WT/TPR/G/306/Rev.1  
28 January 2015  
(15-0620)  Page: 1/18  
Trade Policy Review Body  Original: English  
 
TRADE POLICY REVIEW 
REPORT BY 
HONG KONG, CHINA 
Revision 
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism (Annex 3 of the 
Marrakesh Agreement Establishing the World Tr ade Organization), the policy statement by 
Hong Kong, China is attached. 
 
 WT/TPR/G/306/Rev.1 • Hong Kong, China 
 
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  CONTENTS 
1   INTROD UCTION  .......................................................................................................... 4  
2   MACROECONOMIC SITUATION AND POLICY ................................................................ 4  
2.1   Economic Environment ............................................................................................... 4  
2.2   Economic Outlook ...................................................................................................... 4  
2.3   Fisca l Policy ........................................................................................................... ... 5 
2.4   Monetary Policy ......................................................................................................... 5  
3   TRADE POLICY OBJECTIV ES AND DEVELOPMENTS ...................................................... 6  
3.1   Trade Policy  Objectives .............................................................................................. 6  
3.2   Participation in the World Trade Orga nization and Doha Development Agenda .................... 6  
3.3   Bilateral and Plurilat eral Trade C ooperatio n ................................................................... 6  
3.3.1   Mainland and Hong Kong Closer Ec onomic Partnership Ar rangement (CEPA) .................... 6  
3.3.2   Hong Kong, China–New Zealand Cl oser Economic Partne rship Agreement ....................... 7  
3.3.3   Hong Kong, China–European Free Trade Association States Free Trade Agreement ........... 7  
3.3.4   Hong Kong, China–Chile Free Trade Agreement ........................................................... 8  
3.3.5   Free-trade agreement under negotiation between Hong Kong, China and ASEAN .............. 8  
3.3.6   Agreement on go vernment procurement .................................................................... 8  
3.3.7   Information te chnology ag reement ............................................................................ 8  
3.3.8   Trade in services  agreement ne gotiation .................................................................... 8  
3.3.9   Environmental goods agreement negotiation ............................................................... 8  
3.3.10   Investment promotion and protection agreem ents (IPPAs) .......................................... 9  
3.4   Participation in Asia-Pacific Economic Cooperation and Organization for Economic 
Cooperation and Development ............................................................................................ 9  
4   SUSTAINING LONG TERM GROWTH AND IMPROVING BUSINESS 
ENVIRONMENT ................................................................................................................. 9  
4.1   Sharpening Competitiv eness ....................................................................................... 9  
4.1.1   Trading and lo gistics serv ices ................................................................................... 9  
4.1.2   Financial services ................................................................................................... 10 
4.1.2.1   Banking industry ................................................................................................. 10 
4.1.2.2   Securities and futures .......................................................................................... 10 
4.1.2.3   Insura nce .......................................................................................................... 11 
4.1.2.4   Mandatory provident fund system .......................................................................... 11 
4.1.2.5   Offshore renm inbi (RMB) business ......................................................................... 12 
4.1.3   Tourism ................................................................................................................ 12 
4.1.4   Business and pr ofessional services ........................................................................... 12 
4.1.5   Innovation  and tec hnology ...................................................................................... 13 
4.1.6   Cultural and creative industries ................................................................................ 13 
4.1.7   Testing and certification .......................................................................................... 14 
4.1.8   Environmental industries ........................................................................................ 14 
4.1.9   Intellectual property trading .................................................................................... 15 WT/TPR/G/306/Rev.1 • Hong Kong, China 
 
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  4.1.10   Wine tradin g and distribution ................................................................................. 15 
4.2   Trade Fa cilitation ......................................................................................................  15 
4.3   Protection of intellectual property rights ....................................................................... 15 
4.3.1   Le gislation ........................................................................................................... . 16 
4.3.2   Enforcement ......................................................................................................... 17 
4.3.3   Public education .................................................................................................... 17 
4.3.4   Cooperation with rights owners and law enforcement agencies of other 
jurisdictions ................................................................................................................. ... 17 
4.4   Enhancing Corp orate Gove rnance ............................................................................... 18 
4.5   Competit ion Policy .................................................................................................... 18 
5   CONC LUSION............................................................................................................. 18  
 
 WT/TPR/G/306/Rev.1 • Hong Kong, China 
 
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  1  INTRODUCTION 
1.1.  This is the fifth Trade Policy Review of Hong Kong, China (HKC) since the establishment of 
the Hong Kong Special Administrative Region (HKSAR) of the People's Republic of China (PRC). Since the last Trade Policy Review in 2010, HKC's economy has grown continuously despite a 
challenging external environment. We staged a st rong rebound from the recession inflicted by the 
2008 global financial crisis, registering a 6.8% growth in 2010. Our economy attained further growth of 4.8% in 2011, 1.5% in 2012 and 2.9% in 2013. In 2013, HKC's GDP was 14% higher in 
real terms than its pre-crisis peak in 2008, and the domestic labour market was in a state of 
almost full employment. The institutions and policies that have served HKC well in the past, including the rule of law, free and open market, low and simple tax system, and a level playing field for business, remain the bedrock of HKC's prosperity.  
1.2.  The Basic Law
1 of the HKSAR provides that the HKSAR shall maintain the status of a free 
port, safeguard the free movement of goods and capital, be a separate customs territory, and may, on its own, using the name "Hong Kong, China", maintain and develop relations and 
conclude and implement agreements with foreign st ates and regions or international organizations 
in the appropriate fields, including but not limited to the economic and trade fields, as well as participate in international organizations and conferences not limited to states. This is the 
foundation for HKC's separate  membership in the World Trade Organization (WTO). 
2  MACROECONOMIC SITUATION AND POLICY 2.1  Economic Environment 2.1.  HKC maintains a business-friendly environment characterized by free trade, free flow of 
information, robust legal system, sound and transparent regulatory systems, and well-developed 
transportation and telecommunications infrastructure.  
2.2.  HKC's GDP grew by 2.2% in real terms year-on-year in the first half of 2014. In the ten-year 
period ending 2013, GDP increased at an averag e annual rate of 4.5% in real terms. In 2013, 
HKC's GDP at current market prices reached HK$2.1 trillion (US$274 billion) and its per capita GDP of HK$296,000 (US$38,100) was among the highest in Asia.  
2.3.  HKC is a leading trade and financial centre in the world. In 2013, HKC was the world's eighth 
largest economy in terms of merchandise trade, eigh th largest banking centre in terms of external 
transactions, sixth largest stock market in terms of market capitalization, and fifth largest foreign exchange centre in terms of turnover.  
2.4.  In the Index of Economic Freedom released by The Heritage Foundation in 2014, HKC ranks 
first for the 20
th consecutive year. Canada's Fraser Institute has also consistently ranked HKC as 
the freest economy in the Institute's annual report on Economic Freedom of the World. For eight 
years in a row, we have been accredited by the World Bank with a top ranking for ease of paying 
taxes. Our corporate profit tax rate is among the lowest in advanced economies. The World Bank has also ranked HKC the second easiest place to do business in the world for the fifth consecutive 
year. 
2.5.  HKC's long-term credit ratings are "AAA" by  S&P, "Aa1" by Moody's, and "AA+" by Fitch. 
2.2  Economic Outlook 2.6.  More than five years after the outbreak of th e global financial crisis, the recovery of the world 
economy remains modest and uneven, posing a drag  on international trade performance. In the 
near term, the global economic outlook is still overcast by considerable uncertainties, including those associated with the U.S. Federal Reserve's ta pering of asset purchases, the lack of growth 
momentum in the eurozone and the growth slowdown of emerging markets. Geopolitical tensions 
in different parts of the world are also a source of concern. Yet, the steady growth of Mainland 
                                               
1 Promulgated by the National People’s Congress of the PRC, the Basic Law of the HKSAR prescribes the 
economic, social, government and other systems to be practised in HKC after its reunification with Mailand 
China. WT/TPR/G/306/Rev.1 • Hong Kong, China 
 
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  China's economy should remain an important stabilizing force to the benefit of Asia's as well as 
HKC's trading activities. 
2.7.  Locally, domestic demand is likely to expand at a modest pace in the rest of 2014, as local 
consumer and business sentiment may stay somewhat cautious given the economic growth 
slowdown in recent quarters and the still uncertain external environment, although the broadly 
stable labour market thus far should provide some cushion. 
2.8.  On the whole, HKC's economy is projected to  grow modestly in 2014, at a rate of 2-3%. The 
medium-term outlook remains positive. HKC will continue to evolve into a knowledge-based 
economy, concentrating more on high value-a dding activities, and complemented by closer 
economic collaboration with the Mainland of China (the Mainland). Investments in large-scale cross-border and domestic infrastructure projects will continue, and upon their completion, will 
enhance the competitive edge of HKC's economy.  
2.3  Fiscal Policy 2.9.  The HKC Government adopts a prudent but progressive fiscal policy with the objectives of 
enhancing HKC's competitiveness, sustaining economic growth, improving the business 
environment, increasing employment opportunities, and maintaining the health of public finances, while improving the livelihood and well-being of its people. The HKC Government has had fiscal 
surplus in ten consecutive years since 2004. As of March 2014, its accumulated fiscal reserves 
amounted to HK$756 billion (US$97 billion). Surplus for the 2013-14 financial year was HK$22 billion (US$3 billion) or 1% of GDP. Acco rding to the medium range forecast by the HKC 
Government for the five-year period ending 2018-19, there will be fiscal surpluses in four out of 
the five financial years, and accumulated fiscal reserves will grow to HK$799 billion 
(US$103 billion), representing approximately 29% of GDP and 19 months of government 
expenditure. 
2.10.  The HKC Government set up a Working Group on Long-Term Fiscal Planning ("Working 
Group") in June 2013. This Working Group performe d a health check on the current state of HKC's 
public finances and made projections on HKC Government's fiscal position up to 2042, having 
regard to demographic and economic growth trends, as well as prevailing policies. The Working 
Group has found that in the short to medium term th e overall fiscal position will remain healthy. In 
the longer term, however, the HKC Government mu st seek to foster economic growth, and align 
the growth rates of government revenue and government expenditure.  
2.11.  The HKC Government will ensure the sustaina bility of public finances by upholding prudent 
fiscal disciplines and by keeping the government budget commensurate with the growth rate of the economy. We will also strive to preserve, stabilise and broaden the revenue base. The HKC 
Government's fiscal position remains strong. We are confident that with resolute and timely action 
to address the fiscal sustainability issue, any structural deficit problem can be averted. 
2.4  Monetary Policy 
2.12.  HKC is a small and highly externally-oriented economy. Our trade-to-GDP ratio was 458% in 
2013. A credible fixed-exchange rate system help s minimize the exchange rate risk, benefiting 
externally-oriented businesses. A stable Hong Ko ng dollar against the U.S. dollar is also an 
important anchor for financial stability, which underpins HKC's position as an international financial 
centre. 
2.13.  The primary monetary objective of HKC is to maintain currency stability, defined as a stable 
external exchange value of the currency of HKC,  in terms of its exchange rate in the foreign 
exchange market against the U.S. dollar, at around HK$7.80 to US$1. The structure of the 
monetary system is characterized by currency board arrangements, requiring the Hong Kong dollar monetary base to be at least 100% backed by, and changes in it to be 100% matched by 
corresponding changes in, U.S. dollar reserves he ld by the Exchange Fund at the fixed-exchange 
rate of HK$7.80 to US$1. WT/TPR/G/306/Rev.1 • Hong Kong, China 
 
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  3  TRADE POLICY OBJECTIVES AND DEVELOPMENTS 
3.1  Trade Policy Objectives 3.1.  HKC's trade policy objectives are to support and promote a free, open and stable multilateral 
trading system; to safeguard our rights and fulf il our obligations under multilateral, regional, 
plurilateral, and bilateral agreements and arrangements; and to secure, maintain and improve 
market access for our exports. 
3.2  Participation in the World Trad e Organization and Doha Development  Agenda 
3.2.  HKC actively participates in the WTO. Our participation is guided by two objectives - to foster 
progressive global trade liberalization; and to strengthen the rules of the multilateral trading system so as to provide an effective framework to protect HKC against arbitrary and discriminatory actions by our trading partners. 
3.3.  Hong Kong was a founding Member of the WTO. Our separate membership, under the name 
of "Hong Kong, China", has continued after Hong Kong's reunification with the Mainland in 1997. HKC is a staunch supporter of the multilateral trading system. We believe that the rules-based 
system embodied in the WTO and the WTO's dispute settlement mechanism have provided the 
most effective insurance against trade protectionism. It is HKC's priority to bring the Doha Round of multilateral trade negotiations to a successful and early conclusion. We will continue to work 
closely with other Members and contribute to the negotiating process for the successful conclusion 
of the Round. HKC also participates actively in the work of WTO bodies and committees. Our 
representatives have chaired various such bodies and committees. 
3.4.  HKC welcomes the Bali Package agreed at th e Ninth Ministerial Conference (MC9) of the WTO 
held in Bali, Indonesia in December 2013, which comprises an Agreement on Trade Facilitation 
(TFA) and nine decisions on agriculture, develo pment and least-developed countries issues. We 
consider the Package an important breakthrough in multilateral trade negotiations, as the TFA is 
the first multilateral trade agreement concluded since the establishment of the WTO. Being an 
export-oriented economy and an international trading centre, HKC will benefit from the TFA. As such, expeditious entry into force of the TFA is a top priority for HKC. HKC is the earliest WTO 
Member, which has notified the WTO of the scheduling of all provisions in Section I of the TFA as 
Category A commitments, and we are ready to implement them once the TFA enters into force. With regard to other elements of the Bali Package, we will continue to work constructively with other WTO Members to take them forward and to chart a work programme for the remaining Doha 
issues. 
3.3  Bilateral and Plurilateral Trade Cooperation 3.5.  While the multilateral trading system is a cornerstone of our trade policy, we maintain an 
open mind on pursuing bilateral, plurilateral and regional free-trade agreements (FTAs) with 
trading partners. We are prepared to explore the po ssibility of entering into such agreements, so 
long as they are in HKC's interests, are consistent with WTO principles and provisions, and can 
contribute to multilateral trade liberalization. Wh ere FTAs are concerned, we have signed a Closer 
Economic Partnership Arrangement with the Mainland, a Closer Economic Partnership Agreement with New Zealand, a Free Trade Agreement with the European Free Trade Association (EFTA) States, and a Free Trade Agreement with Chile. We have also commenced negotiations for an FTA 
with the ten member States of the Association of South East Asian Nations (ASEAN) in July 2014.  
3.3.1  Mainland and Hong Kong Closer Ec onomic Partnership Arrangement (CEPA) 
3.6.  The Mainland and HKC signed the "Mainland and Hong Kong Closer Economic Partnership 
Arrangement" (CEPA) on 29 June 2003. CEPA is the first FTA concluded by HKC. CEPA adopts a 
building block approach, whereby the scope and co ntent of the agreement may be expanded from 
time to time to suit the needs of the partie s. To date, the two sides have concluded ten 
supplements. Since the last Trade Policy Review of HKC in 2010, Supplements VIII to X to CEPA 
have been signed in December 2011, June 2012 and August 2013, respectively.  WT/TPR/G/306/Rev.1 • Hong Kong, China 
 
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  3.7.  CEPA provides a platform for HKC and the Mainland to pursue new trade and investment 
facilitation and liberalization initiatives. In fulfilment of the pertinent objectives of CEPA, both sides seek to: 
a)  apply zero tariffs to the merchandise of the other party; 
b)  progressively reduce or eliminate existing restrictive measures applicable to service 
suppliers of the other party; and 
c)  promote cooperation in ten designated areas to facilitate trade and investment flows 
between the two sides.
2 
 3.8.  Under CEPA, effective from 1 January 2006, a ll products of HKC's origin can enjoy tariff-free 
treatment on importation into the Mainland upon fulfilment of the CEPA rules of origin. On the 
services front, there are 403 liberalization measur es under CEPA, enabling HKC service suppliers to 
have preferential access to the Mainland market in 48 service sectors. CEPA also enhances cooperation of the two sides in financial services, tourism promotion and mutual recognition of 
professional qualifications.  
3.3.2  Hong Kong, China–New Zealand Closer Economic Partnership Agreement 3.9.  The Hong Kong, China–New Zealand Closer Economic Partnership Agreement (CEP 
Agreement) entered into force on 1 January 2011. The CEP Agreement is HKC's first FTA with a 
foreign economy. 
3.10.  The CEP Agreement comprises liberalization measures for trade in both goods and services. 
It also contains provisions on facilitating investment and movement of business persons, as well as 
other areas such as competition, electronic commerce, intellectual property, government 
procurement. 
3.11.  On trade in goods, HKC binds its existing  zero-tariff regime with respect to products 
originating in New Zealand upon the entry into force of the CEP Agreement. New Zealand's tariffs 
on HKC-origin products have been gradually removed and will be eliminated by 2016. 
3.12.  On trade in services, the CEP Agreement covers a comprehensive and diverse scope of 
service sectors, securing better business opportunities and greater certainty for service providers 
of HKC and New Zealand. The CEP Agreement also in cludes a set of robust disciplines on domestic 
regulation to ensure that measures affecting trade in services are transparent, are administered in 
a reasonable, objective and impartial manner, and do not become unnecessary barriers to trade. 
3.3.3  Hong Kong, China–European Free Trad e Association States Free Trade Agreement 
3.13.  HKC and the EFTA States signed an FTA on 21 June 2011. The part of the FTA between 
HKC, Iceland, Liechtenstein and Switzerland entered into force on 1 October 2012; whereas that 
between HKC and Norway entered into force on 1 November 2012. 
3.14.  Apart from liberalization measures for trade in goods and services, as well as provisions to 
facilitate investment, the FTA also covers other trade-related issues such as protection of 
intellectual property. The Agreement opens up new business opportunities and strengthens 
bilateral trade and investment ties. 
3.15.  The Investment Chapter of the Agreement provides investors in non-service sectors with 
legal certainty on national treatment, facilitates their temporary entry and stay in HKC and the 
EFTA States, and provides them with safeguards on movement of capital.  
                                               
2 CEPA promotes cooperation between the two side s in trade and investment promotion; customs 
clearance facilitation; commodity inspection and quar antine, food safety, qual ity and standardization; 
electronic business; transparency in laws and regula tions; cooperation of sma ll and medium enterprises; 
cooperation in industries; protection of intellectual property; cooperation on branding; and cooperation on 
education. WT/TPR/G/306/Rev.1 • Hong Kong, China 
 
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  3.3.4  Hong Kong, China–Chile Free Trade Agreement 
3.16.  The Hong Kong, China–Chile FTA was signed on 7 September 2012 and is expected to enter 
into force within 2014 after both parties have completed their domestic procedures.  
3.17.  Apart from trade in goods and services, the FTA contains provisions to promote competition, 
facilitate access to each other's government procurement market, protect intellectual property, 
enhance cooperation in customs procedures, and protect the environment through trade initiatives. 
3.18.  To further enhance investment flows between HKC and Chile, both sides have agreed to 
commence negotiations on a separate, comprehensive investment agreement upon the entry into force of the FTA. 
3.3.5  Free-trade agreement under negotiation between Hong Kong, China and ASEAN 
3.19.  ASEAN is an important trading and investme nt partner of HKC. Formal negotiation of the 
FTA between the ten member States of ASEAN and HKC has commenced in July 2014. The scope of the FTA covers trade in goods and related issues; trade in services; investment; intellectual 
property cooperation; economic and technical cooperation; and dispute settlement mechanism. 
Both sides are prepared to conclude the FTA as soon as possible to foster even closer partnership and contribute to regional economic integration. 
3.20.  On the plurilateral front, HKC is a participant of the Agreement on Government Procurement 
(GPA) and Information Technology Agreement (ITA).  W e  a r e  a l s o  t a k i n g  p a r t  i n  t h e  T r a d e  i n  
Services Agreement (TISA) and Environmen tal Goods Agreement (EGA) negotiations. 
3.3.6  Agreement on government procurement 
3.21.  HKC is a Party to the GPA and has actively participated in its re-negotiation. We tendered an 
offer in October 2011 to expand our commitments under the Agreement to cover two more central government entities and six additional services sub-sectors. The offer was warmly welcomed by 
other GPA Parties. We are amongst the Parties which submitted the instrument of acceptance of 
the Protocol Amending the Agreement before the Ni nth Ministerial Conference of the WTO held in 
December 2013. The collective efforts of the Parties have contributed to the coming into force of 
the revised GPA on 6 April 2014. 
3.3.7  Information technology agreement 3.22.  Given our significant trade interest in the information technology sector, HKC attaches great 
importance to the discussion on expanding the pr oduct coverage of the ITA (generally termed 
ITA II). We started joining the related-technical discussion in October 2012 by sharing our product 
wish list and suggestions from the trade. We look  forward to the early conclusion of the ITA II 
negotiation, and will continue to contribute positively to the process. 
3.3.8  Trade in services agreement negotiation 
3.23.  In June 2013, HKC commenced negotiatio n for the TISA, which involves 23 WTO Members. 
HKC aims to work with other participants to conclude a high-ambition and comprehensive 
agreement with broad participation that could be multilateralized in the future. Participation in the 
TISA would allow HKC to strengthen trade and economic ties with other economies and could provide our service suppliers with more business opportunities in many of our major trading partners as well as some relatively new markets. 
3.3.9  Environmental goods agreement negotiation 
3.24.  HKC together with 13 other WTO Members announced on 24 January 2014 an initiative to 
begin preparations for negotiations to liberalize trade in environmental goods. The negotiations on 
the EGA were formally launched on 8 July 2014, with the goal of eliminating tariffs on a wide range 
of environmental goods. HKC is committed to  working towards the timely and successful 
conclusion of the EGA. WT/TPR/G/306/Rev.1 • Hong Kong, China 
 
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  3.25.  HKC believes that the EGA is a viable building block for multilateral liberalisation in the trade 
of environmental goods, given the participants have agreed that the outcome of the negotiations will be applied on a most-favoured-nation basis when the EGA takes effect. We also believe that the EGA will contribute to the international environmental protection agenda. The elimination of 
tariffs on environmental goods covered by the EGA will lower the cost of those products. This will 
be conducive to their wider use and to environmental protection generally.  
3.3.10  Investment promotion and protection agreements (IPPAs) 
3.26.  To give additional assurance to overseas investors that their investments in HKC are 
adequately protected, and to enable HKC businesses to enjoy similar protection in respect of their 
investments overseas, HKC has been pursuing IPPAs with other economies. 
3.27.  As of June 2014, HKC signed 17 IPPAs with other economies, namely Australia; Austria; 
Belgo-Luxembourg Economic Union; Denmark; Finland; France; Germany; Italy; Japan; Korea, 
Rep. of; Kuwait, the State of; the Netherlands; New Zealand; Sweden; Switzerland; Thailand; and 
the United Kingdom. All these IPPAs are in force. Besides, HKC concluded IPPA negotiations with 
the Kingdom of Bahrain and Myanmar respectively  in December 2013. These two IPPAs will be 
signed after completion of the necessary internal procedures by the parties concerned. Currently, HKC is conducting IPPA negotiations with the Russian Federation. 
3.4  Participation in Asia-Pacific Economic  Cooperation and Organization for Economic 
Cooperation and Development 
3.28.  HKC attaches great importance to regional economic cooperation with the aim of promoting 
free and open trade in support of the multilateral trading system. In the past four years, we have 
continued to participate actively in the Asia-Pacific Economic Cooperation (APEC).  
3.29.  APEC leaders set a visionar y goal of free and open trade and investment in Bogor, Indonesia 
in 1994 (often referred to as "the Bogor Goals") for industrialized economies to achieve no later 
than 2010 and developing economies no later th an 2020. Since 2010, the APEC Policy Support 
Unit (PSU) has prepared two interim reviews to assess the progress made towards the Bogor Goals, one in 2012 and another in 2014. Under the 2014 report, the PSU noted that HKC had 
maintained a very liberal, transparent and open regime for trade in services and investments. 
3.30.  HKC has been an observer (renamed as "participant" since 2012) to the Organization for 
Economic Cooperation and Development (OECD)'s Trade Committee and Committee on Financial Markets since 1994 and 1995 respectively. We have also participated in the Trade Session of the 
OECD annual Ministerial Council Meeting since 2009. We have contributed to and benefited from 
OECD work, and will continue to participate actively. 
4  SUSTAINING LONG TERM GROWTH AND IMPROVING BUSINESS ENVIRONMENT 
4.1  Sharpening Competitiveness 
4.1.  HKC is essentially a services economy. The contribution of services to our GDP amounted to 
93% in 2012. The four pillar industries of HKC are trading and logistics, financial services, tourism, 
and business and professional services. These four industries collectively recorded a cumulative 
growth of 84% in terms of nominal value-added ov er the ten years to 2012, exceeding the overall 
nominal GDP growth for the same period, employin g over 1.7 million people (almost half of the 
total labour force), and contributing close to 60% of our GDP. They are the linchpin of HKC's 
economy. HKC is also rapidly developing a number of industries in which we enjoy distinct 
advantages, to further diversify HKC's economy and secure continued prosperity. They include innovation and technology, cultural and creative industries, testing and certification, environmental 
industries, intellectual property trading, and wine trading and distribution. 
4.1.1  Trading and logistics services 4.2.  Thanks to our physical proximity to the Mainland, strong connections to international 
markets, world-class infrastructure and quality business support services, HKC has developed into 
an international trading hub. In 2013, HKC's visi ble trade (including total exports and imports of  WT/TPR/G/306/Rev.1 • Hong Kong, China 
 
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  goods) exceeded HK$8.2 trillion (US$1.1 trillion),  or close to four times of GDP. The trading 
services industry accounted for more than 21% of nominal GDP and employed close to 16% of the total labour force in 2012. The trading services industry will remain an important pillar of the HKC economy. The HKC Government will continue to seek ways to facilitate the growth and 
development of the industry by fostering closer  economic ties with existing and new trading 
partners. 
4.3.  HKC's logistics industry has been developing towards higher value-added service areas such 
as inventory management, regional distribution and global supply chain management. 
4.4.  Despite its 1% share in total trade volume, air cargo accounts for over one-third of our total 
trade in value terms. HKC has registered the world's largest international air cargo throughput for years. To meet the demands of the airfreight logistics industry, the Hong Kong Airport Authority 
(AA) continues to upgrade the airport's facilities. A new air cargo terminal was fully commissioned 
last October. Another project scheduled for completion in 2015 will provide a new passenger concourse with an additional 20 aircraft parking stands, and other ancillary facilities.  
4.5.  HKC is an international maritime centre. There are currently over 700 international and local 
companies in HKC providing services such as ship  management, broking/chartering, ship finance, 
maritime insurance, legal and arbitration services. The HKC Government supports the long-term 
development of HKC as a preferred base for operating maritime business in Asia, and is setting up 
a statutory maritime body to enhance institutional support for such development. 
4.6.  The Hong Kong Port is one of the bu siest container ports in the world, handling 
22.4 million TEUs in 2013. There are nine container terminals and other cargo-handling facilities, 
which are all operated by the private sector. The HKC Government continues to enhance port 
facilities and related infrastructure to support the development of the port. For instance, a dredging project is being carried out to increase the navigable depth of the container terminal 
basin and its approach channel by 2016 to enable a new generation of ultra-large container ships 
to access the container port at all tides. We will continue to strengthen HKC's position as a leading hub port in the region. 
4.1.2  Financial services 
4.7.  To strengthen HKC's competitiveness in the face of increasing global competition and 
maintain our position as a leading regional and international financial centre, we will continue to improve the quality of the market, modernise th e regulatory regime an d upgrade our market 
infrastructure. 
4.1.2.1  Banking industry 4.8.  HKC has an open banking sector whereby local and foreign banks compete on a level playing 
field. Under the current three-tier licensing system, foreign banks may enter the HKC banking 
market as licensed banks, restricted licence bank s or deposit-taking companies. They may operate 
in the form of locally incorporated companies or branches of foreign banks. 
4.9.  HKC has followed the timetable of the Base l Committee on Banking Supervision in pursuing 
the Basel III capital, liquidity and disclosure reform s to strengthen the capital position, liquidity 
management, and financial statement disclosure of the banking sector. The first phase of the Basel III's capital and disclosure requirements has been implemented in 2013. We are taking 
forward legislative plans to introduce the second phase of the Basel III's capital (i.e. the capital 
buffer requirements), liquidity (i.e. the liquidity coverage ratio) and disclosure requirements with 
effect from 2015. 
4.1.2.2  Securities and futures 
4.10.  HKC has a vibrant securities and futures industry. The Securities and Futures Ordinance 
provides the legal framework for the regulation of the sector on a par with international standards 
and practices. WT/TPR/G/306/Rev.1 • Hong Kong, China 
 
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  4.11.  In 2010, the HKC Government consulted the public on a legislative proposal to oblige timely 
disclosure of price sensitive information by liste d companies. The statutory disclosure regime for 
inside information commenced operation on 1 Janu ary 2013. This regime empowers the Securities 
and Futures Commission (SFC) to institute proc eedings before the Market Misconduct Tribunal 
directly in respect of these cases. The inside information regime helps promote a continuous 
disclosure culture among our listed companies for better protection of investors. 
4.12.  We introduced a regulatory regime for credit rating agencies (CRAs) operating in HKC on 
1 June 2011. Under the new regime, both corporate CRAs and their individual rating analysts need 
to be licensed by the SFC and be subject to a CRA Code of Conduct. 
4.13.  Furthermore, a statutory regulatory fram ework for the over-the-counter (OTC) derivatives 
market in HKC was set up in March 2014. This regulatory regime meets the requirements of the 
G20 and is in line with developments in other international financial centres. The key aspects of 
the regime include mandatory reporting, clearing and trading obligations, regulation of the necessary infrastructure, and regulation and ov ersight of key players in the OTC derivatives 
market.  
4.14.  HKC currently has a paper-based securities market regime. Taking into account outcome of 
the earlier consultation and to facilitate market development, we plan to progress to an 
uncertificated securities regime so that investors could choose to hold and transfer securities in 
uncertificated form, which will in turn allow them to possess the legal ownership, instead of beneficial interest only, in the securities. This me asure will help enhance the overall efficiency of 
our securities market, strengthen corporate governance, improve investor protection and maintain 
our market competitiveness. An amendment bill to  provide for the broad regulatory framework for 
enabling the introduction of an uncertificated securities market regime was introduced into the legislature on 25 June 2014.  
4.15.  On asset management, we launched a three-month public consultation to introduce a new 
open-ended fund company ("OFC") structure to comp lement the existing unit trust structure. The 
public consultation period ended on 19 June 2014, and we are analysing the comments received 
before drawing up the necessary legislative proposal. 
4.1.2.3  Insurance 4.16.  The insurance industry in HKC is a cosmopolitan and competitive one. A level playing field is 
maintained for all insurers and insurance intermediaries irrespective of their country of origin. This 
is evident from the large number of authorized insurers (158 as at 30 June 2014) and the strong 
presence of foreign companies. About 48% of the authorized insurers were incorporated outside 
HKC in 22 places, with the United Kingdom (13 insurers) taking the lead. 
4.17.  The Office of the Commissioner of Insurance (OCI) has been implementing a number of 
measures to further enhance the regulatory regime in respect of the insurance sector . Among 
them are the monitoring of the financial and solvency position of all insurers in HKC, supervision 
on group and cross-sector insurers and consumer protection requirements. To modernize the 
regulatory infrastructure, to facilitate the st able development of the industry, provide better 
protection for policyholders, and align with international practice that financial regulators should be financially and operationally independent of the Government, we are in the process of establishing 
an Independent Insurance Authority ("IIA"). The relevant amendment bill to provide for a legal 
framework for establishing the IIA was introduced into the legislature in April 2014. In addition, we are preparing the enabling legislation for the establishment of a Policyholders' Protection Fund in 
HKC to improve market stability and safeguard the interest of policyholders in the event of 
insolvency of an insurer. 
4.1.2.4  Mandatory provident fund system 
4.18.  HKC implemented the Mandatory Provident Fund (MPF) System in December 2000. It is a 
privately-managed, mandatory system of provid ent fund schemes to assist members of the 
workforce to accumulate financial resources for their retirement. The MPF System operates under a free-market competition environment. There is no barrier to entry, quantitative or qualitative, for 
foreign institutions intending to participate in the MPF market. MPF schemes are governed by trust. WT/TPR/G/306/Rev.1 • Hong Kong, China 
 
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  Any institution, irrespective of its place of origin that meets the eligibility requirements (including 
paid up capital and net asset requirements) may apply for approval as a trustee, or to provide services for MPF schemes such as investment management and custody of assets. There is no fixed quota on the number of approved trustees, which stood at 19 as at 31 March 2014. As at 
March 2014, there were more than 2.4 million scheme members and the aggregate net asset 
values of all MPF schemes amounted to HK$516 billion. 
4.1.2.5  Offshore renminbi (RMB) business 
4.19.  HKC pioneered the development of offshore RMB business and is a major hub serving other 
offshore RMB centres. As at end May 2014, RMB deposits and outstanding RMB certificates of deposits totalled RMB 1,159 billion. With the development of RMB bonds and equity products, HKC has become the largest centre for conducting offshore RMB financing activities. As at end May 2014, 
outstanding RMB bonds issued in HKC amounted to RMB 388.4 billion. HKC also serves as a platform 
for enterprises and financial institutions all over the world to conduct RMB trade settlement, payments and investments. In the first five months of 2014, total RMB trade settlement conducted 
through banks in HKC reached RMB 2,394 billion. Our RMB clearing platform is also supporting 
banks from all over the world to conduct their RMB transactions. As at end May 2014, there were a total of 221 banks participating in the RMB clearing platform in HKC, of which 195 were branches 
and subsidiaries of foreign banks and branches and subsidiaries established overseas by banks in the 
Mainland. 
4.1.3  Tourism 4.20.  Tourism contributes significantly to HKC's economy. In 2013, visitors to HKC exceeded 
50 million, an increase of 11.7% over 2012. Total spending went up by 14.8% to HK$332 billion. 
Tourism, making up 4.7% of GDP and employ ing over 250,000 people, has been driving the 
growth of many other service sectors, such as retail, catering, accommodation and cross-boundary 
passenger transport services.  
4.21.  In order to attract high-spending visitors  t o  H K C ,  w e  c o n t i n u e  t o  u p g r a d e  o u r  t o u r i s t  
facilities, host attractive mega events and maintain the supply of high-end hotel accommodation. 
4.22.   On tourist facilities, the development of a waterpark in the Ocean Park and additional 
facilities (a new themed area and a new hotel) in the Hong Kong Disneyland has commenced. The terminal building and the first berth of the Kai Tak Cruise Terminal came into operation in June 2013. A second berth is planned to be commissioned in 2014 and, upon completion of further 
dredging works, the terminal will be able to accommodate the largest cruise vessels in the world.  
4.23.  The HKC Government has allocated an additional HK$45 million for the Hong Kong Tourism 
Board to provide more attractive and targeted services and concessions for organizers and 
participants of conventions and exhibitions of vari ous scales and types in the coming three years.  
4.1.4  Business and professional services 4.24.  Professional services and other producer services contribute 13% of GDP and employ about 
500,000 people. The professional services industry in particular recorded high growth in recent 
years, contributing nearly 5% of GDP. The HKC Government will continue to strengthen 
government-to-government (G2G) ties with its Mainland and overseas counterparts and secure more liberalization measures to help HKC's service industries access the Mainland and overseas 
markets under more favourable conditions  through CEPA and other arrangements. 
4.25.  HKC is rapidly progressing towards becoming a centre for dispute resolution in the 
Asia-Pacific region. HKC arbitral awards are enforceable in jurisdictions of more than 150 
Contracting States under the New York Convention. Arbitral awards made in HKC and the 
Mainland, as well as those made in Hong Kong, China and Macao, China are also reciprocally enforceable. HKC is increasingly being desi gnated as the place for the resolution of 
Mainland-related disputes. 
4.26.  The Hong Kong International Arbitration Centre is instrumental in helping HKC develop as a 
dispute resolution centre. The International Court of Arbitration of the International Chamber of WT/TPR/G/306/Rev.1 • Hong Kong, China 
 
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  Commerce established a branch of its secretariat in HKC in 2008. In 2012, the China International 
Economic and Trade Arbitration Commission Hong Kong Arbitration Center and the Asia-Pacific Regional Office of the Hague Conference on Private International Law were established in Hong Kong, China. In November 2014, the China Maritime Arbitration Commission will open a branch 
office in HKC. The presence of these law and arbitration-related institutions is a strong 
endorsement of HKC's advantage as a legal services hub in the Asia-Pacific region.  
4.1.5  Innovation and technology 
4.27.  The HKC Government has devoted considerable efforts to foster innovation and high 
value-added, technology-intensive economic activities. Backed by strong research and 
development (R&D) capabilities, excellent technolo gy infrastructure, world-class universities, a 
vibrant pool of R&D talents, a sound legal system and a strong intellectual property protection 
regime, HKC has an enabling environment for the business sector to collaborate with universities 
and R&D organizations to conduct applied research and commercialize their innovations. 
4.28.  The Innovation and Technology Commission administers an Innovation and Technology 
Fund (ITF), which provides funding for applied R&D projects by universities, research institutions 
and companies to boost productivity and comp etitiveness of our manufacturing, and service 
industries. 
4.29.  By the end of May 2014, over 3,900 proj ects were approved, with total ITF funding 
amounting to over HK$8 billion (US$1 billion). The Government has announced plans to expand 
the scope of the ITF to cover more downstream ac tivities (e.g. development engineering, system 
integration, industrial design and process optimi sation, and compliance testing and clinical trials, 
etc.). A new scheme will be launched under the ITF to encourage more private sector investment 
in R&D. Furthermore, an annual funding up to HK$24 million will be provided to universities through the ITF, initially for three years from 2014-15, to encourage their R&D teams to start 
technology businesses and commercialise their R&D results. 
4.30.  The Hong Kong Science Park is home to about 440 technology companies. The Science 
Park's incubation programme has so far nurtured over 450 technology start-ups. Phase 3 of the 
Science Park's expansion is underway with a strong focus on green technology. When fully 
completed in 2016, the new phase will provide space for an additional 150 technology companies and offer 4,000 R&D-related jobs. 
4.31.  We will continue to create an environmen t conducive to the development of innovation and 
technology, encourage investment in this area and enhance cooperation among the Government, 
industry, academia and research sectors.  
4.1.6  Cultural and creative industries 
4.32.  The Government supports the development of art and culture in HKC. In 2014-15, we spend 
around HK$3.5 billion to nurture local arts groups, artistic talents and arts administrators, encourage students to participate in art and cultural activities, promote public art and enrich 
artistic programmes, etc.  
4.33.  The West Kowloon Cultural District (WKCD) project is a strategic investment of the HKC 
Government to meet the long-term infrastructura l and development needs of the arts and culture 
in HKC. Our vision is to develop a 40-hectare prime waterfront site facing the Victoria Harbour into 
an integrated arts and cultural district with world-class facilities. The WKCD will serve as a 
platform for international cultural exchange an d performances. From 2015-16, a range of arts and 
cultural facilities in the WKCD will come on stream in stages. 
4.34.  To spearhead the development of HKC's creative industries, the Government also set up in 
2009 a dedicated office, "Create Hong Kong" (CreateHK) to provide one-stop services to the trade. We run two funding schemes, the Film Development Fund (FDF) and the CreateSmart Initiative 
(CSI) to support the industries. The FDF, with a commitment of HK$320 million, provides 
co-financing support to small-to-medium budget film productions to help nurture film talents. It also funds projects and activities which promote Hong Kong films in the Mainland and overseas, 
provides training in various aspects of film production and distribution, and enhances the interest WT/TPR/G/306/Rev.1 • Hong Kong, China 
 
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  and appreciation of HKC films by the local audience. The CSI, with a commitment of 
HK$600 million, provides financial support to initiatives that are conducive to the development and promotion of the non-film creative sectors. Since the establishment of CreateHK, the FDF has funded 17 film production projects and 79 film -related projects while the CSI has funded 
206 projects. 
4.35.  In view of the significant growth potential of the design sector in HKC, the Government has 
collaborated with the Hong Kong Design Centre (HKDC) to promote Hong Kong, China's design 
excellence and wider use of design and design thinking in the business and public sectors. The 
HKDC also seeks to educate the professions and the community to be resourceful champions for sustainable development through design and innovation. The operation of the HKDC, the organization of its two flagship events, namely  the Business of Design Week (BODW) and the 
HKDC Awards which help raise public/business awareness of the value of design and celebrate 
design excellence, as well as its Design Incubation Programme (DIP) which nurtures design start-ups, are mainly supported by Government funding.  
4.1.7  Testing and certification 
4.36.  Testing and certification is an industry with good development potentials and a sector where 
HKC enjoys clear advantages. The number of persons engaged in testing, inspection and 
certification activities in HKC was 16,680 in 2012. The total business receipts of the private 
independent establishments in the industry we re HK$10.9 billion in 2012. The direct economic 
contribution to Hong Kong's Gross Domestic Product (GDP) was HK$5.8 billion. 
4.37.  To spearhead the development of the industry, the HKC Government established the Hong 
Kong Council for Testing and Certification (HKCTC ) in September 2009 to advise on the overall 
strategy to support the development of the in dustry. Since then, the HKCTC has been working 
closely with the Government and developing the testing and certification industry through 
improvement to accreditation services and factors of production, exploration of new opportunities 
in six specific trades
3, as well as organization of seminars and promotion activities. Liberalization 
measures were also included in four CEPA Supplem ents from 2010 to facilitate wider recognition of 
HKC's conformity assessment results by the Mainland. 
4.1.8  Environmental industries 4.38.  The Government invests heavily in the development of environmental infrastructure 
facilities and the setting up of various funding schemes to encourage adoption of clean 
technologies. In the past five years, from 2008-09 to 2012-13, the total investment on 
environmental infrastructural projects amounted  to HK$22,467 million, while the earmarked funds 
for funding schemes and other initiatives amounted to HK$2,259 million. Examples of 
environmental infrastructure developed include the EcoPark, which is Hong Kong, China's first 
recycling-business park, and a state-of-the-art district cooling system at Kai Tak Development Area. 
4.39.  We have been pursuing policy initiatives to promote business opportunities for 
environmental friendly products and services. In the Hong Kong Blueprint for Sustainable Use of 
Resources (2013-2022)  published in May 2013, we set out a series of policy measures to create a 
more favourable operating environment for sust ainable development of the recycling and green 
industries in HKC. These measures include the implementation of programmes on source 
separation of waste, the identification of more su itable sites for leasing to the recycling industry, 
the development of the EcoPark, the promotion of green procurement policy amongst government 
departments, and the implementation of producer  responsibility schemes, etc. In addition, we 
support the industry's participation in trade promotion activities such as environmental exhibitions and trade missions so as to build local environmental brands, explore business opportunities in the 
Mainland and increase collaboration with overseas enterprises.  
                                               
3 The HKCTC has identified opportunities to promote the use of testing and certification services in the 
following six specific trades, namely Chinese medicines, construction materials, food, jewellery, environmental protection and information, and communications technologies. WT/TPR/G/306/Rev.1 • Hong Kong, China 
 
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  4.1.9  Intellectual property trading 
4.40.  The Government set up a Working Group on Intellectual Property (IP) Trading (the Working 
Group) in March 2013 to advise on the overall strategy to promote HKC as a premier IP trading hub in the region, and devise specific polici es and measures in support. The Working Group 
promulgated a strategic framework for forging ahead the development of IP trading in 
November 2013. This framework covers four strategic areas, namely (i) enhancing the IP protection regime; (ii) supporting IP creation an d exploitation; (iii) fostering IP intermediary 
services and manpower capacity; and (iv) pu rsuing promotion, education and external 
collaboration efforts. In 2014, the Working Group is  working to explore specific policies and other 
support measures under each strategic area for promoting Hong Kong, China as a regional IP trading hub. 
4.1.10  Wine trading and distribution 
4.41.  Since the Government abolished all wine duties in 2008, Hong Kong, China has become a 
regional wine trading and distribution hub and the world's largest wine auction centre. We have 
imported more than HK$43.6 billion worth of wine and total wine auction sales in HKC have 
fetched over HK$5.8 billion since 2008. HKC's positi on is also reflected in the hosting of major 
international wine fairs regularly. 
4.42.  To help maintain wine quality and promote authenticity, the Hong Kong Quality Assurance 
Agency (HKQAA) has implemented a scheme since 2009 that accredits wine storage, retail and 
transport operators with good management systems, which is the first of its kind in the world. Since 2013, HKQAA has implemented another scheme that recognizes supply chain players who 
trade wines with identifiable sources. These initiatives reinforced the development of wine 
businesses in HKC. 
4.2  Trade Facilitation 
4.43.  To facilitate customs clearance, the Cu stoms and Excise Department (C&ED) of the HKC 
Government rolled out an electronic Road Cargo System (ROCARS) in 2010. With the ROCARS, Customs officers can receive cargo information before the goods arrive at the land boundary. This 
enables the C&ED to perform computer-based risk profiling in advance to determine whether 
inspection is called for. As a result, cross-boundary trucks, except those selected for inspection, enjoy seamless customs clearance at the land bo undary. The ROCARS also provides added room 
for the C&ED to facilitate the passage of transshipment cargoes, which involve inter-modal transfer 
(e.g. from land to air/sea or vice versa) under an Intermodal Transshipment Facilitation Scheme 
(ITFS). For traders using the ROCARS and having their cross-boundary trucks installed with electronic locks and tracking devices prescribed by the C&ED, their transshipment cargoes (if 
selected) will normally be subject to customs inspection at either the point of exit or entry. 
4.44.  In 2012, the C&ED launched the Hong Kong "Authorized Economic Operator" (HKAEO) 
Programme to encourage local companies to upgr ade their internal security and management 
systems. Companies accredited under this Programme are recognized by the C&ED as trusted 
operators and enjoy customs facilitation, such as reduced inspection and prioritized clearance of cargoes at control points. The programme is open, voluntary and free-of-charge, and is in conformity with the Framework of Standards to Se cure and Facilitate Global Trade advocated by 
the World Customs Organization. 
4.45.  As at end of June 2014, the C&ED has entered into Mutual Recognition Arrangements on 
AEO programmes with the customs administrations of  the Mainland, India, the Republic of Korea, 
and Singapore respectively. Accredited companies will enjoy customs facilitation in those 
economies. 
4.3  Protection of intelle ctual property rights  
4.46.  HKC is committed to protecting intellectu al property rights (IPR). This commitment is 
underpinned by our respect for private economic ri ghts and our recognition of the importance of 
robust IPR protection to our economic growth. WT/TPR/G/306/Rev.1 • Hong Kong, China 
 
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  4.47.  We achieve this through comprehensive legislation, rigorous enforcement action, sustained 
public education, close cooperation with rights owners and other law enforcement agencies, and promotion of intellectual property trading. 
4.3.1  Legislation 
4.48.  HKC has comprehensive legislation for the protection of patents, trademarks, copyright, 
registered designs, layout-designs (topographies) of integrated circuits and plant varieties. Our 
intellectual property laws comply fully with the requirements of the WTO Agreement on Trade-
Related Aspects of Intellectual Property Rights. 
4.49.  We constantly review our intellectual proper ty laws to ensure that they remain appropriate 
in present-day circumstances. Since the last Trade Policy Review in 2010, we have reviewed the patent and the copyright regime, and rolled out the following new initiatives:  
(a)  The setting up of an original grant patent (OGP) system and a refined short-term patent 
system 
 
4.50.  In order to keep the local patent system up-to-date and facilitate the development of HKC 
as a regional innovation and technology hub, the HKC Government conducted a comprehensive review and a public consultation exercise on th e patent system in 2011. In 2013, the Government 
announced the way forward for the development of the patent system in HKC: 
i. introducing an OGP system with substantive examination outsourced to other patent 
office(s);  
ii. retaining the existing re-registration system for grant of standard patents; 
iii. retaining the short-term patent system subject to suitable refinements; and 
iv. developing a full-fledged regulatory regime for patent agency services in the long run 
to be achieved in stages, with possible interim measures.  
 
4.51.  Subject to the progress of implementation  work and preparation of the legislation, we 
tentatively aim at launching the OGP system and the refined short-term patent system in 2016-17 
at the earliest. 
(b)  Copyright (Amendment) Bill 2014 
 4.52.  To meet the challenges posed by advances in technology, we introduced the Copyright 
(Amendment) Bill 2014 into the legislature in Ju ne 2014 to update HKC's copyright regime. The 
key proposals of the Bill include:  
i. introducing a technology-neutral exclusive right for copyright owners to communicate 
their works through any mode of electronic transmission;  
ii. introducing corresponding criminal sanctions against unauthorized communication of 
copyright works to the public; 
iii. expanding the scope of copyright except ion under the existing law to balance 
copyright protection and reasonable uses  of copyright works for the following 
purposes in appropriate circumstances:   
 - parody, satire, caricature and pastiche; 
 - commenting on the current events;   - quotation;  
 - temporary reproduction of copyright works by Online Service Providers; 
 - media shifting of sound recordings; and  - giving education instructions; 
 
iv. establishing a statutory "safe harbour" for Online Service Providers so that their 
liabilities for copyright infringement occurring on their service platforms could be limited; and 
v. providing additional factors for the court to consider in assessing damages in civil 
cases in which infringement has been established.  WT/TPR/G/306/Rev.1 • Hong Kong, China 
 
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  4.3.2  Enforcement 
4.53.  Rigorous enforcement actions are taken by the C&ED against piracy and trademark 
counterfeiting activities. The C&ED has a strong enforcement team comprising around 240 officers. The infringement situation in HKC has been brought under firm control. 
4.54.  The Anti-Internet Piracy Teams and Computer  Analysis and Response Team of the C&ED are 
playing a vital role in tackling Internet piracy. To cope with new enforcement challenges arising from the advance of cyber technologies, the C& ED has successfully developed and launched three 
systems (collectively called the Lineament Monitoring System) for monitoring and tracing 
infringement on the Internet with a view to strengthening the enforcement capabilities and enhancing effectiveness in combating online piracy and counterfeiting. These systems operate round-the-clock, targeting "peer-to-peer" file sharing, online sale of counterfeit goods and online 
piracy using cyberlockers.  
4.55.  In addition, the C&ED set up an Electronic  Crime Investigation Centre (ECIC) in February 
2013. The ECIC aims to strengthen research into the latest operation of cyber-crimes, formulate 
enforcement strategies and procedures on evidence collection and conduct training courses on 
retrieval and preservation of digital evidence for front-line officers. It also conducts research on online investigation systems. 
4.3.3  Public education 
4.56.  The Intellectual Property Department (IPD ) of the HKC Government promotes awareness of 
and respect for IPR in the community through on-going and sustained public education programmes. These include school visits and programmes for school children, activities 
collaborated with the rights-holders and youth a ssociations and territory-wide publicity campaigns 
(e.g. seminars, exhibitions, printed and electronic  advertisements, No Fakes Pledges Scheme and I 
Pledge Campaign) targeted at the business community (both in HKC and the Mainland cities where 
HKC enterprises have a strong presence), and the general public.  
4.57.  In 2006, the C&ED, the IPD, the IPR indu stry and eleven local uniformed youth groups 
worked together and launched the "Youth Ambassador Against Internet Piracy" Scheme. At 
present, the number of participating uniformed youth groups has increased to thirteen. By 
encouraging local young people to report online piracy, the Scheme helps heighten awareness of the importance of IPR protection and secure th eir commitment to serving the community. Various 
educational activities including IPR workshops, visits to production companies and competitions 
are organized for the 200,000 members of the Scheme. 
4.3.4  Cooperation with rights owners and law enforcement agencies of other 
jurisdictions 
4.58.  The HKC Government liaises closely with IPR owners to solicit their assistance in fighting 
IPR infringement. For example, the C&ED has taken the lead in forming an Intellectual Property Rights Protection Alliance (IPRPA). Membership encompasses individual companies and 
stakeholders in the IPR industry. The IPRPA serves as a platform for voluntary monitoring by the 
IPR owners of IPR infringement activities in the retail market. Members will report to the C&ED on finding any suspected IPR violation. 
4.59.  In April 2014, the C&ED established the Electronic Recordation and Triage Centre (ERTC). 
Through the use of advanced communication systems, the ERTC has helped rights holders, 
especially those based outside HKC, to complete recordation of their copyrights and trademarks 
and conduct preliminary examination of the offending goods without the need to come to Customs 
offices in person. 
4.60.  We maintain regular liaison with other enfo rcement agencies in the region to prevent cross-
boundary infringing activities. In order to strengthen international cooperation in the protection of 
IPRs, the C&ED has seconded an officer to the INTERPOL''s Trafficking in Illicit Goods and 
Counterfeiting (TIGC) Sub-Directorate since 2011. WT/TPR/G/306/Rev.1 • Hong Kong, China 
 
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  4.61.  To guard against transshipment of IPR infringing goods, the C&ED has developed 
partnership arrangement with major express courier service providers and the Hong Kong Post to facilitate enforcement actions on suspicious parcels. The C&ED has also maintained close cooperation with overseas enforcement authorities to exchange intelligence on both regular and ad 
hoc bases, as well as mounting parallel and joint operations. The C&ED also coordinates closely 
with international organizations, including the WCO, the WTO, APEC and the INTERPOL in the protection of IPR, and participated actively in various operations coordinated by international 
organizations.  
4.4  Enhancing Corporate Governance 4.62.  The HKC Government attaches much importance to upholding HKC's corporate governance 
standards in line with international standards. One significant development in this area was the 
enactment of the new Companies Ordinance (Chapter 622), which came into operation in 
March 2014. This new Ordinance contains provisions that enhance corporate governance on multiple fronts. These include strengthening accountability of directors, improving disclosure of 
company information, strengthening auditors' rights, enhancing shareholders' engagement in the 
decision-making process and fostering shareholder protection. 
4.5  Competition Policy 
4.63.  A free and competitive market is the backbone of HKC's economy. In 2012, the HKC 
Government enacted the Competition Ordinance (CO) to establish a legal framework to prohibit anti-competitive conduct which has the object or effect of preventing, restricting and distorting competition in HKC. Specifically, the CO prohibits anti-competitive conduct in three major areas 
(described as the first conduct rule, the second conduct rule, and the merger rule). The first 
conduct rule prohibits agreements, concerted practices as well as decisions of an association of undertakings that have the object or effect to prevent, restrict or distort competition. The second 
conduct rule prohibits an undertaking with a substantial degree of market power from abusing that 
power by engaging in conduct that has as its object or effect the prevention, restriction or distortion of competition. The merger rule, which applies only to mergers involving carrier 
licencees in the telecommunications sector, prohibits mergers and acquisitions that have, or are 
likely to have, the effect of substa ntially lessening competition in HKC. 
4.64.  The CO adopts a judicial enforcement model to separate the powers of investigation and 
enforcement from adjudication. A Competition Commission, which is an independent statutory 
body established under the CO, will be responsible for investigation and enforcement action. A 
Competition Tribunal, established under the CO, will  hear and adjudicate alleged breaches of the 
competition rules. 
4.65.  Since the enactment of the CO, the HKC Government has been working closely with the 
Competition Commission and the Judiciary to prepare for the full implementation of the CO. The CO will become fully operational when all relevant preparatory work is completed. 
4.66.  Pending full implementation of the CO, th e Competition Policy Advisory Group (COMPAG), a 
dedicated forum in the HKC Government for examining, reviewing and advising on competition-related issues as well as promoting Government's competition policy, will continue to review competition issues that have policy or systemic implications, and look into competition-related 
complaints. 
5  CONCLUSION 5.1.  As a founding Member of the WTO, HKC attaches great importance to the WTO's rules-based 
multilateral trading system. Our economic achievements owe much to our competitive edges, 
including free market policy; free flow of goods, capital and information; a sound legal system and an independent judiciary; strong protection of intellectual property rights; a simple tax regime; 
prudent management of public finances; and a ro bust financial regulatory framework. We will 
continue to enhance our competitive advantages and enrich the development of our industries, with a view to promoting sustaina ble economic development in HKC. 
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