190 hectare, 20 hectare
and 280 hectare respectively. The 2006 agricultural production amounted
to \$152 million, comprising \$33 million of crop production, \$76
million of livestock production and \$43 million of poultry production.
In essence, farming is insignificant with very limited future prospects.
The livestock industry is diminishing.

In recent years, the Hong Kong government has been promoting organic
farming so as to find a niche market for Hong Kong's grown vegetables
amidst the severe competition from imports from China. With the further
development of organic farming, an organic certification service
company, the Hong Kong Organic Resource Center (HKORC), was established
in 2002. HKORC started to provide independent organic certification
service in late 2004 for farmers and food processors. By the standard of
HKORC, all certified organic products have to be GM free.

As reported in Biotechnology Annual 2006 (HK#6015), biotech papayas were
planted by mistake by some organic farmers in Hong Kong in 2005. All the
biotechnology production was subsequently eradicated. In 2004 and 2005,
the Agriculture, Fisheries and Conservation Department (AFCD) of the
Hong Kong government helped local farmers source papaya seeds so as to
encourage them to plant papayas. Consequently, a total of about 13
organic farms were involved with approximately 300 papaya trees planted.

Following news in October 2005 that papaya production in Thailand was
found to be genetically modified, AFCD and Greenpeace Hong Kong tested
locally grown papaya samples to see if they were genetically modified.
The results were positive. As a result, all the papaya trees planted
were eradicated. AFCD also wrote to farmers in Hong Kong advising them
not to plant papayas due to the existence of unknown GM seeds. AFCD
revealed that the seeds were sourced from a research institute in
Guangdong, a province in China adjacent to Hong Kong. According to the
Hong Kong government, the institute reaffirmed that it had not conducted
any GM engineering work on papayas. However, AFCD staff indicated that
they discovered the presence of papaya seedlings of unknown sources near
the institute's papaya production site.

Subsequently, those organic certified farms which were involved in this
case stopped planting papayas in 2006 and 2007 in order to prevent any
biotech papaya seeds left over in the land from growing into papayas.

The Hong Kong government also conducted a one-off testing on farm
product samples of corn and papayas to see if any farm products in Hong
Kong had been contaminated with GM seedlings. The results were negative.

Hong Kong does carry out research on biotech rice at in the Chinese
University of Hong Kong. Field trials are conducted in China. One of the
research projects is by Professor Samuel Sun, who in co-operation with
the National China Hybrid Rice Research & Development Center, conducts
research to improve the quality and nutritional value of super hybrid
rice by utilizing transgenic plant production methods. According to
Professor Sun, 50 percent of rice produced in China is of hybrid type.
The yield is 30 percent higher than that of conventional rice. Professor
Sun's research project is to improve the lysine content of the super
hybrid rice.

On the trade front, Hong Kong import regulations regard biotech products
as conventional products. Importers/exporters are not required to make
any special declarations if products are of biotech origin. However, all
the few major soybean users in Hong Kong specifically request non-GM
soybeans because of market-driven factors, particularly if their
products are exported to overseas markets. Buyers generally have a wrong
perception that soybeans from the U.S. must be of biotech origin. On the
other hand, Canadian soybeans of the grade SQWH (Special Quality White
Hilum) is very popular among soybean users in Hong Kong. According to
importers, these SQWH soybeans are non-GM but there is no identity
preservation. In 2006, Hong Kong imported merely 2 percent (\$0.280
million) of its soybean demand from the United States while 92 percent
(\$11.3 million) was supplied by Canada.

Hong Kong is not a food aid recipient and is unlikely to be a food aid
recipient in the future.

# SECTION III. Biotechnology Policy

Presently, Hong Kong does not have any regulatory measures on biotech
products. In the area of production or field-testing, there are no
special pieces of legislation regulating biotech crops. There is no law
prohibiting biotech crop plantation. According to Hong Kong's organic
certification scheme, all organic products should not be genetically
modified. The certification scheme, however, is voluntary and is not
backed legislatively. Neither is there any legislation for the labeling
for packaged foods or feeds. Hong Kong does not maintain a list of
approved biotechnology crops. Biotech crops can be imported to Hong Kong
as conventional crops and are subject to the same legislations.

Government sources revealed that the HKG will review its policy on the
labeling of biotech pre-packaged foods and drinks. While the government
has not announced its decision to implement a mandatory labeling scheme,
industry sources have said they are certain the HKG is moving in this
direction.

According to a government proposal in 2003, Hong Kong should adopt
voluntary labeling for biotech foods because there is not any
international consensus. Subsequently, the government introduced a set
of guidelines on voluntary labeling for biotech foods last year. The
guidelines have been released for one year and the government is
planning to conduct a survey to evaluate the effectiveness of the
guidelines in terms of application. Industry generally felt that
positive labeling of biotech foods virtually does not exist. What is
applied is negative labeling. This foregone conclusion of the survey is
very clear. They worry that the HKG would use the survey result to
support their mandatory labeling initiative.

The government also announced in March 2003 its intention to introduce a
mandatory pre-market safety assessment. However, the government has not
announced any time frame as to when this will be implemented. The HKG
has not reported on any progress on the development of introducing this
pre-market safety assessment. Instead, government representative
revealed that they would review this proposal along with labeling.

In 2003, the Hong Kong government also announced its intention to enact
a new legislation in order to incorporate the Cartagena Protocol on
Biosafety requirements.

## Voluntary Labeling 

The Food and Health Bureau is the policy bureau responsible for the
policy direction over biotech foods. Its executive arm, the Food and
Environmental Hygiene Department (FEHD), is the regulatory department
for food safety through the Center for Food Safety. Both the pre-market
safety assessment and labeling of biotech foods are under the portfolio
of the Bureau while the Center for Food Safety is executing the policy
decisions of the bureau.

In a proposal submitted to the Hong Kong Legislative Council in 2003,
the Hong Kong government announced its intention to launch a program of
voluntary labeling for pre-packaged food and mandatory pre-market safety
assessment requirements for all food products. While the Hong Kong
government has not set a date for the implementation of the mandatory
pre-market safety assessment, it released the guidelines for voluntary
labeling of biotech foods in order to answer the public's call for
consumers' right to make an informed choice of biotech foods.

The guidelines were formulated by a working group established under the
Center for Food Safety, with members coming from various sectors
including manufacturing, wholesale, retail, consumer groups and
government departments. The guidelines are advisory in nature and do not
have any legal effect. Adoption is entirely voluntary and is not
binding. The guidelines apply to prepackaged food.

The guidelines are based on the following four principals.

-   The labeling of biotech food will comply with the existing food
    legislation.

-   The threshold level applied in the guidelines for labeling purpose
    is 5 percent, in respect of individual food ingredient.

-   Additional declaration on the food label is recommended when
    significant modifications of the food, e.g. composition, nutrition
    value, level of anti-nutritional factors, natural toxicant, presence
    of allergen, intended use, introduction of an animal gene, etc, have
    taken place.

-   Negative labeling is not recommended.

As the guidelines are voluntary, U.S. food exports should not be
affected if they choose not to have any biotech labeling. However, it
should be noted that the Hong Kong government does not encourage
negative labeling when no biotech counterparts of the respective
products ever exist. Also, the Hong Kong government does not encourage
negative labeling using very definite terms such as:

-   GMO free,

-   Free from GM ingredients, etc

For products with such definite negative labeling, the government may
take the initiative to test the products against GM ingredients and a
zero tolerance will be adopted for testing purposes. If products are
found to have misleading labeling, a retailer may be subject to
prosecution under Section 61 -- False Labeling and Advertisement of Food
or Drugs of Chapter 132 Public Health and Municipal Services Ordinance.
(Available at <http://www.legislation.gov.hk/eng/home.htm>)

If the trade chooses to apply negative labeling, the government advises
to use less definite terms such as "sourced from non-GM sources" (which
contains less than 5 percent of GM content) and to have documentation to
substantiate such declaration.

For more details, please refer to Gain Report HK#6026.

## Mandatory Pre-market Safety Assessment

The Hong Kong government plans to introduce legislative measures
mandating pre-market safety assessment, according to a proposal
delivered to the Legislative Council in 2003. Importers or manufacturers
of food containing biotech ingredients would be required to submit
documents and certificates to the Food and Environmental Hygiene
Department (FEHD) prior to importing the food to Hong Kong, detailing
the safety assessments that have been conducted by the developer of the
biotech ingredients. The results of evaluations conducted on the
ingredients by overseas regulatory authorities would also be submitted
for the pre-market safety assessment. FEHD would assess risks associated
with toxins, allergies, nutrition, etc., based upon guidelines developed
by Codex. Foods containing biotech ingredients that pass the safety
assessment could then be sold in Hong Kong.

FEHD would develop a list of approved biotech ingredients based on the
applications made by importers and manufacturers. The list would be
publicized and updated regularly for public reference. Importers and
manufacturers would bear the responsibility of determining whether their
products contain only approved biotech ingredients and, if so, whether
the foods may be imported without any further safety assessment. For
foods containing biotech ingredients not on the approved list, an
application to FEHD for pre-market safety assessment would be required.

Regarding products already in the market, FEHD would require importers
or manufacturers to provide risk assessment reports if products contain
biotech ingredients. Such biotech products could be sold in Hong Kong
within a grace period pending document review and approval.

The proposal empowers FEHD to take food samples from the market to
periodically test for biotech ingredients. Unapproved biotech products
would be required to be removed from the market, and the importers would
be prosecuted.

The government has not set a date for the implementation of the
mandatory pre-market safety assessment.

## Cartagena Protocol on Biosafety

The Environment Bureau takes the lead on the implementation of the
Cartagena Protocol on Biosafety. While it is a policy bureau, the
technical responsibility lies with the Agriculture, Fisheries and
Conservation Department (AFCD). AFCD is primarily responsible to provide
infrastructure support services to promote agricultural production and
sustainable development of agriculture and fisheries in Hong Kong. In
2002, AFCD created a division called Biodiversity Conservation Division.
Among other duties, its role is to prepare Hong Kong to implement the
Cartagena Protocol.

Hong Kong at present is not a party of the Convention on Biological
Diversity and the Cartagena Protocol on Biosafety. Hong Kong is a
Special Administrative Region of China. The application of international
agreements to Hong Kong for agreements to which China is a party will be
decided by China in accordance with the circumstances and needs of Hong
Kong, after seeking the views of the Hong Kong government. China has
been a party to the Convention and the Protocol since 1993 and 2005
respectively. The Hong Kong government has obtained the
agreement-in-principle of China to extend the application of both the
Convention and the Protocol to Hong Kong when it is adequately prepared.
In essence, the Protocol was not extended to Hong Kong simultaneously
upon China's ratification of the Protocol in 2005.

With this background, the Hong Kong government first announced its
intention to apply for the extension of the Cartagena Protocol in late
2003. The Hong Kong Government had sent delegates to attend the
Protocol's COP-MOP (Conference of the Parties serving as the Meeting of
the Parties) as part of China's delegation to keep track of the
development. Government officials revealed that they plan to take into
account the developments of the Protocol when drawing up the detailed
regulatory framework for implementing the Protocol in Hong Kong. The
drafting of the legislative work has halted. The government officials
explained that they need to make reference from Protocol's
implementation details, which have yet to be discussed by members.
According to the officials, Hong Kong's future requirements will be in
line with and would not be more or less stringent than those stipulated
by the Protocol. They indicated that they will send representatives to
attend the upcoming COP-MOP meeting and keep themselves abreast of the
developments. According to the published information, the future
legislation will encompass the following key provisions.

a\) Establishment of a licensing system for the Agriculture, Fisheries
and Conservation Department (AFCD) to process applications for first
imports of LMOs (Living Modified Organisms) into Hong Kong for
intentional introduction into the environment in accordance with the
Advance Informed Agreement (AIA) procedure of the Protocol;

b\) A requirement that an exporter in Hong Kong shall send a
notification enclosing the risk assessment report to the competent
authority of the importing party and obtain its prior consent for the
export of the LMO for first intentional introduction into the
environment at the importing end;

c\) A requirement that approval shall be obtained from AFCD prior to the
domestic use or export of a locally developed LMO for intentional
introduction into the environment or for direct use as food, feed or for
processing;

d\) Documentation requirements on trans-boundary movements of LMOs;

e\) Penalties for violation of the import, export or documentation
requirements set out in (a) to (d) above;

f\) Other miscellaneous matters including designation of the Director of
AFCD as the competent authority to discharge the Protocol's obligations
in Hong Kong; and

g\) Implementation of measures to fulfill obligations under the Protocol
following future decisions made by Parties to the Protocol, e.g. setting
standards for the identification, handling, packaging and transport of
LMO.

# SECTION IV. Marketing Issues 

The green groups and consumer organizations are key parties in Hong Kong
advocating mandatory labeling of biotech foods. Their rationale is based
on consumers' right to know. The safety issue is not their major
argument. The request of green groups and consumer organizations has
gained support of certain Legislative Council (Legco) members. In
January 2000, Legco adopted a motion to "draw on the experience of most
member states of the European Union and expeditiously legislate for a
labeling system" and to "conduct strict examinations and tests" on
biotech foods. On June 2003, Legco passed a motion calling on the
government to expeditiously establish a "voluntary first, and then
mandatory" approach to a labeling system for biotech foods.

However, the food industry is generally opposed to mandatory labeling of
biotech foods on the grounds that it would limit the choices of
consumers, reduce variety of food supplies to Hong Kong and add burden
to consumers and the industry alike.

On the whole, general consumers do not have a concern whether food
contains biotech ingredients. In recent years, there are not any strong
voices in public urging the Hong Kong government to adopt mandatory
labeling for biotech foods. Prices and nutritional values are of bigger
concern in general. However, local food processors would specify the use
of non-biotech soybeans particularly if their products are exported
overseas.

# 

# SECTION V. Capacity Building and Outreach 

There are no U.S. government funded outreach activities carried out in
Hong Kong that relate to agricultural biotechnology.