RESTRICTEDWORLD TRADE
ORGANIZATIONWT/TPR/G/82
19 February 2001
(01-0704)
Trade Policy Review Body Original: English
TRADE POLICY REVIEW
MACAU, CHINA
Report by the Government
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), the policy statement by the Government of Macau, China is
attached.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Macau, China.Macau, China WT/TPR/G/82
Page 3
CONTENTS
Page
I. OVERVIEW 5
II. CONSTITUTIONAL AND LEGAL FRAMEWORK 6
(1) T HE WIDE SCOPE OF THE MSAR' S AUTONOMY 6
(2) T HE EXECUTIVE OF THE MSAR 7
(3) T HE LEGISLATIVE ASSEMBLY OF THE MSAR 7
(4) T HE JUDICIAL SYSTEM OF THE MSAR 8
(5) T HE MSAR' S LEGAL SYSTEM 8
(6) T HE MANNER IN WHICH INTERNATIONAL INSTRUMENTS ARE MADE PART OF THE
MSAR L AW 8
III. RECENT ECONOMIC DEVELOPMENTS 9
IV. TRADE AND INVESTMENT ENVIRONMENT 10
(1) T RADE ENVIRONMENT 10
(2) I NVESTMENT ENVIRONMENT 11
V. PARTICIPATION OF MACAU, CHINA IN THE MULTILATERAL TRADING SYSTEM 11VI. TRADE POLICY:  THE REGULATORY FRAMEWORK FOR TRADE IN GOODS 12
(1) P
OLICY OBJECTIVES 12
(2) M ARKET ACCESS 12
(3) T ARIFF COMMITMENTS 12
(4) I MPORT LICENSING 13
(5) T EXTILES AND CLOTHING 13
(6) Q UANTITATIVE RESTRICTIONS (QR S) AND TECHNICAL BARRIERS TO TRADE (TBT S)1 3
(7) R ULES ON TRADE REMEDIES 13
VII. TRADE POLICY:  THE REGULATORY FRAMEWORK FOR TRADE IN SERVICES 13
(1) P OLICY OBJECTIVES 13
(2) F INANCIAL SERVICES 14
(3) T OURISM SERVICES 16
(4) T ELECOMMUNICATIONS SERVICES 17
(5) A IR TRANSPORT SERVICES 18
(6) M ARITIME TRANSPORT SERVICES 19
VIII. TRADE POLICY AND REGULATORY FRAMEWORK FOR TRIPS 19
(1) N EW IP R EGIME 20
(2) E NFORCEMENT OF IP L EGISLATION 20
IX. FUTURE PROSPECTS 21Macau, China WT/TPR/G/82
Page 5
I. OVERVIEW
1. The purpose of this Report is to present Macau, China's view on its trade policies and
practices over the last six years.  The Report is  provided against the background of the Secretariat's
Report and takes into account, in conformity with the procedures for the Trade Policy Review
Mechanism set out in Annex 3 of the WTO Agreement, the wider political and economic background
affecting Macau, China in this period.  The timing of this Report is particularly significant. It comes
one year after the reunification of Macau with the People's Republic of China (PRC) and the
establishment of the Macau Special Administrative Region (MSAR) on 20 December 1999.  In
addition, since its last trade policy review took place in September 1994, the present Review is the
first since Macau, China's implementa tion of the Uruguay Round Agreements.
2. As was widely recognized in the 1994 review of Macau, China's trade policy, Macau, China's
fundamental commitment to economic liberalism and free trade tradition make Macau, China, in
many ways, a paradigm WTO Member.  On the other hand, Macau, China's size, population, legal
status, and geographical location are all special factors, which need to be taken into account in any
assessment of Macau, China's trade policy under the WTO.
3. In general terms, notwithstanding the changing political and economic environment in which
Macau, China has had to operate within the last six years, Macau, China has staunchly maintained an
open market, has accepted in full its Uruguay Round commitments and is now working to consolidate
and develop its economy taking into account its status as a Special Administrative Region of the PRC
and a full WTO Member.
4. Over the recent years, the focus of economic and business activity in Macau has shifted to
services and invisibles rather than manufacturing.  This pattern is set to continue.  The MSAR's legal
and administrative system is adapting accordingly.  Increasingly, the MSAR authorities areencouraging investment into sectors such as tourism,  IT industries, and business services.  In order to
encourage this trend and to provide legal certain ty for investors and economic operators the MSAR
authorities have undertaken in recent years a considerable programme of new legislation.  Partly, this
has been in response to commitments undertaken by Macau, China in the Uruguay Round
Agreements.  Macau, China's new IP laws are an ex ample of this, with upgraded provisions, improved
administrative and enforcement measures.  In addition, the MSAR has a financial supervisory
authority, which adopts regulatory practices in accordance with international standards.  The authority
is also well recognized within the intern ational financial supervisory organizations.
5. As a narrow-based economy with a small public administration, combined with a tradition of
open market and free trade, the MSAR Government has to adopt a selective approach to the domesticlegislation needed to implement Macau, China's international obligations, notably under the
WTO/GATT.  As explained below, Macau, China belongs to the continental Roman-Germanic family
of law.  The provisions of international agreements are directly applicable in the MSAR, including by
its courts and tribunals.
6. The MSAR authorities are, however, continuously  reviewing the adequacy of their current
domestic legislative framework for international trade and investment.  As it is made clear in this
report, the last few years have seen substantial activity.  Much new legislation has already been
implemented, such as the new foreign trade regime, which entered into force in 1996 and revised in
1998, and new intellectual property laws in 1999 and 2000.  Furthermore, in order to follow the WTO
principle of progressive liberalization, since the establishment of the MSAR, the authorities have
already introduced – on an autonomous basis – liberalization measures in certain services sectors such
as telecommunications and air transport.  Further steps in this direction will be reviewed as required.WT/TPR/G/82 Trade Policy Review
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7. Macau's geographical location means that it is ideally situated to act as a regional hub or
"gateway" between the PRC (especially the Pearl River Delta area and the western part of Guangdong
province) and the rest of the world.  Macau, China attaches great importance to its relationship with
the PRC and all WTO Members.  In this respect, it is important to underline that Macau, China's trade
relations are conducted on the basis of non-discrimination with all its trading partners, including the
PRC and Hong Kong, China.
8. The contrast between the MSAR's situation today and that which pertained six years ago
during the previous Review, could not be greater.  The MSAR authorities have had recently to face
not only profound constitutional changes, but also the dramatic effects of the Asian financial turmoil
since 1997.  Like its trading partners, Macau, China has had to come to terms with globalization and
the increasingly wide choices available to economic operators for trade and investment.  In thissituation, the MSAR Government and business comm unity have made great efforts to modernize and
upgrade their regulatory framework and enforcement system.  These efforts have been successful.
They will be pursued in future, taking full account of the current and evolving WTO/GATT
framework.
II. CONSTITUTIONAL AND LEGAL FRAMEWORK
9. On 20 December 1999, Macau, a territory previously under Portuguese administration,
became a Special Administrative Region of the PRC.  The Chinese Government adopted the "one
country, two systems" formula as the guiding prin ciple for the country's reunification.  Under this
principle the capitalist system and the way of life of Macau shall remain unchanged for 50 years.  The
MSAR was established in accordance with the provisions of Articles 31 and 62(13) of the 1982
Constitution of the PRC by decision of the Natio nal People's Congress (NPC) on 31 March 1993.  At
the same time the NPC also adopted the MSAR Basic Law, which is the fundamental legal instrumentof the MSAR.  Having constitutional value, the Basic Law takes precedence over all the other laws of
the Region and no law enacted by the MSAR may contravene it.
(1) T
HE WIDE SCOPE OF THE MSAR' S AUTONOMY
10. In essence, the Basic Law endows the MSAR with a high degree of autonomy in exercising
executive, legislative, and independent judicial power including that of final adjudication, except forforeign affairs and defence.
11. Notwithstanding the non-sovereign status, th e Basic Law authorizes the MSAR to conduct
autonomously relevant external affairs in accordance with its provisions.  In this connection, the
MSAR may maintain and develop relations and conclu de international agreements with foreign states
and international organizations
1 in respect to a wide-range of fields, including the economic, trade,
financial and monetary, shipping, communications, tourism, cultural, science and technology, and
sports fields.  To this extent, Macau, China has full international legal personality in the field of
international economy and trade.
12. Within the aforesaid autonomy, the MSAR is able to pursue liberal economic and trade
policies, thereby preserving the free movement of capital, goods, and services in the Region.  Underthe Basic Law, the MSAR is financially independent.  Its fiscal revenue is managed and controlled by
the Region itself.  The MSAR also formulates its own tax, fiscal, monetary and financial policies,
                                                     
1 Article 136 of the Basic Law.  The WTO/GATT is such a case.  In this respect, the MSAR may,
together with Article 141, establish economic and trad e offices in foreign countries as necessary.  The
Macau Economic and Trade Office in Brussels, responsible for relations with the EU and its Member Statesand with the WTO, is an example of such an office.Macau, China WT/TPR/G/82
Page 7
issues and manages its own currency (Macau Pataca, MOP)2 and maintains freedom of capital
movements.  It operates as a separate customs territory and free port, with absence of foreign
exchange control.
13. As notified by Macau, China (WT/L/333), the Region continues to maintain its WTO
membership, being a separate customs territory with full autonomy in the conduct of its external trade
and economic relations and of other matters provided for in the WTO Agreement.  In this connection,the MSAR may (and does) conduct all economic and trade activities with states and regions, including
its neighbour, Hong Kong, China and the PRC itself.  In addition, quite apart from the accession of
the PRC to the WTO, Macau, China maintains its independent WTO membership with full rights and
obligations.  Any trade dispute between Macau, China and any other WTO Member is subject to
WTO dispute settlement procedures.
(2) T
HE EXECUTIVE OF THE MSAR
14. The Chief Executive is the head of the MSAR Government and represents the Region.  The
Chief Executive is assisted by the Executive Council.  Under the Chief Executive, there are five
Secretaries who are responsible for administration and justice, economy and finance, security, social
affairs and culture, public works and transport.  The structural diagram provided by the SecretariatReport (Chart II.1) shows in detail the com position of the executive branch of the MSAR
Government.  The Commission against Corruption and the Commission of Audit are independent
bodies, which are also accountable to the Chief Executive.
15. The Chief Executive is accountable to the Central People's Government (CPG) of the PRC
and to the MSAR.  The CPG has the power to appoint or remove the Chief Executive and the
principal officials of the MSAR Government.  Nevertheless, the Chief Executive is selected by
election or through consultations held locally.
(3) T
HE LEGISLATIVE ASSEMBLY OF THE MSAR
16. In accordance with the Basic Law, the Legislative Assembly enacts, amends, suspends, and
repeals laws in the MSAR.  It also examines and approves the budget introduced by the Government,
examines the Audit Report produced by the Government and legislates on taxation.  The Assembly
currently consists of 23 members3, of whom eight are elected by direct suffrage, eight by indirect
suffrage and seven are appointed by the Chief Executive.
17. The Basic Law provides for an institutional balance between the Legislative Assembly and
the Chief Executive.  Although the legislative pow er belongs exclusively to the Assembly, laws
relating to government policies require the written consent of the Chief Executive to be introduced
and all the laws passed by the Legislative Assembly only take effect after being signed andpromulgated by the Chief Executive.  Furthermore, the Chief Executive has the ultimate power to
dissolve the Legislative Assembly in case of continuing disagreement on the budget or other
important laws.  This power of dissolution may only be exercised once in each term of office, and is
balanced by the fact that the Chief Executive shall have to resign when the new Legislative Assembly
                                                     
2 MOP is currently pegged to Hong Kong Dollar at 1.032, and indirectly to the US Dollar
(eight Patacas are approximately equal to one US Dollar).
3 In the Legislative Assembly's second term (from 2001 until 2005) its composition will be of
27 members:  ten elected by direct suffrage, ten by indirect suffrage and seven members appointed by the ChiefExecutive.WT/TPR/G/82 Trade Policy Review
Page 8
has again passed the original law in dispute or still refuses to pass the budget or any other important
law that the previous Legislative Assembly refused to approve.4
(4) THE JUDICIAL SYSTEM OF THE MSAR
18. The Basic Law vests the MSAR with independent judicial power, including that of final
adjudication.  The judicial power is exercised by the MSAR courts.  They are submitted to nothing but
the law and are free from any interference.  The MSAR  courts have jurisdiction over all cases in the
Region, with exception for acts of state such as defence and foreign affairs.5
19. The Primary Court (with general jurisdiction at first instance, including the Criminal
Instruction Court), the Administrative Court (with jurisdiction at first instance in administrativedisputes), the Court of Second Instance and the Court of Final Appeal
6 are established in the MSAR.
20. The Basic Law and other specific ordinary laws exhaustively determine the immunities and
guarantees of the independence of the members of the judiciary (the judges and the procurators).7
(5) THE MSAR' S LEGAL SYSTEM
21. The MSAR's legal system belongs to the continental Roman-Germanic family of law.  The
concept of law is unitary.  The immediate sources of law are enacted legislation. Custom,
jurisprudence and doctrine have no juridical relevance as sources of law.  Though custom, as long as
it does not contravene the principles of good faith, may be accepted if the law so provides.  Further,
publicity (all laws have to be published in the MSAR's Official Gazette  in order to take effect)8,
legality and equality are the fundamental principles of the MSAR's legal system.  Everyone is subject
to the law, equal before the law and has the right to access the courts.
(6) THE MANNER IN WHICH INTERNATIONAL INSTRUMENTS ARE MADE PART OF THE MSAR
LAW
22. In the MSAR's legal system, international and domestic laws are part of the same general
legal order operating simultaneously in regard to the same subject matter.  In case of a conflict
between international and domestic law, international agreements applicable in the MSAR take
precedence over ordinary domestic law.
23. The Basic Law determines that the application to  the MSAR of international treaties to which
the PRC is a party is decided by the CPG after seeking the views of the MSAR Government and
according to the circumstances and the MSAR's needs.  Previous treaties in force in Macau to which
the PRC is not a party may continue to be applied in the MSAR.  As far as the WTO membership is
concerned, legal continuity for Macau, China's WTO rights and obligations is, thus, fully guaranteed.
24. Once international treaties have been ratified or approved by the PRC, or in appropriate fields
by the Chief Executive and published in the Official Gazette , they enter into force immediately and
automatically become part of the MSAR's legal orde r.  There is no need to incorporate international
                                                     
4 Article 54(2) and (3) of the Basic Law.
5 Articles 19, 82 and 83 of the Basic Law.
6 Articles 10, 27 to 54 of Law 9/1999.
7 The MSAR's Procuratorate, in itself, is an independent autonomous judiciary body
(Article 55(1) of Law 9/1999).
8 The lack of publicity determines the non-juridical existence of the law or, as it may be the case, that
the law cannot be opposed to third persons.  In both circumstances, the law is not enforceable.Macau, China WT/TPR/G/82
Page 9
law into the domestic law in order to effect its application.  Nevertheless, reservations and
declarations made at the time of the acceptance of the international instrument or its own wording
may imply that one or more of its clauses are not self-executing.  In these cases, though the
international provisions are still directly effective, they must be implemented by means of domestic
legislation.
III. RECENT ECONOMIC DEVELOPMENTS
25. Over the last six years, the MSAR's economy has been under severe pressure notably as a
result of the real estate market adjustment starting in 1994 and the Asian financial crisis in 1997.  In
fact, since Macau, China's last Trade Policy Review in 1994, its economy in terms of GDP has been
contracting consistently from a 4.3% growth rate in  1994 to a negative growth rate of 2.9% in 1999.
During this period, Macau's per capita real GDP fell from US$16,700 in 1996 to about US$14,145 in1999.
26. Other economic indicators were also less encouraging.  In spite of the decline in per capita
GDP, at the same time unemployment has increased to over 7% in mid 2000, representing around
15,000 unemployed workers.  The gambling sector, one of the most important indicators of the
Macau's service industry, has also suffered, with a 10% fall in receipts in 1999.  Public finances aregenerally sound, although the downturn in the real estate and gambling sectors in particular tend to
diminish revenues.  The principal factors underlying this disappointing development were a sharp
drop in demand and in investment.  The narrow base of the Macau's economy has undoubtedly been a
handicap in these recent difficult circumstances.  Notwithstanding this fact, Macau, China has still
sustained its open market policies and fully respected the letter and spirit of its WTO commitments.
27. On the brighter side, there are indications of economic revitalization.  The generally
favourable external environment (particularly in Asia) will tend to sustain Macau's economicrecovery, led by an increasing demand for a wider variety of tourism services, a strengthening of
traditional exports and a gradual recovery of consumer spending and corporate activity.  The driving
force for economic recovery stems from positive tr ends in two important sectors:  tourism and
exports.  In 2000, the number of visitors registered an increase of around 20% compared with 1999,
breaking an historical record of over 9 million visitors to Macau.  At the same time, manufacturedexports have increased by 15% in the first nine months of 2000, with imports rising by only 9% in the
same period.  There has been an increase in the MSAR's trade surplus and in the first nine months of
2000, this amounted to MOP 2 billion, an expansion of 67% compared with the same period in 1999.
28. After the establishment of the MSAR, the Government's strategic policy is "strengthening the
fundamentals and promoting stable growth".  Undoubtedly, the macroeconomic scenario in Macauhas been improving and gaining momentum since the year 2000 with GDP growth being anticipated
to reach 4% in that year.  The deflationary gap has been gradually narrowing down since
February 2000, posting around -1% at the end of that year.  Furthermore, as a result of measures
pursued by the MSAR Government, the unemployment rate has also been easing, falling to 6.6% in
November 2000.
29. In view of the recovery of the Asian economies and the substantial improvement of security
within the MSAR, the incr ease in inbound tourism should be sustained in 2001.  The property market
is also expected to rebound in the year 2001 and em erge from its period of adjustment.  In addition,
exports of goods and services will probably show accelerated growth, resulting in an expected rise in
the trade surplus.WT/TPR/G/82 Trade Policy Review
Page 10
30. The number of companies establishing in the MSAR has also been picking up.  The total
number of companies registered in the first ten m onths of 2000 grew by 45% compared with the same
period in 1999.  This trend should continue as the MSAR Government has launched a significant
effort to attract new foreign investment by intr oducing measures that support economic development
and diversification.
31. The MSAR is also playing a more active role in strengthening its economic links with various
neighbouring countries and adjacent mainland regions, thus providing a sound basis for future
cooperation in the areas of trade, tourism, business service, and information technology.  This
initiative, coupled with the comprehensive modernization of Macau, China's economic and trade
legislation, offers a viable long-term prospect for an improvement of its economic climate.
IV. TRADE AND INVESTMENT ENVIRONMENT
(1) TRADE ENVIRONMENT
32. The fact that Macau, China is one of the smallest separate customs territories in the WTO,
with a geographical size of only 23.8 km² and a population of around 450,000, imposes limitations on
the government as well as economic operators.  Therefore, the adoption of a laissez-faire ,
market-driven economic and trade policy has been demonstrated to be the only way in whichMacau, China can achieve its economic development objectives.
33. In essence, the MSAR's primary concerns have been to provide a regulatory framework,
which facilitates business for economic operators, but at the same time which meets the MSAR's
international commitments and maintains a high level of credibility for the MSAR in the international
community.  Therefore, with a relatively small public administration, the MSAR has attempted to
keep regulation to the minimum necessary, whilst at the same time providing legal certainty to
facilitate business for economic operators.
34. Macau's merchandise trade is traditionally dependent on the export of manufactured goods, in
particular clothing and textiles.  The exports of these products accounted for approximately 85% of
the total exported goods.  Non-textile exports, na mely footwear, toys, electronics, and other goods
accounted for 7.3% of total sales abroad in 1999.  The MSAR's main exporting markets are the
United States and the European Union, accounting respectively to 46.9% and 30.2% of the totalexported goods in 1999.  Hong Kong SAR and the P RC are also destinations to MSAR's exports and
accounted respectively for 6.8% and 9.2% of total exports in the same year.  Re-exports, which are a
part of exports, and represented 14.4% of the total exports in 1999, rose significantly in that year
mainly to the PRC and Hong Kong SAR representing  more than four-fifths of total re-exports.  The
major merchandise items were textiles and related products.
35. Since the major export items in Macau are textile and clothing products, the biggest group of
imported merchandise is raw materials and semi-manufactures, accounting for around 48% of total
imported goods in 1999.  The remaining imported commodities are machinery and transport
equipment, agricultural and consumer goods.  The majority of imports are acquired predominantly
from neighbouring Asian and Pacific economies.  The PRC retained and bolstered its position as thebiggest imports partner with a share of 35.6% (+3%), while the share of Hong Kong SAR fell
remarkably by 5.6% points to 18.1% in 1999.
36. Given the importance of trade in goods to Macau's economy, the Government has – in the
period under review – taken a number of practical measures to facilitate trade.  Apart from products
subject to licensing, imports and exports can be customs-cleared by means of a simple import-export
declaration form.  The Macau Marine Police and Customs (MMPC) is in the process of computerizingMacau, China WT/TPR/G/82
Page 11
customs clearance procedures for all border entries to facilitate the flow of goods.  The Government
has also decided to implement electronic data interchange (EDI) system.  This will allow licence
applications and approvals to be handled electronically, thereby improving the efficiency and
effectiveness of customs procedures and the accuracy of import data.  The EDI project was initiated in
September 1998.  After the system is fully implemented, all documentation involved in foreign trade
will be processed through EDI.  Export licences for products subject to textile quota have beenprocessed  through EDI since September 2000.  Finally, it is significant to note that 2001 will see the
establishment of a customs services in the MSAR
9, the Commissioner for which has already been
appointed.
37. With regard to invisible trade, the MSAR's export of services registered an annual average
decline of 0.3% in the last six years, as a result of the fall in tourism related receipts.  Imports ofservices posted an annual average growth rate of 7.8% in view of increased residents' consumption
abroad and foreign services paid by the local airline.  However, despite the performance of this sector,
the service trade balance surplus has been sustained and reached MOP 16,054 million in 1999.
(2) I
NVESTMENT ENVIRONMENT
38. In the first year of the MSAR's establishment, the Government has made great efforts to
maintain a free, fair and open investment environment, in order to speed up economic recovery.  The
positive impact has been apparent even in the first half of 2000, when there has been a remarkable
growth in exports and in the number of visitors ente ring the MSAR.  In order to achieve the objectives
set by the Government on becoming a regional services centre and a gateway to China, several
measures have been adopted by the MSAR Government to improve the business environment and to
encourage industrial and export diversification.  Such measures include incentives to investments,
various tax exemptions, interest subsidies on MOP bank loans for the purchase or leasing of new
equipment, as well as for the purchase, construction or  leasing of industrial buildings.  The concession
of government-owned land is also deemed as a potential instrument for projects, which would benefit
the environment and stimulate economic growth a nd diversification.  Further, the governmental
agency – Macau Trade and Investment Promotion Institute (IPIM) – has been set up in order to
provide assistance (for example the "One stop service") to both local and foreign investors inimplementing their investment projects.
10
V. PARTICIPATION OF MACAU, CHINA IN THE MULTILATERAL TRADING
SYSTEM
39. Macau, China became a Contracting Party to the General Agreement on Trade and Tariffs
(GATT) on 11 January 1991, after meeting the conditions required by Article XXVI:5(c) of theGeneral Agreement.  Subsequently, in the light of Article XI of the Marrakesh Agreement
Establishing the World Trade Organization, on 1 January 1995, Macau, China also became a founding
Member of the WTO, thereby assuming all its rights and obligations through the formal acceptance of
the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations.
40. The WTO Agreements were published in Macau's Official Gazette  on 27 December 1994 and
entered into force on the same date.  Despite the change of status involved in the handover process,
                                                     
9 At present, customs functions in the MSAR are primarily exercised by the Marine Police and
Customs.
10 Further details concerning investments in Macau are to be found in the IPIM booklet titled
"Guide to investing in Macau – Special Administrative Region of the People's Republic of China" atwebsite:  www.ipim.gov.moWT/TPR/G/82 Trade Policy Review
Page 12
Macau, China continues to assume all its Uruguay Round rights and obligations, participating in the
WTO as a full Member.
41. The legal framework provided by the WTO/GATT Agreements is the lynchpin for
Macau, China's participation in the multilateral trading system. Macau, China's attaches great
importance to free trade as guarantor of its prosperity, and fully supports the WTO/GATT principles
in conducting its relationship with other trading partners.
42. The enactment of domestic legislation in the trade policy field has been adopted for reasons of
administrative convenience, minimizing bureaucracy and maintaining a legal system, which is as
simple and user-friendly to economic operators as possible.  At the same time, this approach enables
Macau, China comprehensively to respect its Uruguay Round commitments.  However, given
Macau, China's fundamental commitment to the WTO, it has over the last five years conducted acomprehensive review of its economic and trade legislation in order to make this fully compatible
with WTO rules.  The main themes of these ch anges have been modernization, streamlining, and
simplification – all with the aim of facilitating trade.
43. Apart from the commitments resulting from th e Uruguay Round negotiations, following the
Singapore Ministerial Conference, Macau, China became a party to the Ministerial Declaration onTrade in Information Technology Products (the Information Technology Agreement, ITA) and
additionally bound all the tariffs on products covered by this Agreement at a zero rate in one go.  On
another front, given the increasing contribution to the MSAR's economy by the services sector, it is
clear that Macau, China will also participate in the CTS Council as well as in the ongoing services
negotiations.
VI. TRADE POLICY:  THE REGULATORY FRAMEWORK FOR TRADE IN GOODS
(1) P
OLICY OBJECTIVES
44. Taking advantage of the geographic proximity to mainland China as well as of its free port
status, the MSAR Government envisages that the regulatory framework for trade in goods in Macau
will facilitate and encourage the MSAR's development as a regional trading hub in Asia and, in
particular, as a gateway for trade to and from the PRC.
(2) MARKET ACCESS
45. The direct effect of the international (WTO) regulatory framework for trade in goods (and
services) in MSAR's law, complements and underpins its traditional status as a free port.  The unique
size, structure, and components of Macau's econom y mean that, for the MSAR authorities, the
absence of tariff and non-tariff barriers is a pillar of Macau, China's trade policy.
(3) TARIFF COMMITMENTS
46. Macau, China has implemented Uruguay Round tariff commitments by binding 1,368 tariff
lines at zero in one go with effect from 1 January 1995, including all agricultural items and some 7%
of manufactured products.  By 1997, Macau, China bound in total 23.9% (1,454 items) of its tariff
lines, including Information Technology products, at 0%.  It should be underlined that Macau, China
in effect applies zero tariff rate to all imported and exported products.Macau, China WT/TPR/G/82
Page 13
(4) IMPORT LICENSING
47. Macau, China complies with the main objectives set out in the WTO Agreement on Import
Licensing Procedures.  Macau, China practises a si mple, transparent and expeditious import licensing
system, and its licensing requirements are kept to a minimum.  Licences, which are required, are
justified by the WTO Agreement and other international treaties (e.g. CITES and Montreal Protocol).
(5) TEXTILES AND CLOTHING
48. This sector, in particular clothing, is the mainstay of the Macau economy, so far as
manufactured goods are concerned.  Macau, China is vitally concerned that the provisions of the ATC
are respected by all WTO Members, especially the importing Members.  When implementing the
ATC, Macau, China notified the Textile Monitoring Body (TMB) that it did not wish to retain its right
of recourse to safeguard measures under Articl e 6 of the ATC.  As for quota management, the
Regulation on Utilization of Quota11 is the legal basis for quota allocation and utilization system for
exports of textile products into restrained mark ets with which the MSAR maintains administrative
arrangements, principally the U.S. and the EU.
(6) QUANTITATIVE RESTRICTIONS (QR S) AND TECHNICAL BARRIERS TO TRADE (TBT S)
49. Given Macau, China's free port status and commitment to the liberalization of international
trade, the issue of trade restrictions in whatever form does not generally arise.  The few exceptions,
namely the restriction on imports of CITES species12 and ozone-depleting substances13, as well as the
prohibition of importation of used cars14, which concerns the protection of the environment, are
applied and on a non-discriminatory basis.  By the same token, given the virtual absence of tariffs and
QRs, Macau, China has no need to apply rules on customs valuation or rules of origin.  For the same
reason, Macau, China has never developed its own standards except in the fields of civil construction
and telecommunications.  In practice, Macau, China accepts and applies standards set by competentinternational organizations (such as ISO, WHO, ITU, and ETSI) and permits the free importation of
products, which are certified as conforming to standards set by these bodies.
(7) R
ULES ON TRADE REMEDIES
50. Macau, China has felt no need for recourse to trade protection measures.  Therefore, the WTO
Agreements on anti-dumping, countervailing duties and safeguard measures have not been transposedinto domestic law and no such actions have ever been sought or applied.
VII. TRADE POLICY:  THE REGULATORY FRAMEWORK FOR TRADE IN
SERVICES
(1) P
OLICY OBJECTIVES
51. In line with global trends, a significant shift has been under way for some time in Macau's
economy, away from manufacturing to a services-based economy.  Broadly, the objectives are to
develop Macau as a regional service centre and to pursue progressive liberalization for trade in
services.
                                                     
11 The allocation and utilization of export quotas are set out in Government Decision 59/GM/94
of 13 September 1994.
12 Decree-Law No. 45/86/M.
13 Decree-Law No. 62/95/M.
14 Government Decision No. 219/98/M.WT/TPR/G/82 Trade Policy Review
Page 14
52. Notwithstanding Macau, China's respect for the WTO principle of progressive liberalization,
it needs to be remembered that by virtue of the limitations of domestic market size and natural
resources, a number of public utilities (water supply, electricity, etc.), which are to a large extent
deemed to be natural monopolies, still benefit fro m concessions entitling them to exclusivity in
Macau's market.  The reason for this is generally to guarantee stable and efficient supply to the small
local demand in Macau.  However, after the establishment of the MSAR, the Government has, to theextent possible, made efforts to liberalize the services sector, notably the telecommunications and air
transport sectors.
53. Macau, China's determination to secure the liberalization of trade in goods extends to the
relatively new area of trade in services.  As a result of the Uruguay Round negotiations, Macau, China
bound three sectors
15 in the Schedule of Commitments, two of which are of special significance to its
economy.
(2) FINANCIAL SERVICES
54. As indicated above, the MSAR Government intends to place particular emphasis on the
development of Macau as a regional financial centre.  Despite intense regional competition in
financial markets, there are already indications that Macau may be able to carve out a niche for itselfin this area.  Pre-conditions for doing so are already in place:
- the existence of a modern, comprehensive, and transparent regulatory framework;
and
- competent supervisory authorities with the ability not only to ensure the integrity of
financial services operations in the MSAR , but to cooperate effectively with other
supervisory authorities, both regionally and globally.
55. In particular, as a result of globalization and at a time of increased capital flows (and taking
into account the world wide introduction of electronic banking transactions), it is crucial that
supervisory authorities have the legal and practical means to prevent irregularities, including money
laundering and other forms of financial crime.
56. As the following sections show, the MSAR has equipped itself in recent years with the rules
and institutions necessary to run a regional financial centre in accordance with the highest prudentialand regulatory standards.
16  The MSAR system and the activities of the Monetary and Foreign
Exchange Authority of Macau (AMCM)17 – the regulatory institution of the financial system – have
been generally regarded as in line with international practices by principal financial institutions (e.g.
IMF and BIS).
57. MSAR's Monetary and financial system:  the Basic Law provides the legal framework for the
MSAR's autonomy in the field of monetary and fi nancial activities, including the formulation of
relevant policies;  the maintenance of the Macau Pa taca as the legal tender circulating in the MSAR;
the absence of foreign exchange control and the full convertibility of foreign currency to and from the
Pataca.
                                                     
15 Tourism, Financial Services including Banking and Insurance, and Rental Leasing Services
(GATS/SC/50).
16 The Annual Report of the Monetary Authority of Macau for 1999 contains further detailed
information (http://amcm.macau.gov.mo).
17 Renamed as Monetary Authority of Macau since 21 February 2000.Macau, China WT/TPR/G/82
Page 15
58. Being an independent agent of the MSAR Government, the AMCM operates as a
quasi-central bank.  Its functions are laid out in the Financial Systems Act, which consolidates all
previous rules and regulations relating to the banking sector.  Its main duties are to supervise,
coordinate and inspect the money, financial and foreign exchange markets as well as credit
institutions, financial intermediaries and other financial institutions.  The AMCM is the single
financial service regulator of the MSAR.  It also manages and supervises the money, financial andforeign exchange markets and the activities of fina ncial institutions in order to maintain a sound
banking system in Macau.
59. Macau's banking sector is comparatively simple. By the end of 1999, it included 21 foreign
banks (nine subsidiaries and 12 foreign branches), one government-owned Post Office savings bank,
two banks with head office in Macau were owned by  local investors.  Foreign participation in the
banking sector has been important since the sector was opened to foreign investment in the 1970's.
Statistics show that most of the currently existing foreign branches were set up after the
implementation of the revised banking law in 1982.  For historical reasons, banks with capital
originally from Mainland China and Portugal have occupied approximately 77% market share of the
total banking system (55% and 22% respectively).  However, no monopoly banking activities areallowed in Macau.
60. The AMCM is well connected with various international organizations.  Currently,
Macau, China is a member of the South-East Asia New Zealand and Australia (SEANZA) Forum of
Banking Supervisors and of the Offshore Group of  Banking Supervisors (OGBS).  The AMCM also
participates in meetings held by the above organizations to enhance supervisory skills and to improve
international cooperation.  The AMCM has also been invited by the Basle Committee to join their
meetings and seminars.  Under the membership of th e PRC, the MSAR has also participated in all the
important meetings, which were held by the International Monetary Fund (IMF) and the World Bank.
In 1999, the IMF also sent their experts to Macau to give technical assistance to the reformulation of
the monetary statistics reporting system.
61. As regards the insurance sector, authority for the supervision, coordination, and inspection of
insurance activity in the MSAR rests with the Chief Executive, while the actual execution of these
functions is carried out by AMCM through its In surance Supervision Department.  The insurance
industry in Macau is made up of 24 insurance companies, nine of which are life companies and the
remaining 15 are involved in non-life business.  Seven are domestic companies (i.e. incorporated in
the MSAR) and the remaining 17 are branches of overseas companies, representing eight countries
and one Special Administrative Region of China (Hong Kong).
62. The Insurance Companies Ordinance, Decree-Law 27/97/M of 30 June, regulates the business
of insurance and reinsurances companies, while the Agents and Brokers Ordinance,
Decree-Law 38/89/M of 5 June, regulates the insuran ce intermediary sector.  Only licensed insurance
companies or insurance intermediaries are permitted to operate in the MSAR.
63. As regards the supervision of the insurance sector, AMCM's policy is to strike a balance
between total liberalism and excessive controls so as to maintain the traditional free-market
characteristics of Macau.  However, to safeguard the legitimate interests of the policyholders, the
efforts of the Supervisory Authority have focused on monitoring the financial guarantees of insurance
companies.  Like other comparable supervisory authorities, the AMCM constantly monitors the
financial situation and conduct of business by insurance companies and intermediaries in Macau
(including by on-site inspections or third-party audits), in order to detect and prevent threats to
policyholders caused by insolvency or maladministration.  In this context, the AMCM also monitorsgeneral policy-conditions, in order to protect consumers' interests.WT/TPR/G/82 Trade Policy Review
Page 16
64. Although the insurance sector in Macau is still relatively small, the MSAR Government
attaches importance to a constant process of upgr ading and modernizing the regulatory framework for
the industry.  In this context, there have been a number of significant developments in recent years
and more are in the pipeline, such as new rules on pension funds, liability insurance for travel agents,
legislative provisions on insurance contracts, and the negotiation of cooperation arrangements with
other supervisory authorities.
(3) TOURISM SERVICES
65. The tourism sector is one of the most dynamic branches of Macau economy and has made an
increasing contribution to the local economy in recent years.  It has now become the main source of
revenue for the MSAR.  Since 1992, tourism revenue has surpassed income from manufactured
exports.  The tourism sector and related services  employ 30% of the working population, generating
40% of the MSAR's total revenue.  More positively, tourists to Macau in the year 2000 reached an
historical record level of over 9 million, an increase of around 20% from 1999, accounting for
approximately 20 times of Macau's entire population.
66. Macau's cultural and historical heritages are traditional attractions for visitors.  In addition
and more recently however, Macau has become a popular location for convention and conferencebusiness, leisure, and entertainment.  In many respects, the tourism sector is a catalyst for the
economic development of Macau in general.  The im portance of tourism for the MSAR is reflected in
the fact that the MSAR now has 14 overse as tourism offices located around the world.
18
67. The MSAR's location is an obvious positive factor favouring the development of tourism.
Proximity and easy communications with Mainland China and the Hong Kong SAR allow synergies
to be developed from Macau.  The relatively recently established international airport is another factor
which already contributes to the development of tourism in Macau.
68. The gambling industry is closely related to the MSAR's tourism.  It also makes a vital
contribution to Macau's economy.  Tax revenue from the sector rose from MOP 2 billion in 1960 to
over 6 billion in 1997.  Although the Asian financial crisis has had an impact on the MSAR's
gambling revenue (1999 income for the sector was the lowest since 1993), it is still an important
contributor to the economy, with an average of 30% of GDP and 55% of total government revenuebetween 1996-99.  As for employment, 12,400 persons worked in the industry in 1999, representing
6% of the total active working population.  The current contract for the operation of casinos in Macau
was revised and signed between the Government and the concessionaire (Sociedade de Turismo e
Diversões de Macau, STDM) in 1997 and will expire in 2001.
69. The importance of tourism to the Macau economy is underlined by the fact that Macau, China
has made a number of commitments on tourism in the GATS.  Indeed, since Macau, China made
these commitments, certain restrictions have been removed on market access.  The situation now is
that, although licences are required for the establishment of hotels and restaurants in Macau, these are
available to both nationals and foreigners without restriction or discrimination.  As regards travel
agencies and tour operator services, it should be noted that after the implementation ofDecree-Law 48/98/M (with effect from November 1998) any discrimination between in-bound and
out-bound travel agencies has been removed.  In addition, as regards the commercial presence of
travel agencies and tour operator services, previous restrictions, which limited branches and
subsidiaries, have been abolished.  All investors, without distinction, are now allowed to open travel
agencies and branches as long as legal requirements are fulfilled.
                                                     
18 The overseas tourism offices are located in:  Bangkok, Brussels, Frankfurt, Hong Kong,
Kuala Lumpur, Lisbon, London, Los Angeles, Manila, Seoul, Singapore, Sydney, Taipei, and Tokyo.Macau, China WT/TPR/G/82
Page 17
70. As far as future tourism policy is concerned, the major objectives for 2001 will be to reinforce
the quality of services, develop better tourism products, increase visitor's length of stay and
expenditure per capita.  In essence, in tourism as in sectors such as transportation, communications
and financial services, Macau, China's aim is to maximize its historical, cultural, geographic and
economic potential.
(4) TELECOMMUNICATIONS SERVICES
71. Until 30 June 2000, the Macau Posts and Telecommunications (CTT Macau) acted as a
regulatory body for the telecommunications sector.  The Office for the Development of
Telecommunications and Information Technology (GDTTI), which was subsequently established,
also performs an essentially regulatory function with the aim of liberalizing the telecommunications
sector.  Against this background, the GDTTI issues licences for telecom services and networkoperators.  Further, the Office oversees the quality of service and the pricing of public
telecommunications and information services.  It also monitors whether the requirements stated in
relevant legislation and regulations are duly fulfilled by the telecom and information operators.  The
GDTTI sets standards and grants type approval for telecommunications and information equipment.
At the international level, the GDTTI is responsible for the application of international conventions,agreements and other instruments in the field of telecommunications and information technology.
72. The post-2001 framework for the telecommunications  sector in the MSAR is set out in the
new ten-year contract signed between the Government and the exclusive operator (Macau
Telecommunication Company Limited (CTM)) on 6 December 1999 and lasting till
31 December 2011.  The new contract clearly states that the following services remain exclusive:
- local:  the fixed telephone service, telegram service, fixed telex service, fixed
switched data transmission and rental circuit services;
- international:  he fixed telephone service, telegram service and fixed telex service
provided that they involve call addressing and be established in real time, fixed
service for data transmission and rental circuit services;  and
- transit:  the fixed telephone service, the telex service, telegram service and fixed
service for data transmission.
73. All other services apart from those listed above (and cable TV and video on demand) are now
open for competition.  Services such as mobile, Internet, and value-added services have begun to be
treated as competitive services.  As a result, in October 2000, the Government decided to license two
new mobile phone operators.  Internet services were partially liberalized in 1995.  As at 1 July 2000,
there were two Internet service operators, and four public information providers.  The process ofliberalization entered a new phase from 1 October 2000, as noted by the revision of conditions in
accepting applications for Internet services and content providers, without limitation on number of
licences.
74. In the broadcasting sector, there is one terrestrial TV broadcasting company, and two radio
broadcasting companies in Macau.  In addition, there are two satellite TV broadcasting servicecompanies and one company providing the satellite TV and support services.  As far as cable TV is
concerned, on 5 May 1999, a 15-year exclusive franchise on land subscription TV service was given
to Macau Cable TV.  Services include the exclusive provision of cable TV services and video service.
75. Standards in the telecommunications sector:  in Macau, there are standards for certain types of
radiocommunications equipment, which are based on parameters recommended by the InternationalWT/TPR/G/82 Trade Policy Review
Page 18
Telecommunications Union (ITU).  Generally speaking, telecommunications equipment must comply
with international standards in order to be used in Macau.  At present, there exist two technical
standards for type-approving conventional radiotelephone and pager, which are based on ETSI
standards.  There are no mutual recognition schemes available for telecommunications equipment but
the regulator accepts certificates issued by accredit ed laboratories and administrations such as FCC in
the USA, BABT in the United Kingdom, BZT in Germany and OFTA in Hong Kong.
(5) AIR TRANSPORT SERVICES
76. The MSAR Government is firmly committed to the development of Macau's aviation industry
through an open and liberal aviation policy.  The adoption of this policy was dictated by the fact that
Macau has a very small domestic market and is a newcomer in this very competitive industry without
the economic attractions of some of its main competitors already well-established in the market.  TheGovernment is aware that the development of Macau's aviation industry may only be achieved by
attracting foreign airlines to operate to, from and through Macau, promoting Macau International
Airport as an aviation gateway in the region, whil e retaining sufficient flexibility for the future
development of the locally incorporated airline, Air Macau.
77. After a few decades with no activity, the recent history of the aviation industry in Macau
re-started in 1991 with the operation of non-scheduled helicopter services between Macau and
Hong Kong.  Macau International Airport started operations in November 1995 with capacity to
handle 6 million passengers and 165,000 metric tonnes of cargo per year.  The airport was built by
Macau International Airport Company Limited-CAM, under a concession contract granted in 1989.
The contract, with a 25-year term, gives CAM a monopoly to operate the airport.  Passenger and
cargo throughput has been increasing since its opening.
78. Macau, China's liberal policy in air transport is reflected in the 34 Air Services Agreements
(ASAs) already officially signed or initialled between the MSAR and its partners.  This demonstrates
Macau, China's willingness to exchange fifth freedom traffic rights in addition to third and fourth
freedom traffic rights.  The agreements with the U.S. and Singapore illustrate such policy.  Further,
Macau, China's flexible approach is also reflecte d in the latest amendment to the Macau Singapore
ASA, when one of the major constrains for the full liberalization of air transport, the ownership and
control clause, was replaced by a more liberal incorporation and principal place of business/provision.
79. Notwithstanding this flexible, liberal, and open approach to ASA negotiations, given the
dimension of the aviation market in Macau, a monopoly concession for public air transport was
granted to Air Macau in 1995.  This gives Air Macau the exclusive right to operate both passenger
and cargo flights from and to Macau, for a period of 25 years. This concession does not of courseprevent non-local companies flying from, to and through Macau under the rights negotiated in the
relevant ASAs.  The Government considers that, in the near future, due to Macau's geographical
location, liberal trading policies and non-congested airport, cargo will be the focus of development in
the industry.  To accommodate the expansion of the air cargo business in the years to come, the
Government will prepare the legal environment and will create multi-modal infrastructures to ensurethat the MSAR can develop as a regional cargo hub.
80. In summary, notwithstanding the fact resulting from the exclusive rights granted through the
concession contracts to Air Macau and to the CAM, the MSAR Government will strive to keep an
open and liberal environment for the air transport industry, with a view to better serve the
development of Macau's economy and the travelling public.Macau, China WT/TPR/G/82
Page 19
(6) MARITIME TRANSPORT SERVICES
81. International maritime transport is relatively less significant compared with air transport in
Macau.  As a free port, there are few formalities and restrictions for vessels entering the local ports.
However, the shallow waters around Macau are a physical limitation to the development of maritime
transport.  Thus, international traffic mostly relies on regional connections.
VIII.  TRADE POLICY AND REGULATORY FRAMEWORK FOR TRIPS
82. Apart from complying with TRI PS rules, the development of the MSAR's new intellectual
property system also reflects the need to modernize and upgrade legislation affecting international
trade.  The TRIPS Agreement entered into force in the MSAR on 1 January 2000.  Meanwhile
Macau, China had already established a comprehensive regime to ensure proper protection for IP
rights, so that investors and traders can be guaranteed a free and fair environment in which to dobusiness.
83. Although the main body of IP law is contai ned in the Copyright and Neighbouring Rights
Law
19 and the Industrial Property Law20, some TRIPS obligations are contained in other legislation.
The picture as a whole is as follows:
- the TRIPS obligations on copyright and related rights are implemented by the
Copyright and Neighbouring Rights Law;
- the TRIPS obligations on trademarks, geographical indications, industrial designs,
patents, and topographies of integrated circuits are implemented by the Industrial
Property Law;
- the TRIPS obligations on protection of undisclosed information are implemented in
the Commercial Code21;  and
- the TRIPS obligations on enforcement are implemented by the above legislation and
by Civil Procedure Code22, Criminal Code23, Criminal Procedure Code24, and
Administrative Procedure Code.25  The Civil Code transposes some general
obligations of TRIPS, whilst other Codes transpose commitments where enforcement
is concerned.
84. At the administrative level, the Macau Economic Services (MES), which is the body
responsible for supervising intellectual property rights, has been restructured on 29 July 1999 to create
an Intellectual Property Department (IPD).  The IPD is responsible for advising the Director of the
MES on implementation of IP policies.  It is also in charge of managing the registration of industrial
property rights.  The importance of IP protection in Macau justifies a fuller description of current laws
and enforcement practices, which make the Macau, China's legislation TRIPS compliant.
                                                     
19 Decree-Law No. 43/99/M, 16 August 1999.
20 Decree-Law No. 97/99/M, 13 December 1999.
21 Enacted by Decree-Law No. 40/99/M, 3 August 1999.
22 Enacted by Decree-law No. 55/99/M, 8 October 1999.
23 Enacted by Decree-Law No. 58/95/M, 14 November 1995.
24 Enacted by Decree-Law No. 48/96/M, 2 September 1996.
25 Enacted by Decree-Law No. 57/99/M, 11 October 1999.WT/TPR/G/82 Trade Policy Review
Page 20
(1) NEW IP R EGIME
85. Copyright and Neighbouring Rights:  the MSAR 's new Copyright and Neighbouring Rights
Law was published on 16 August 1999 and entered into force on 1 October 1999.  It provides
comprehensive protection for recognized categories of literary, dramatic, musical and artistic works,
as well as for films, television broadcasts and any original work created or published.  In the MSAR,
copyright is an "automatic" right, arising when a work is created.  It is not necessary to register acopyright in the MSAR in order to obtain protection under the law.  The general rule is that copyright
lasts until 50 years after the creator of the work dies.  There are however minor variations to this rule
depending on the type of work.  There are also provisions in the law for the registration and
responsibilities of collecting societies.
86. Industrial Property Rights:  the Industrial Property Law was published on 13 December 1999
and entered into force on 6 June 2000.  It replaced the previous Industrial Property Code (Decree-Law
No. 16/95), Trademark Regulation (Decree- Law No. 56/95/M) and Administrative Rule
No. 306/95/M, and provided the MSAR  for the first time with its ow n independent industrial property
law.  The new law provides protection for patents, including invention patents and utility models,
semiconductor topography products, industrial designs and models.  It also provides a basis for theprotection of trademarks, names and emblems of es tablishment, designation of origin, geographical
indications and a complementary certificate for the protection of medicines and phyto-pharmaceutical
products.
87. Other legislation and regulations:  together with the new copyright law, Decree-Law 51/99/M
of 27 September 1999, regulates trade in, and the reproduction of, software, phonograms, and
videograms on optical discs.  Under these provisions, the import and export of raw materials and
equipment for production are tightly controlled and monitored by a licensing system.  The CivilProcedure Code, Criminal Code and Criminal Procedure Code complement enforcement provisions.
(2) E
NFORCEMENT OF IP L EGISLATION
88. For some time, the MSAR authorities have been  aware of the fact that improvements needed
to be made in the enforcement of IP legislation.  In particular, there was an urgent need to prevent
illegal copying of sound or video recordings.  A number of measures have now been taken to dealwith this problem, with considerable success.  In addition, at a wider cooperative level, close
cooperation has been established between Macau SAR, Hong Kong SAR and the PRC in order to
coordinate and reinforce measures preventing illicit copying.
89. A further practical measure to eradicate criminal activities in this area, is the implementation
of a requirement for SID codes
26, based on an agreement signed between Philips International B.V.,
the International Federation of Phonographic Industry, and the MES on 15 December 2000, entering
into force the same day.  This system requires each manufacturer to endorse products with a
distinctive and individual SID code.  These codes are issued under the authority of the MES.
90. As far as tightening controls at the borders are concerned, Macau, China is in the process of
establishing a customs services, which will work with other relevant authorities to deter and preventillegal trade in optical discs and counterfeit material.
91. The MES currently has an inspection department to ensure closer monitoring of activities in
the IP field.  As a result of these legislative and successful enforcement measures, an effective
deterrent has now been provided against illicit ac tivities.  For instance, a drastic reduction in the
                                                     
26 Source Identification Disc.Macau, China WT/TPR/G/82
Page 21
number of factories producing or capable of producing illegal products (some twenty to thirty plants
have been closed since 1998).  Also since 1998, seizures of optical discs and the closure or sealing of
production lines have been impressive (see table below).  The MSAR authorities have, wherever
possible and justified by available evidence, instituted legal proceedings against those suspected of
illegal activities. Macau, China is firmly committed to continue its enforcement efforts in combating
counterfeiting and related activities in the MSAR.
Actions against counterfeiting
1998 1999 2000
Optical Disc
No. of Administrative Proceedings instituted 76 67 35
No. of Criminal Proceedings instituted 94 78 87
No. of actions (production locations) 346 210 143
No. of actions (retail locations) 147 91 120
No. of actions (warehouses) - - 10
No. of active production lines 23 10 8
No. of production lines seized 25 18 7
Quantity of optical discs seized 1,420,790 807,534 785,184
Other Pirated Productsa
No. of Criminal Proceedings instituted 1 9 90
No. of actions (retail locations) 1 9 99
Quantity of goods seized (pcs) 52 18,726 63,957
a Clothing, leather goods, and watches.
Source: Inspection of Economic Activ ities Department of Macau Ec onomic Services, 2000.
IX. FUTURE PROSPECTS
92. A key factor behind Macau's favourable pe rformance in 2000 was robust external demand.
However, economic recovery was also attributable to Macau's flexible and highly internationalized
open market system.  According to the "one country, two systems" principle and under the Basic Law,
together with the WTO rules and principles, Macau, China continues to manage the economy on the
basis of its free trade tradition – laissez-faire , free port, rules-based, market-driven – allowing free and
open markets to determine long-term economic devel opment.  In this context, the MSAR Government
has made efforts to provide a regulatory infrastruc ture for the development of the private sector, and
to create a level playing field for local and foreign investors.
93. It should be underlined that, after ten years of membership of the GATT/WTO,
Macau, China's trade regime is today underpinned by a transparent, modern, and efficient regulatorysystem that guarantees non-discriminatory and free access to its markets.  For some years to come,
Macau, China still has to confront with some challenges, namely the gradual liberalization of the
gambling sector, expiry of the ATC in 2005, the accession of China to the WTO, and structural
diversification of its economy.  However, Macau, China is in many ways determined that its
legislation should be inspired by the fundamental WTO rules.  In this connection, the MSARGovernment has made efforts to ensure that its legal framework can secure a fair, favourable and
dynamic trade environment in Macau, thus, providin g as an attractive location for both local and
foreign investment.
94. The MSAR Government believes that its effort to improve the market dimension;  attract
trade and investment to Macau;  improve the business and investment environment;  promote
industrial transformation;  upgrade the tourism and gaming sector, will all contribute to enhancingWT/TPR/G/82 Trade Policy Review
Page 22
Macau's reputation as a regional business centre with a modern, diversified and well-regulated
economy.
95. In this new millennium, Macau, China will undoubtedly further strengthen its role as an open
and fair player in the multilateral trading system , thus fostering trade promotion and liberalization
which are associated with Macau, China's long-held and well-established beliefs in free trade and
market economy.
__________