WT/TPR/S/306/Rev.1  
28 January 2015  
(15-0622)  Page: 1/136  
Trade Policy Review Body   
 
 TRADE POLICY REVIEW 
REPORT BY THE SECRETARIAT 
HONG KONG, CHINA 
Revision 
This report, prepared for the seventh Trade Polic y Review of Hong Kong, China, has been drawn 
up by the WTO Secretariat on its own responsibility. The Secretariat has, as required by the 
Agreement establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement 
Establishing the World Trade Organization), sought clarification from Hong Kong, China on its trade 
policies and practices.  
Any technical questions arising from this report may be addressed to Mrs. Martha Lara Fernández 
(Tel: 022 739 6033); Mr. Pierre Latrille (Tel: 022 739 5266), and Mr. Xinyi Li (Tel: 022 739 5579).  
Document WT/TPR/G/306/Rev.1 contains the polic y statement submitted by Hong Kong, China. 
 
 
Note: This report was drafted in English. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  CONTENTS 
SUMMARY ....................................................................................................................... . 7 
1   ECONOMIC ENVIRONMENT ........................................................................................ 10  
1.1   Recent Econ omic Developments.................................................................................. 10 
1.2   Trade Performance ................................................................................................... 16 
1.2.1   Mercha ndise trade ................................................................................................. 16 
1.2.1.1   Composition of merchand ise trade ......................................................................... 17 
1.2.1.2   Direction of merchandise trade .............................................................................. 17 
1.2.2   Services trade ....................................................................................................... 20 
1.3   Foreign Dire ct Invest ment ......................................................................................... 21 
2   TRADE AND INVE STMENT RE GIME ............................................................................ 22  
2.1   General Constitution al and Legal Framework ................................................................ 22 
2.2   Trade Policy ObjÈectives ............................................................................................ 22 
2.3   Trade Agreements and Arrangements .......................................................................... 23 
2.3.1   WTO ................................................................................................................... . 23 
2.3.2   Regional and preferential trade agreements ............................................................... 24 
2.3.2.1   Closer Economic Partne rship Agreement wi th New Zealand ....................................... 24 
2.3.2.2   Free Trade Agreement with EFTA ........................................................................... 25 
2.3.2.3   Free Trade Agreement with Chile ........................................................................... 26 
2.3.2.4   Closer Economic Partnership Arrangement (CEPA) with Mainland China ....................... 26 
2.3.3   Other agreements and arrangements ........................................................................ 28 
2.4   Investme nt Regime .................................................................................................. 29 
3   TRADE POLICIES AND PRACTICES BY MEASURE ........................................................ 31  
3.1   Overview ................................................................................................................. 31 
3.2   Measures Direct ly Affectin g Imports ............................................................................ 32 
3.2.1   Customs procedur es and requirements ..................................................................... 32 
3.2.2   Rules of origin .......................................................................................................  34 
3.2.3   Tariffs ............................................................................................................... ... 34 
3.2.4   Other duti es and charges ........................................................................................ 35 
3.2.4.1   Internal taxes collected at the border ..................................................................... 35 
3.2.4.2   Other charges ..................................................................................................... 36 
3.2.5   Custom s valuation ................................................................................................. 36 
3.2.6   Import  controls ..................................................................................................... 36 
3.2.6.1   Import prohibit ions and rest rictions ....................................................................... 36 
3.2.6.2   Import licensing .................................................................................................. 37 
3.2.7   Continge ncy measures ........................................................................................... 39 
3.2.8   Sanitary and phyt osanitary requ irements .................................................................. 39 
3.2.9   Standards and othe r technical requirements .............................................................. 42 
3.3   Measures Directly Affecting Exports ............................................................................. 43 
3.3.1   Export documents and procedures ............................................................................ 43 WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  3.3.2   Export taxes, charges, an d levies ............................................................................. 44 
3.3.3   Export prohibitions, restrictions, and licensing ............................................................ 44 
3.3.4   Export assist ance and fa cilitation ............................................................................. 46 
3.4   Measures Affectin g Production and Trade ..................................................................... 46 
3.4.1   Taxation and incentives .......................................................................................... 46 
3.4.1.1   Taxation ............................................................................................................  46 
3.4.1.2   Tax incentives .................................................................................................... 47 
3.4.1.3   Non-ta x incentives .............................................................................................. 48 
3.4.2   Competition policy and price controls ........................................................................ 50 
3.4.2.1   Competition policy .............................................................................................. 50 
3.4.2.2   Pric e contro ls ..................................................................................................... 53 
3.4.3   State trading and state-owned en terprises ................................................................ 53 
3.4.4   Governme nt procurement ....................................................................................... 54 
3.4.5   Intellectual property rights ...................................................................................... 57 
3.4.5.1   Legislation .........................................................................................................  57 
3.4.5.1.1   Copyright law .................................................................................................. 59 
3.4.5.1.2   Patent law ....................................................................................................... 60 
3.4.5.1.3   Parallel imports ................................................................................................ 61 
3.4.5.1.4   IP trading ........................................................................................................ 61 
3.4.5.2   Enforcement ....................................................................................................... 62 
4   TRADE POLICIES BY SECTOR ..................................................................................... 65  
4.1   Overview ................................................................................................................. 65 
4.2   Agriculture and fisheries ............................................................................................ 67 
4.2.1   Agriculture ............................................................................................................ 67 
4.2.2   Farm su pport measures .......................................................................................... 68 
4.2.3   Rice .................................................................................................................. ... 68 
4.2.4   Fisheries ............................................................................................................... 69 
4.3   Energy .................................................................................................................. .. 70 
4.4   Manuf acturi ng .......................................................................................................... 71 
4.5   Services ................................................................................................................ .. 72 
4.5.1   Telecommuni cation services .................................................................................... 72 
4.5.1.1   Statistical overview ............................................................................................. 72 
4.5.1.2   Trade re gulatory regimes ..................................................................................... 74 
4.5.2   Financial services ................................................................................................... 78 
4.5.2.1   Statistical overview ............................................................................................. 78 
4.5.2.2   Trade and regulatory regimes for financ ial services .................................................. 81 
4.5.2.2.1   Trade and regulatory regimes for insura nce services ............................................. 81 
4.5.2.3   Trade and regulatory regimes fo r banking and other financial services ........................ 84 
4.5.3   Transp ort services ................................................................................................. 90 
4.5.3.1   Air transport ....................................................................................................... 90 WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  4.5.3.1.1   Statistical overview .......................................................................................... 90 
4.5.3.1.2   Regulatory framew ork for aviation  services .......................................................... 91 
4.5.3.2   Mariti me tran sport .............................................................................................. 95 
4.5.3.2.1   Statistical overview .......................................................................................... 95 
4.5.3.2.2   Maritime transp ort regulatory  framework ............................................................. 97 
4.5.3.2.3   Inland waterways tr ansport ............................................................................... 99 
4.5.4   Construction, architecture  and real estate services ................................................... 100  
4.5.4.1   Statistical overview ........................................................................................... 100  
4.5.4.2   Trade and regulatory regimes for architecture, construction and real estate 
services ........................................................................................................................ 101  
4.5.5   Distribution services ............................................................................................. 106  
4.5.5.1   Statistical overview ........................................................................................... 106  
4.5.5.2   Trade regu latory re gimes ................................................................................... 107  
REFERENC ES ................................................................................................................ 110  
5   APPENDIX TABLES .................................................................................................. 112  
 
CHARTS 
 
Chart 1.1 Product composition of merchand ise trade by HS se ction, 2010 and 2013  .................. 18 
Chart 1.2 Direction of merchandise trade, 2010 and 2013 ...................................................... 19 
Chart 4.1 HKC rice imports by major suppliers, 2009-13 ........................................................ 69 
 
TABLES 
 
Table 1.1 Selected macroeconomic indicators, 2010-2013 ...................................................... 11 
Table 1.2 Basic economic  indicators , 2010- 13 ...................................................................... 14 
Table 1.3 Balance of payments, 2010-13 ............................................................................. 15 
Table 1.4 Composition of tr ade in servic es, 2010- 13 ............................................................. 20 
Table 2.1 CEPA preference utilization ra tes, 2009 -13 ............................................................ 27 
Table 2.2 Services sectors or subsecto rs covered under CE PA, Januar y 2014 ............................ 27 
Table 3.1 Summary of procedures and documents for tradin g across borders ........................... 32 
Table 3.2 Bound tariff structure by WTO definitions, 2014 ...................................................... 34 
Table 3.3 Internal ta x collection,  2010-14  ........................................................................... 35 
Table 3.4 Import licen sing schemes, 2013 ........................................................................... 37 
Table 3.5 Export licen sing schemes, 2013 ........................................................................... 44 
Table 3.6 Government  revenues,  2009-1 3 ........................................................................... 46 
Table 3.7 Forgone revenues from tax ince ntives, 2010-14 ..................................................... 48 
Table 3.8 Support under SME Lo an Guarantee Scheme, 2010-13 ............................................ 49 
Table 3.9 Enterprises in which the Government has financial stakes, January 2014 .................... 54 
Table 3.10 Government procurement,  2010-1 3 .................................................................... 54 
Table 3.11 Government procurement contracts awarded by type of procedurea, 2010- 13 ........... 56 WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Table 3.12 Framework protecting some intellectual property rights, 2014 ................................. 58 
Table 3.13 Customs and Excise Department: cases, seizures, and arrests, 2010-13 ................... 63 
Table 4.1 Main economic indicators of  the telecommunicati ons sector , 2011-13  ........................ 72 
Table 4.2 Average telecom prices  in Hong Kong , China,  2012 ................................................. 74 
Table 4.3 Main economic indicato rs of the financial sector ...................................................... 79 
Table 4.4 Banking subsector .............................................................................................. 79 
Table 4.5 Insura nce subs ector ........................................................................................... 80 
Table 4.6 Stock exchange an d securities subsector ............................................................... 81 
Table 4.7 Mandatory providen t fund scheme s subsec tor ........................................................ 81 
Table 4.8 Main economic indicators for aviati on services in Hong Kong, China,  2008-13 ............. 90 
Table 4.9 Air servic es agreements ...................................................................................... 93 
Table 4.10 Hong Kong, China internationa l maritime freight trade, 2012 and 2013 .................... 96 
Table 4.11 Hong Kong, China co ntainer termin als, 2013 ........................................................ 96 
Table 4.12 Hong Kong, Chin a registry an d fleet , 2014 ........................................................... 97 
Table 4.13 Port tr affic, 2009-13 ....................................................................................... 100  
Table 4.14 Main economic indicators for construction, architecture and real estate services, 
2009-1 3 .......................................................................................................................  100 
Table 4.15 Trade regimes for construction services ............................................................. 103  
Table 4.16 Trade regimes for real estate services ............................................................... 105  
Table 4.17 Main economic indicators of the distribution  sector, 2009-12 ................................ 106  
Table 4.18 Regulatory regimes of  distribution services ........................................................ 107  
 
BOXES 
 
Box 4.1 Bound trade regimes of the telecommunica tions se ctor .............................................. 75 
Box 4.2 Applied regulatory regime for regulatory supervision, competition and 
interconnection ................................................................................................................ 76 
Box 4.3 Other regu latory aspects ....................................................................................... 77 
Box 4.4 Bound trade regimes for insurance services .............................................................. 82 
Box 4.5 Applied trade regime and general regulatory framework for insurance services .............. 83 
Box 4.6 Trade regimes for banking serv ices and other fina ncial services .................................. 85 
Box 4.7 Regulatory framewor k for banking services .............................................................. 87 
Box 4.8 Regulatory fram ework for se curities ........................................................................ 88 
Box 4.9 Regulatory framework for mu tual funds and asset management .................................. 89 
Box 4.10 Regulatory framework for air tran sport services cove red by the GATS ........................ 91 
Box 4.11 Regulatory regime fo r other aviation  services ......................................................... 92 
Box 4.12 Bound trade regimes for maritime transp ort serv ices ............................................... 98 
Box 4.13 Applied regulatory regi me for maritime  transport .................................................... 99 
Box 4.14 Trade regimes for ar chitectural se rvices ............................................................... 101  
Box 4.15 Regulatory framework fo r architectural services .................................................... 102  
Box 4.16 Regulatory framework fo r construction services .................................................... 104  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Box 4.17 Regulatory framework for real estate services ....................................................... 105  
 
APPENDIX TABLES 
 
Table A1. 1 Merchandise re-exports by HS sections and major HS  chapters, 2010-13 .............. 112  
Table A1. 2 Merchandise domestic exports by HS  sections and major HS chapters, 2010-13 ..... 113  
Table A1. 3 Merchandise imports by HS sect ions and major HS ch apters, 2010-13 .................. 114  
Table A1. 4 Merchandise re-expor ts by destinat ion, 2010 -13 ................................................ 115  
Table A1. 5 Merchandise domestic exports by destination, 2010-13 ....................................... 116  
Table A1. 6 Merchandise impo rts by supplie r, 2010-13  ........................................................ 117  
Table A1. 7 Stock of foreign direct investment by country/territory, 2009-13 .......................... 118  
Table A1. 8 Stock of foreign direct inve stment by economic activity, 2009-13 ......................... 119  
 
 
Table A2. 1 Selected notifications from Hong Kong, China .................................................... 120  
 
 
Table A3. 1 Excise du ties, 2010 an d 13 ............................................................................. 121  
Table A3. 2 First registration tax for automobiles, 2010 and 20 13 ......................................... 122  
Table A3. 3 Regime of standards and technical requirements, 2013 ....................................... 123  
Table A3. 4 Insured business by major markets and major pr oducts, 2012- 13 ........................ 127  
Table A3. 5 Selected incentives and assistances measures, Hong Kong, China, 2011-13 ........... 128  
Table A3. 6 Intellectual property laws and regula tions, 2014 ................................................ 132  
Table A3. 7 Enforcement of intell ectual property rights, 2010-13 .......................................... 135  
 
 Table A4. 1 Entries of the ITIP services database for the telecommunication sector in Hong 
Kong, China, 2005 and 201 1 ........................................................................................... 136
 
 
 WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  SUMMARY 
1. Between 2010 and 2013 (the review period), th e economy of Hong Kong, China (HKC) grew 
at an average annual rate of 3.1% (at 2012 prices),  driven chiefly by solid domestic demand, amid 
a fragile global economic recovery. HKC is one of the world's most market-friendly and open 
economies, with a trade/GDP ratio of 458% in 20 13, and some of the highest rankings in world 
indicators of economic freedom, competitiveness, and ease of doing business. It also has a very 
liberal foreign investment regime. 
2. In the aftermath of the global financial turmoil (2008-09), the HKC Government 
implemented countercyclical measures to preserve financial stability and stimulate the local economy, affected by weak external demand . The economy quickly rebound in 2010 and 2011, 
and after a brief slowdown in 2012, grew by 2.9% in 2013. It is now forecast to expand by 3.75% 
in 2014.
1 
3. During the review period, HKC continued to strengthen its economic and financial ties with 
the People's Republic of China (Mainland China), in particular through their Closer Economic 
Partnership Arrangement (CEPA). The CEPA offers many trade opportunities for HKC's services 
suppliers and for the territory to consolidate itself as a key intermediary for Mainland China's external trade. The position of HKC as an international financial centre has also benefited from the 
gradual liberalization of Mainland China's capital account and the increasing international use of 
the Chinese renminbi. By the same token, closer financial integration has led to greater Mainland exposure of HKC's financial institutions. Overall, HKC's economic prospects are ever more intertwined with the economic performance of Mainland China.  
4. Hong Kong, China's sound economic fundamentals, such as a healthy fiscal balance, a strong 
external financial position, flexible markets and a well regulated financial system have enabled it to adjust swiftly to challenging external conditions  and spared it from the destabilizing effects of 
the global financial crisis. Fiscal prudence, a key feature of its macroeconomic framework, allowed 
HKC to maintain a surplus in public finances throughout the review years (although it decreased over the period). Monetary policy continues to focus on currency stability, which has been 
achieved through a pegged exchange rate to the U.S. dollar since 1983.
2 Low interest rates have 
led to rapid credit expansion since 2010 and have helped boost domestic demand. After rising quickly in 2010-11, inflation was reduced to just ov er 4% in 2012 and 2013, thanks to prudential 
and demand-side measures implemented by the Government to cool off the property market as 
w e l l  a s  t h e  e a s i n g  o f  i m p o r t e d  f o o d  p r i c e s .  H o w e v e r ,  i n f l a t i o n  r e m a i n e d  h i g h e r  t h a n  i n  t h e  
United States, leading to the real appreciation of the local currency vis-à-vis  the U.S. dollar. 
5. Notwithstanding its sound macroeconomic framework, HKC faces a number of policy 
challenges, including the need to: preserve fiscal sustainability in the face of an ageing population; 
address income inequalities and social welfare, health, and education needs; ensure appropriate 
and affordable housing supply as well as a stable property market; and keep inflation in check. 
6. Services remain the dominant sector of the economy, accounting for 93% of GDP and 88% 
of total employment (2012). The most dynamic subsectors during the review years were wholesale and retail trade; accommodation and food services, which benefited from vibrant inbound tourism; and finance and insurance. Because of its services-orientation, HKC relies heavily on imports of 
goods to satisfy domestic consumption. This is reflected in a persistent deficit in the goods trade 
balance, which has been more than offset by large surpluses in services trade, mainly due to exports of transport, travel, and financial services. Given that HKC is the world's largest free zone, 
re-exports are the driving force of its goods trade, and Mainland China is its main trading partner, 
receiving 55% of HKC's re-exports and supplying 48% of HKC's merchandise imports (2013). 
7. Hong Kong, China is a firm supporter of the multilateral trading system, the conclusion of 
the Doha Development Agenda, and the implementati on of the Bali package. It has committed to 
                                               
1 IMF Press Release N° 14/238, 22 May, "Executive Board Concludes 2014 Article IV Consultation with 
People's Republic of China-Hong Kong Sp ecial Administrative Region". Viewed at: 
http://www.imf.org/external/np/sec/pr/2014/pr14238.htm . 
2 Recently, HKC's monetary author ity intervened in the foreign ex change market to maintain the 
currency peg, as increased capital market activity  (from new mergers and acquisitions) triggered the 
strengthening of the local currency. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  implement the Trade Facilitation Agreement upon its entry into force, without using any flexibility. 
HKC is a party to the WTO Information Technology Agreement and the revised Government Procurement Agreement (GPA), and participates in other plurilateral initiatives such as the negotiations on the Trade in Services Agreement (TISA) and the recently-launched talks on 
environmental goods among WTO Members. Perhaps the most salient development in HKC's trade 
policy stance during the review period is its active engagement in free-trade agreements (FTAs). Since 2010, HKC has signed FTAs with New Zealand, the EFTA member states, and Chile (with the 
two former already in effect). It has also sign ed five supplements to the CEPA with Mainland 
China, and is currently negotiating an FTA with ASEAN countries. The HKC authorities have indicated that they are prepared to enter into bilateral, plurilateral, and regional free-trade 
agreements, as long as they are consistent with the WTO and can contribute to multilateral trade 
liberalization. 
8. A landmark development in HKC's economic policy reform is the adoption of its 
first comprehensive competition law in 2012. The Competition Ordinance applies to all economic 
sectors, provides a legal framework to deal with different types of anti-competitive conduct and 
follows international best practices. However, merger control remains limited to the telecommunications sector, and statutory bodies ar e exempted from the Ordinance. A Competition 
Commission with ample investigative powers will be responsible for enforcing the law and 
developing competition guidelines, and a Competition Tribunal will adjudicate proceedings and grant remedies, including pecuniary penalties and relief. 
9. HKC applies a duty-free tariff regime on an MFN-basis, but more than half of its tariff 
schedule remains unbound in the WTO. Given HKC's free-port status, customs procedures are 
among the easiest and fastest worldwide, with virtually all customs declarations and related 
documents processed electronically. Among the measures implemented by HKC in the past few 
years to facilitate trade and enhance its role as a transit hub are the formal introduction of an 
authorized economic operator programme, an intermodal transhipment facilitation scheme, and lower customs declaration fees. Customs valuation is only used for collecting excise duties on 
four products (liquor, tobacco, hydrocarbon oil, and methyl alcohol) and a first registration tax on 
motor vehicles.  
10. Non-tariff measures are few, and import prohibitions and licensing are applied mostly on 
safety, health, and environmental grounds or to comply with international obligations. Licensing 
and notification requirements for textile trade with "non-sensitive markets" and for textiles 
transhipments were lifted in 2011, and there are pl ans to remove the remaining requirements on 
textile trade before the end of 2014, subject to the passage of the relevant legislative reforms. 
HKC has no legislation on contingency measures and safeguards. 
11. The TBT and SPS systems are transparent and relatively simple. A new Food Safety 
Ordinance became effective in February 2012; it establishes a registration scheme for food 
importers and distributors, and requires food traders to maintain proper transaction records for a 
specified period in order to enhance food traceability. 
12. No export taxes are applied. Goods subject to export prohibition and licensing are basically 
the same as those subject to import licences and are applied for the same reasons. An export 
licence for powder formula for infants and children under 36 months was introduced in March 2013 
to ensure local supply of the product. Excise duti es are refunded if the goods on which they were 
paid are exported. The Government supports exporters, mainly through export credit insurance 
and funding for export promotion activities. In June 2012, HKC established a Brand, Upgrade, and 
Development (BUD) fund to provide export assistance for locally registered SMEs to target Mainland China's market. 
13. HKC maintains a simple tax structure with a narrow base and low rates. Nevertheless, 
several tax incentives are offered, including for the purchase of environmentally friendly commercial vehicles and for IPR-related expenditure. Non-tax incentives, mainly to support SMEs and R&D activities, are provided in the form of loans, loan guarantees, and cash grants, but the 
scale of assistance is modest.  
14. Hong Kong, China was one of the first WTO Members to ratify the revised GPA, and 
improved its commitments by adding new govern ment entities and types of services to its WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  schedule. The IP regime has remained largely unchanged, but there are important ongoing 
initiatives to amend legislation on copyrights and patents. HKC has gained international recognition for its actions to improve public awareness and enforcement of IPRs, and is taking active steps to fight against the new global challenges raised by IPR-infringing activities in the 
digital environment.  
15. The agriculture and fisheries sector is very sm all, representing only 0.1% of GDP and total 
employment. The manufacturing sector continues to  shrink and accounts for less than 2% of GDP. 
No direct policy instruments have been applied to reverse this trend. Mainland China is the largest 
market for manufactured exports from HKC, but "domestic merchandise exports" to Mainland 
China under CEPA account for less than 50% of total "domestic exports". 
16. Hong Kong, China has consolidated itself as a regional or even global centre in sectors such 
as financial services, and maritime and air transport. HKC's GATS commitments are not always 
extensive, but the applied regime is quite liberal, as is reflected in the standstill-based, negative list in the HKC-EFTA States free-trade agreement. This contains very few reservations, notably for 
future measures, most of which are of a purely precautionary nature without effective application 
so far. The regime defined by  this agreement is applied erga omnes .  
17. The telecommunications regime was liberalize d in 2003. The market is quite competitive 
judging by the number of operators, at least for fixed-telecom services, and by prices 
benchmarked on an international scale by the International Telecommunications Union. The mobile telephone market is dominated by three local firms that won a recent 4G/LTE international auction, as is the fixed-telecom market.  
18. In financial services, HKC appears as a dynamic regional and global financial hub (e.g. for 
the IPO market). Three local banks dominate the domestic market but the largest part of the financial sector is devoted to offshore services, in particular towards Mainland China, and in which 
virtually all major global players are represented. The applied regime is quite liberal and has been 
further relaxed regarding establishment requirements for foreign banks to set up a locally incorporated fully licenced bank. Otherwise, the market access regime for financial services has 
not changed substantially and most of the measures taken since the last Review are of a domestic 
regulatory and prudential nature. 
19. HKC is the 4
th largest port in the world (after Shanghai, Singapore, and Shenzhen), and has 
the 4th largest registry (after Panama, Liberia, and the Marshall Islands). Favourable operating 
conditions and the cluster of maritime-related services offered by HKC have attracted investment 
from global shipowners, which explains why a very large part of the tonnage in the registry is owned by foreign interests. In addition, HKC ship owners own a sizable fleet under flags other than 
HKC's flag. The shipping policy is liberal with no restriction on onshore activities and 
establishment, and absence of cargo-sharing regimes. There are no support or subsidy schemes but income derived from international activities under the HKC flag is exempt from profits tax. 
Most container terminals are managed privately, essentially by local firms but also with a 
significant foreign investment presence under lease agreements.  
20. HKC has a relatively liberal regime for its bilateral air transport agreements. However, 
having the number one air-cargo airport in the world, considering this activity as strategic, and 
facing capacity and land constraints, HKC has a relatively less liberal regime for certain auxiliary 
services (e.g., cargo ground handling and maintena nce services), which are subject to a limited 
number of licences. Computer reservation services, and selling and marketing services are fully 
liberalized. 
21. Distribution is a major sector of the HKC economy, representing nearly 10% of employment 
and almost 5% of GDP. HKC's GATS commitments on distribution services are limited to retail 
services with a liberal regime (no restrictions for market access under mode 3). The free-trade 
agreements signed by HKC cover the totality of the sector with very limited reservations. The 
activity is essentially unregulated except for zoning and urban planning purposes. Numerous foreign distributors are present but the supermarket segment is largely dominated by local 
interests. Traditional open-air fresh food markets ("wet markets") remain an important component 
of HKC's distribution system. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  1  ECONOMIC ENVIRONMENT 
1.1  Recent Economic Developments 1.1.  Between 2010 and 2013, the economy of Ho ng Kong, China (HKC) expanded moderately, at 
an average annual rate of 3.1% (at 2012 prices ), sustained primarily by domestic demand. 
Hong Kong, China's services-oriented economy remain s one of the most open in the world, with a 
ratio of trade (goods and non-factor services) to GDP of 458% in 2013. As such, it is particularly sensitive to changes in the global economic environment. After being hit by the 2008-09 global 
economic downturn, the economy of HKC made a solid rebound in 2010, supported by the revival 
of global trade and the Government's stimulus and relief measures.
1 However, GDP growth slowed 
down again in 2011-12, amid a fragile international economy.  
1.2.  In 2013, the economy of HKC grew by 2.9% (T able 1.1), faster than in 2012 but still slower 
than the trend in the past decade, reflecting slu ggish economic performance in both advanced and 
emerging economies. In 2013, GDP growth was driv en by domestic demand and services exports, 
in particular tourism. Within the domestic sector, private consumption was the main driving force 
thanks largely to rising real incomes, while investment showed only modest growth, attributed 
mainly to increased purchases of machinery and equipment. Due to weak external demand, net merchandise exports made a negative contribution to growth.  
1.3.  In the aftermath of the global financial crisis and amid a still challenging external 
environment, the HKC Government took counter-cyclical measures to stimulate the economy as well as measures to safeguard financial stability and restore public confidence. On the fiscal side, these included: (i) measures to create jobs, such as infrastructure projects and works, extending 
temporary positions, providing internships opportunities and employment assistance; (ii) relief 
measures for people and enterprises, such as wa ving certain fees, providing one-off tax relief, 
temporary free rent for public housing, and one-off electricity subsidies; and (iii) assistance and 
loan guarantees to small and medium-size enterprises (section 3.4.2). The fiscal measures, as 
included in the Government budgets, were estimated to have a stimulus effect on the economy of 1.5% in 2012 and 1.3% in 2013. Measures to preserve financial stability include strengthening 
supervision and regulation of the insurance industry in line with international standards (e.g., 
planned legislative reforms to establish an inde pendent insurance regulator and a policyholder's 
protection fund), and improving the overall financial sector resolution regime. 
1.4.  During the period under review, HKC continued to deepen economic integration with its main 
trading partner, the People's Republic of China (Mainland China), especially through their Closer 
Economic Partnership Arrangement (CEPA) (section 2.3.2.4). CEPA offers many trade opportunities 
for HKC to leverage on its comparative advantage in the services sector, and to strengthen its role 
as key intermediary for Mainland China's external trade. The position of HKC as a major global 
financial centre is poised to benefit from the gradual opening of Mainland China's capital account and the increasing international use of the renminbi (RMB). Specifically, HKC benefits from 
Mainland China's liberalization measures, which increase the scope for using the RMB in cross-
border trade and investment transactions with the te rritory and the rest of the world. All this is in 
line with HKC's objective of establishing itself as an off-shore RMB centre and asset management centre for the Mainland. By the same token, closer financial integration has meant rising Mainland 
exposure for HKC's banks. Overall, the economic growth prospects of HKC are inextricably linked 
to the economic performance of Mainland China.  
1.5.  Along with stronger trade and financial ties, HKC has worked to enhance transport integration 
with the Mainland (in particular with Guangdong and other neighbouring provinces). Several major 
infrastructure projects are under construction such as the Hong Kong-Zhuhai-Macao bridge and the project to link HKC's rail network with Mainland China's high-speed rail. These projects are 
expected to enhance the efficient cross-border flow of goods and people, and the role of HKC as a 
logistics hub in Southern China.  
                                               
1 WTO (2010). WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Table 1.1 Selected macroeconomic indicators, 2010-2013 
  2010  2011  2012 2013  
Real GDP (HK$ billion, 2012 prices) 1,914.4  2,006.0  2,037.1  2,096.8  
Real GDP (US$ billion, 2012 prices) 246.4  257.7  262.6  270.3  
Current GDP (HK$ billion) 1,776.3  1,934.4  2,037.1  2,125.4  
Current GDP (US$ billion) 228.6  248.5  262.6  274.0  
GDP per capita at current market price (HK$) 252,887.0  273,550.0  284,721.0  295,701.0  
GDP per capita at current market price (US$) 32,551.0  35,143.0  36,710.0  38,125.0  
National accounts  (% change, unless otherwise indicated) 
Real GDP  6.8  4.8  1.5  2.9  
  Consumption 5.8  7.6  4.0  4.1  
    Private consumption 6.1  8.4  4.1  4.3  
    Government consumption 3.4  2.5  3.6  2.3  
  Gross domestic fixed capital formation 7.7  10.2  6.8  3.3  
        Building and construction 5.7  15.7  7.2  -0.9  
        Machinery, equipment and IP products 6.5  12.3  10.1  10.8  
  Exports of goods and non-factor services 16.8  3.9  1.9  6.4  
        Goods 17.3  3.4  1.8  6.6  
        Services 14.7  5.5  2.2  5.5  
  Imports of goods and non-factor services 17.4  4.6  2.9  6.8  
        Goods 18.1  4.7  3.0  7.4  
        Services 11.1   3.5  1.9  2.0  
     XGS/GDP (%) (at current market price) 219.4  225.5  225.6  229.6  
     MGS/GDP (%) (at current market price) 213.5  221.6  224.4  228.7  
Unemployment rate (%) 4.3  3.4  3.3  3.4  
Labour force participation rate (%) 59.6  60.1  60.5  61.2  
Prices and interest rates  
Inflation (CPI, % change) 2.4  5.3  4.1  4.3  
Best lending ratea (period average) 5.00  5.00  5.00  5.00  
Deposits rate (period average) 0.01  0.01  0.01  0.01  
Exchange rate  
HK$/US$ (period average) 7.769  7.784  7.756  7.756  
Nominal effective exchange rate (% change)b -2.6  -5.2  2.4  2.7  
Real effective exchange rate (% change)b -1.9  -1.2  6.6  2.2  
 (% of GDP, unless otherwise indicated) 
Fiscal balancec  
Government opening reserve balance 29.3  30.8  32.8  34.5  
Total revenue 21.2  22.6  21.7  21.4  
  Current revenue 16.9  17.5  16.9   ..  
    Tax revenue 13.6  14.2  13.7  13.6  
Total expenditure 17.0  18.8  18.5  20.4  
  Current expenditure 13.5  15.3  14.9   ..  
Government consolid ated balance 4.2  3.8  3.2  1.0  
Fiscal reserves (at 31 March) 33.5  34.6  36.0  35.6  
Public sector debt 0.6  0.6  0.5  0.5  
Saving and investment  
Gross national savings 30.9  29.7  26.8  25.6  
Gross domestic investment 23.9  24.1  25.2  23.8  
Savings-investment gap 7.0  5.6  1.6  1.8  
External sector d 
Current account balance  7.0   5.6  1.6  1.9  
Goods balance 1.4  -3.0  -7.2  -9.6  
  Exports 170.1  176.1  178.3  185.6  
  Imports 168.7  179.1  185.5  195.2  
Services balance 4.4  6.9  8.3  10.4  
Capital account -0.2  -0.1  -0.1  -0.1  
Financial account -4.8  -5.7  -3.3  -1.8  
   Direct investment -6.9  0.1  -5.0  -5.4  
Balance of payments 3.3  4.5  9.3  2.7  
Terms of trade (2010=100) 100.0  99.9  100.0  100.4  
Goods exports (% change)e 22.8  12.5  7.0  8.6  
Goods imports (% change)e 27.1  15.4  9.5  9.8  
Services exports (% change)e 24.5  13.4  7.9  7.1  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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    2010  2011  2012 2013  
Services imports (% change)e 15.2  5.5  3.2  0.4  
Foreign exchange reserves (US$ billion, end period) 268.7  285.4  317.4  311.2  
   in months of imports of goodsf 28.7  25.9  27.9  26.4  
Total external debt (HK$ billion) 6,834.1  7,649.3  7,987.5  9,043.4  
   % of GDP 384.7  395.4  392.1  425.5  
.. Not available. 
a Best lending rate refers to the average of the ra tes over the period quoted by the Hong Kong and  
 Shanghai Banking Corporation Limited. b Figures are based on 2010 index numbers (unit labour costs) taken from the IMF. c Figures are based on fiscal year beginning 1 April.  The GDP denominator is based on calendar year 
GDP figures. 
d Figures for trade in goods and services are calcul ated according to conventi onal methodology, i.e. 
without adopting the new principle in recording g oods sent abroad for proc essing and merchanting. 
e Growth rates are calculated based on  balance-of-payment figures in US$. 
f Figures are calculated based on past 12-mont hs average of retained imports of goods. 
Source: Census and Statistics Department online information. Viewed at: http://www.censtatd.gov.hk ; 
 International Monetary Fund, International Financial Statistics ; and data provided by the 
 authorities. 
1.6.  HKC's economic strengths include a healthy fiscal balance, a sound and well regulated 
banking system, and a strong external financial po sition with abundant foreign exchange reserves. 
These strengths have enabled it to swiftly respond and adjust to a changing international environment. From the point of view of the privat e sector, HKC has much to offer in terms of an 
attractive business climate, an efficient logistics chain, low taxation, deep and diversified capital 
markets, and an independent legal system. HKC has earned some of the highest rankings in world 
indicators of economic freedom, competitiveness, and ease of doing business.
2 On the other hand, 
HKC also faces important policy challenges, including the need to: preserve fiscal sustainability in 
the face of an ageing population; address income inequalities; ensure appropriate housing supply 
and a stable property market; and maintain inflation in check. 
1.7.  Hong Kong, China remains committed to fiscal prudence, a key element of its macroeconomic 
policy framework, which is deemed essential to maintain the confidence of local, overseas, and 
international investors. The authorities follow the principle of keeping expenditure within the limits of revenues in drafting the budget, and strive to achieve fiscal balance, while keeping the budget 
aligned with GDP growth. They are also committed to maintaining a low and simple tax system, 
while providing appropriate public and social services, especially for low-income and vulnerable groups. HKC has a narrow tax base, and its main sources of revenue are profits tax, land premiums, salaries tax, and stamp duties. On the expenditure side, the authorities aim to keep 
spending at no more than 20% of GDP. 
1.8.  In each of the four years under review, th e fiscal balance recorded a surplus, although it 
decreased over the period (Table 1.1). At the same time, the Government managed to accumulate 
abundant fiscal reserves (35.6% of GDP as of March 2013), while keeping very low debt levels. 
In 2013, total revenue and total expenditure were equivalent to 21.4% and 20.4% of GDP, respectively. Prospects of increased spending on health care and social welfare to address the 
needs of an ageing society will most likely put pressure on the Government's consolidated 
balance.
3 Hence, maintaining a healthy fiscal position will rank high on the authorities' economic 
priorities in the years to come. A Working Group on Long-term Fiscal Planning was set up in June 2013 to explore ways to undertake more comprehensive planning for HKC's public finances with a 
view to coping with the demands of an aging po pulation and other long-term commitments of the 
Government such as social welfare, health, and education.
4  
                                               
2 The Heritage Foundation (2014); World Economic Forum (2014); and World Bank (2014). 
3 Spending on health care, social welfare, and education already represents some 60% of the 
Government's recurre nt expenditure. 
4 The Working Group is led by the Permanent Secr etary for Financial Services and the Treasury 
(Treasury Department) and comprises Government offici als, scholars, and experts. The group has reported 
that the prospects of an ageing population and a shri nking working force will caus e the fiscal position to 
deteriorate in some 15 years. Viewed at: http://www.fstb.gov.hk/tb/en/report-of-the-working-group-on-
longterm-fiscal-planning.htm . WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 13 - 
 
  1.9.  As a highly open economy and renowned global financial centre, HKC is committed to 
maintaining a credible fixed exchange rate system that helps minimize exchange rate risk for businesses and acts as an anchor for financial stability. Hence, currency stability is the principal monetary objective of the Hong Kong Monetary Au thority (HKMA). This has been achieved through 
the implementation, since 1983, of the Linked  Exchange Rate System (LERS), whereby the 
external exchange value of the Hong Kong dollar is pegged to the U.S. dollar, trading at around 
HK$7.80 to US$1.00. Currency board arrangements require 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 held by the Exchange Fund at the fixed exchange rate of HK$7.80 to US$1.00. In 2012 and 2013, the Hong Kong dollar real effective exchange rate appreciated 
moderately (Table 1.1). Under the LERS, interest rates in HKC closely follow those in the United 
States. During the reviewed period, this led to low interest rates, abundant liquidity, and rapid 
credit growth in HKC, which in turn helped boost domestic demand.  
1.10.  In the first two years covered by this Re view, inflation (measured as the Consumer Price 
Index) rose quickly from low levels to 5.3% in 2011, on the back of increasing domestic demand, 
higher prices for imported food and fuels, and rising housing prices. In order to cool off the 
property market, mitigate the inflationary effects of surging housing prices, and preserve financial 
stability, the Government implemented tighter prudential measures (such as maximum loan-to-
value ratios and debt service ratios) and demand-side management measures (higher and new property stamp duties), while granting two months free rent to public housing tenants and increasing land supply for housing. Along with the easing of imported food prices, these measures 
helped reduce inflation to just over 4% in 2012 and 2013 (Table 1.1). However, this rate was 
considerably higher than the U.S. inflation rate, leading to the real appreciation of the Hong Kong dollar vis-à-vis the U.S. dollar in 2012 and 2013. 
1.11.  The labour market remained tight for most of the period under review, owing to resilient 
domestic demand and abundant new job opportunities in the private sector. Total employment has been on the rise in recent years, reaching record highs in 2013, on the back of robust labour 
demand, matched by a similar increase in the supply of labour. The annual unemployment rate fell 
from 4.3% in 2010 to 3.4% in 2013 (Table 1.1). In line with the tight labour market conditions, wages and earnings increased almost across-the-board, with the low-skilled segment of the workforce faring remarkably better, thanks in part to the implementation of the Statutory 
Minimum Wage since May 2011. The overall labour force participation rate rose to 61.2% in 2013, 
the highest level since 2007.
5  
1.12.  Nominal GDP per capita increased to HK$295,701 (US$38,125) in 2013, one of the highest 
in East Asia. Nonetheless, the income gap remains significant, as measured by the Gini coefficient, 
which was at 0.537 in 2011 based on original household income (and at 0.475 based on post-tax post-social transfer household income).
6 In recent years, several factors have affected income 
distribution, including a transformation of economic structure, a continuous decline in average 
household size, and an ageing population. To mitigate the effects of income disparity, the Government has increased public expenditure on he althcare and welfare, provided social benefits 
and relief measures for lower-income groups, and introduced a statutory minimum wage. 
Abundant fiscal resources have provided adeq uate scope for addressing these concerns. 
1.13.  The structure of Hong Kong, China's economy remains dominated by the services industries, 
which accounted for 93% of GDP and 88.4% of total employment in 2012 (Table 1.2).
7 Within the 
services sector, the main contributors to GDP continue to be imports/exports, and wholesale and 
retail trade (25.4%); public administration, social and personal services (16.8%); and finance and insurance (15.9%). The contribution of agriculture,  fishing, and mining is very small, accounting 
for a mere 0.1% of both GDP and total employment in 2012, while the manufacturing sector 
contributed 1.5% to GDP and 3.0% to employment.  
                                               
5 Information provided by  the HKC authorities. 
6 Government of the Hong Kong Special Administrative Region (2012). 
7 At the time of writing this report, GDP figures by sector for 2013 were not yet available. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Table 1.2 Basic economic indicators, 2010-13 
  2010  2011  2012 2013 
GDP by economic activity in real terms (annual %age change)   
Agriculture, fishing, and mining 3.9 0.8 -3.2 1.3 
Manufacturing 3.3 0.7 -0.8 0.1 
Electricity, gas and water supply, and waste management -0.2 0.6 1.4 -0.7 
Construction 15.6 18.3 8.3 1.1 
Services 6.9 5.2 1.8 2.9 
 Import/export, wholesale, and retail trade 16.7 9.1 1.9 3.6 
    Import and export trade 16.5 6.3 0.6 2.3 
    Wholesale and retail trade 17.4 22.2 7.3 9.2 
 Accommodation and food services 9.5 8.3 1.8 3.7 
 Transport, storage, postal, and courier services 6.0 7.2 0.9 2.5 
 Information and communications 1.5 2.8 2.8 4.2 
 Finance and insurance 6.3 6.5 0.8 5.6 
 Real estate -1.4 1.8 3.9 -3.9 
 Professional and business services 6.5 3.3 2.3 4.2 
 Public administration, soci al and personal services 2.2 1.8 2.1 2.6 
 Ownership of premises 0.8 0.7 1.1 0.4 
Share of GDP at current basic prices (%)  
Agriculture, fishing, and mining 0.1 0.0 0.1 .. 
Manufacturing 1.8 1.6 1.5 .. 
Electricity, gas, and water supply and waste management 2.0 1.8 1.8 .. 
Construction 3.3 3.4 3.6 .. 
Services 93.0 93.1 93.0 .. 
 Import/export, wholesale, and retail trade 23.8 25.9 25.4 .. 
    Import and export trade 19.7 21.1 20.4 .. 
    Wholesale and retail trade 4.1 4.8 5.0 .. 
 Accommodation and food services 3.2 3.5 3.6 .. 
 Transport, storage, post al, and courier services 7.9 6.3 6.0 .. 
 Information and communications 3.2 3.3 3.5 .. 
 Finance and insurance 16.3 16.1 15.9 .. 
 Real estate 5.1 5.6 5.8 .. 
 Professional and business services 5.7 5.7 5.7 .. 
 Public administration, social and personal services 17.0 16.5 16.8 .. 
 Ownership of premises 10.6 10.3 10.3 .. 
Share of sector in total employment (%)a 
Agriculture, fishing, and mining 0.1 0.1 0.1 0.1 
Manufacturing 3.2 3.1 3.0 2.9 
Electricity, gas, and water supply and waste management 0.4 0.4 0.4 0.4 
Construction 7.5 7.6 8.0 8.3 
Services 88.7 88.7 88.4 88.3 
 Import and export trade 15.0 14.5 14.2 13.8 
 Wholesale and retail trade 10.4 10.3 10.4 10.4 
 Transport, storage, postal, and courier services 9.0 8.9 8.7 8.7 
 Accommodation and food services 7.5 7.4 7.3 7.4 
 Information and communications 2.7 2.7 2.8 2.8 
 Finance and insurance 6.2 6.3 6.3 6.1 
 Real estate 3.3 3.4 3.5 3.4 
 Professional and business services 9.4 9.5 9.7 9.8 
 Public administration, social and personal services 25.1 25.6 25.6 25.9 
.. Not available. 
a Employment figures for 2013 are preliminary. Source: Census and Statistics Department online info rmation. Viewed at: http://www.censtadt.gov.hk , and 
data provided by the HKC authorities.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  1.14.  The most dynamic services sectors over the review period were: wholesale and retail trade, 
which grew at an average annual rate of 12.7% in real terms between 2010 and 2013 on the back 
of strong domestic demand; accommodation and food services (4.6% average annual growth), 
which benefited from vibrant inbound tourism; and finance and insurance (4.3% average annual 
growth). The construction sector was also quit e dynamic, posting real annual growth of 9% 
between 2010 and 2013.  
1.15.  During the period under review, HKC conti nued to foster the development of six economic 
areas identified in 2009 as having competitive advantages for further growth: testing and 
certification, medical services; innovation and technology; cultural and creative industries; the environmental industry; and educational services.
8 For example, steps were taken to improve the 
accreditation system and encourage the development by third parties of new certification schemes 
and testing methods. The framework for the promot ion of innovation and technology was reviewed 
to reflect a strong emphasis on the realisation/commercialization of R&D outcomes, while funding support was enhanced. In 2012, the selected industries contributed 8.7% to GDP and 11.9% to 
total employment.
9  
1.16.  As regards the external sector, HKC's cu rrent account recorded a surplus throughout the 
reviewed period, although the size of the surp lus decreased sharply in 2012, owing mainly to a 
negative balance in goods trade caused by faster growth in imports than in exports (Table 1.3). 
In 2013, the current account surplus was equivalent  to 1.9% of GDP. A widening surplus in the 
services balance and a persistent net inflow of primary income more than offset the deficit in trade in goods in 2011-13.  
1.17.  The capital and financial accounts maintained a negative balance throughout the period. An 
overall net outflow of financial non-reserve assets  was recorded in 2010-11, while a net inflow was 
recorded in 2012-13. Both direct investment and portfolio investment activities were quite 
dynamic during 2010-13, reflecting, on the one hand, the attractiveness of HKC to non-resident 
investors to set up companies in the territory, and on the other, its role as a major global financial centre. A net outflow of direct investment was reco rded during the period, except in 2011. Foreign 
exchange reserves increased from US$269 billion in 2010 to US$311 billion in 2013, equivalent to 
26.4 months of imports of goods (Table 1.1). 
Table 1.3 Balance of payments, 2010-13 
(HK$ million) 
  2010  2011  2012 2013  
Current account 124,369 107,513 32,151 39,517 
Goods and services balance 104,353 74,478 23,031 18,065 
Goods balance 25,564 -58,203 -146,729 -203,302 
Exports  3,021,492 3,406,765 3,632,957 3,945,256 
Imports  2,995,928 3,464,968 3,779,686 4,148,558 
Services balance 78,789 132,681 169,760 221,367 
Credit  625,719 710,716 764,026 817,948 
Transport 231,971 250,075 248,494 242,995 
Travel 172,472 221,490 256,534 301,969 
Insurance and pension 6,664 6,610 7,224 8,390 
Financial  101,639 111,910 120,680 128,942 
Other 112,972 120,630 131,094 135,652 
Debit 546,930 578,035 594,266 596,581 
Transport 121,961 139,414 142,580 142,068 
Travel 134,849 148,071 155,716 164,545 
Insurance and pension 9,262 9,283 9,462 9,837 
Financial 27,526 30,214 30,528 33,238 
Other 253,333 251,052 255,980 246,893 
of which: manufacturing 148,852 139,459 138,884 129,953 
Primary income 37,596 52,826 29,455 42,170 
Credit 929,741 1,059,351 1,091,235 1,127,680 
Investment income 927,103 1,056,615 1,088,390 1,124,888 
                                               
8 The six industries were identified by the Task Force on Economic Challenges. 
9 Information provided by the authorities. In 2013, the HKC Government indica ted that the development 
strategies for the medical and education sectors would be reviewed having regard to the need to address 
certain issues identified during the promotion of such industries, e.g. the manpower shortage in the medical sector and the need to meet local demand  for medical and educational services.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 16 - 
 
    2010  2011  2012 2013  
Compensation of employees 2,638 2,737 2,845 2,792 
Debit 892,145 1,006,526 1,061,779 1,085,510 
Investment income 888,393 1,002,210 1,057,069 1,080,341 
Compensation of employees 3,752 4,315 4,710 5,169 
Secondary income -17,580 -19,791 -20,336 -20,718 
Credit 4,449 6,858 7,021 9,890 
General Government 0 0 0 0 
Other sectors 4,449 6,858 7,021 9,890 
Debit 22,030 26,649 27,357 30,608 
General Government 2,086 1,873 1,871 1,988 
Other sectors 19,944 24,776 25,486 28,620 
Capital and financial account -88,838 -113,242 -67,664 -40,452 
Capital and financial non-reserve assets -29,693 -26,458 121,224 17,437 
Capital account -4,436 -2,021 -1,433 -1,594 
Financial account -84,402 -111,220 -66,231 -38,858 
Financial non-reserve assets -25,257 -24,437 122,658 19,032 
Direct investment -122,026 1,868 -102,623 -115,542 
Assets -764,596 -746,372 -683,484 -709,906 
Liabilities 642,570 748,240 580,861 594,364 
  Portfolio investment -442,460 -10,979 -31,592 -333,625 
   Assets -626,584 -155,818 -310,949 -471,693 
Equity and investment fund shares -365,079 -237,303 -159,624 -192,809 
Debt securities -261,506 81,485 -151,325 -278,884 
   Liabilities 184,125 144,839 279,358 138,069 
Equity and investment fund shares 143,455 47,111 224,462 92,382 
Debt securities 40,669 97,729 54,896 45,687 
  Financial derivatives 18,677 20,884 15,208 8,066 
  Other investment 520,552 -36,210 241,665 460,132 
Reserve assets -59,145 -86,783 -188,889 -57,890 
Net errors and omission -35,530 5,729 35,513 935 
Balance of payments 59,145 86,783 188,889 57,890 
Memorandum:     
Current account as % of GDP 7.0 5.6 1.6 1.9 
Note: Figures for trade in goods and services are calc ulated according to conven tional methodology, i.e. 
without adopting the new principle in recording g oods sent abroad for proc essing and merchanting. 
Source: Census and Statistics on line information. Viewed at: http://www.censtatd.gov.hk . 
1.2  Trade Performance  
1.18.  HKC is highly dependent on internationa l trade, with exports and imports of goods and 
non-factor services representing more than 450% of GDP. In 2013, HKC ranked as the world's 
6th largest exporter and the 5th largest importer of goods, and 6th largest exporter and the 
13th importer of services.10  
1.2.1  Merchandise trade11 
1.19.  Since its economy is markedly oriented towards the services sector, HKC continues to rely 
heavily on imports of goods to satisfy domestic consumption. This is reflected in a persistent deficit in the merchandise trade balance, although this has been more than compensated by a large 
surplus in the services trade balance. In 2013, total exports of goods (domestic exports and re-
exports) amounted to US$458.9 billion, while total imports of goods were US$523.6 billion. 
1.20.  After a strong rebound in 2010 and the first part of 2011, total goods exports (domestic 
exports and re-exports) decelerated in the second half of 2011 and in 2012, owing mainly to 
slackening demand in developed economies, particularly the EU and the United States. In 2013, 
total goods exports increased moderately, by 2.8% in real terms, reflecting a tepid recovery in advanced economies and a slowdown in some major emerging markets. Imports of goods 
                                               
10 Counting the EU28 as one. WTO, International Trade Statistics 2013 . Viewed at: 
http://www.wto.org/english/res_e/statis_e/its2013_e/its2013_e.pdf . 
11 Real growth figures in this section are ba sed on: Government of the Hong Kong Special 
Administrative Region (2014). They do not necessarily coincide with the figures shown in GDP accounts in 
Table 1.1. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 17 - 
 
  increased consistently throughout the period und er review. In 2013, goods imports grew by 3.9% 
in real terms, due in part to a resilient domestic demand.  
1.2.1.1  Composition of merchandise trade 1.21.  Because HKC is a free port, and the largest free zone in the world, re-exports are the 
driving force of overall merchandise exports, re presenting about 98% of total exports of goods 
throughout the review period. This also points to  the small size of the domestic production base. 
Import intake related to re-exports represents ar ound three-quarters of total merchandise imports, 
while "retained imports" (i.e. for local use) account for the rest. Mainland China, the Separate 
Customs Territory of Taiwan, Penghu, Kinmen and Matsu, and Japan are the main origins of re-exports. 
1.22.  In 2013, re-exports of goods rose by 3.0% in real terms. As regards product composition, 
machinery and electrical equipment remain by far the largest component of re-exports, followed 
by textiles and textile articles (Chart 1.1 and Table A1.1). Other main re-exports are precious stones and metals and pearls, precision instruments, and plastics and rubber.  
1.23.  Domestic exports decreased by 9.4% in real terms in 2013. The main domestic products 
exported include precious stones and metals and pearls, machinery and electrical equipment, plastics and rubber, prepared foodstuff, beve rages and tobacco, chemicals and base metals 
(Chart 1.1 and Table A1.2). The share of precious stones and metals and pearls in total domestic 
exports increased notably between 2010 and 2013, mainly owing to a surge in foreign sales of non-monetary gold. 
1.24.  HKC's merchandise imports grew by 3.9% in real terms in 2013, with retained imports 
increasing by 6.3% in real terms. The compos ition of imports has remained largely unchanged 
since 2010. Machinery and electrical equipment account for the largest share, followed by precious stones and metals and pearls, precision instruments, textiles and textile articles, and mineral fuels 
(Chart 1.1 and Table A1.3). As regards retained imports, the most dynamic product groups in 
2013 were capital goods and foodstuffs.
12 
1.2.1.2  Direction of merchandise trade  
1.25.  Mainland China is by far HKC's main trading partner. Based on its strategic geographical 
location and its modern transport and communications networks, HKC plays an important entrepôt role for trade between Mainland China and the rest of the world. In 2013, nearly 55% of HKC's re-
exports were destined to the Mainland, and almost 48% of total HKC merchandise imports came 
from China. Mainland China also receives 45.6% of HKC domestic exports and is a major source of 
retained imports (13.6% of retained imports), in particular imports of foodstuffs (Chart 1.2 and 
Tables A1.4, A1.5 and A1.6). Total two-way trad e between HKC and Mainland China amounted to 
almost US$502 billion in 2013, an increase of 24.6% over the 2010 figures (US$402.6 billion).  
1.26.  The United States, the European Union (E U28), and Japan are also important destination 
markets for HKC, although their respective shares in re-exports and domestic exports declined 
somewhat during the review period, owing in part to sluggish demand in those markets and, in the 
case of Japan, compounded by the effects of a weaker yen. In contrast, exports to other Asian 
countries increased moderately. The markets for domestic exports are more diversified, with several high-income East Asian countries accounting for around 15% of the total.  
1.27.  Mainland China accounts for almost half of HKC's imports. Other major suppliers of imported 
goods are the European Union, Japan, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, Singapore, the United States, and the Republic of Korea, which together account for 
36.7% of total merchandise imports (Chart 1.2 and Table A1.6). 
                                               
12 Government of the Hong Kong Special Administrative Region (2014). WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Chart 1.1 Product composition of merchandise trade by HS section, 2010 and 2013 
 2010 2013
Imports
Other 
18.7%
Plastics & rubber (VII)
3.7%
Textiles & textile
articles (XI) 6.3%
Precious stones & 
metals & pearls (XIV) 
5.8%
Domestic exports
Re-exportsPrecision instruments (XVIII)
4.9%
Machinery; electrical 
equipment (XVI)
57.0%
Chemicals (VI)
6.9%Other
15.4%Other 
15.8%
Other
13.6%Total:  US $433.1 b illion Total:  US$523.6 billion
Total:  US$8.9 billion Total: US$7.0 billion
Total:  US$381.2 billion Total:  US$451.9 billionMineral products (V) 
3.6%Other
17.5%
Other
15.6%Prepared foodstuff
beverages & tobacco (IV)
6.5%Base metals & articles 
thereof (XV)
9.6%Precision instruments (XVIII)
5.4%
Machinery; electrical 
equipment (XVI)
58.4%
Precious stones & 
metals & pearls (XIV) 
7.4%Textiles & textile
articles (XI) 5.0%Plastics & rubber
(VII) 2.9%Mineral products 
(V) 3.5%
Prepared foodstuff
beverages & tobacco
(IV) 11.2%Mineral products (V) 
3.3%
Mineral products (V) 
3.3%
Chemicals (VI)
9.6%Plastics & rubber (VII)
12.6%Plastics & rubber (VII)
12.5%Precious 
stones & metals
& pearls (XIV)
18.2%
Precious stones & 
metals & pearls (XIV) 
13.1%Base metals &
articles thereof 
(XV) 7.8%Machinery; electrical 
equipment (XVI)
31.8%Machinery; electrical 
equipment (XVI)
15.6% Precision 
instruments (XVIII)
4.6%Precision 
instruments (XVIII)
2.2%
Precision instruments (XVIII)
5.9%Precision instruments (XVIII)
5.6%
Machinery; electrical 
equipment (XVI)
61.2%Machinery; electrical 
equipment (XVI)
64.4%
Precious stones & 
metals & pearls (XIV) 
5.2%Precious stones & 
metals & pearls (XIV) 
6.1%Textiles & 
textile articles (XI) 
6.9%Textiles & 
textiles articles (XI) 
8.8%Plastics & rubber (VII)
3.6%Plastics & rubber 
(VII) 3.2%
 
Note: Data in brackets refer to the HS Section number. 
Source: Data provided by the authorities. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Chart 1.2 Direction of merchandise trade, 2010 and 2013 
2010 2013
Imports
Other 
4.9% EU28
7.3%
Mainland
China
45.5%Japan
9.2%
Domestic exports
Re-exportsSingapore
7.1%
Chinese
Taipei 
6.7%Korea, Rep. of
3.9%United
States
5.4%
Singapore
6.1%
Chinese Taipei
6.4%
Japan
7.1%EU28
7.8%
Mainland
China
47.8%
United States
12.0%
EU28
9.5%
Mainland
China
44.9%Japan
2.9%Chinese Taipei 
4.0%Other
5.7%United States
9.9%
EU28
5.4%Other 
5.3%
Macao, China  3.4%
Singapore
4.7%
Mainland
China
45.6%
United States
10.9%
EU28
11.2% India 
2.5%
Mainland
China
52.9%United States
9.3%
EU28
9.5%
Mainland
China
54.9%Other
6.7%
Japan 
4.2%India
2.4%Total:  US $433.1 billion Total:  US $523.6 b illion
Total:  US$8.9 billion Total: US$7.0 billion
Total:  US $381.2 billion Total:  US $451.9 b illionKorea, Rep. of
4.0%United 
States
5.3%Other
5.9%
Chinese Taipei 
4.5%Singapore 
4.1%
Other
5.6%
Japan 
3.8%Other Asia
10.1%Other Asia
9.7%
Switzerland
2.7%
Switzerland
2.4%Other Asia 
14.8%Other Asia
14.7%
Viet Nam  3.3%
Other Asia
12.6% Other Asia
13.5%
 
Source: Data provided by the authorities. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  1.2.2  Services trade13 
1.28.  Exports of services grew faster than merchandise exports during the review period. Based 
on balance-of-payments (BOP) data, services expo rts grew at an annual average rate of 9.3% 
between 2010 and 2013. They recorded very stro ng growth in 2010 and, to a lesser extent in 
2011, on the back of rising inbound tourism and cross-border commercial and financial activity. 
However, they decelerated in 2012 affected by the fragile external environment, with exports of 
transportation and trade-related services being particularly hit by the slowdown in global 
merchandise trade. In 2013, services exports grew faster (5.8% in real terms), bolstered mainly 
by tourism, although exports of financial servic es and other business services also picked up 
together with an improvement in financial market and commercial activity. In contrast, exports of transportation and trade-related services (essentia lly offshore trade) remained weak, against the 
background of slackened international trade.  
1.29.  Imports of services grew at an annual av erage rate of 2.9% betw een 2010 and 2013, based 
on BOP figures. In 2013, they showed modest growth  (1.5% in real terms), with imports of travel 
services growing faster, helped by improved income conditions and consumer sentiment, and a 
cheaper Japanese yen and other Asian currencies. 
1.30.   Reflecting its comparative advantage in the tertiary sector, HKC is a competitive exporter of 
services. According to BOP data, the main export services in 2013 were travel, transport, and 
financial services. The main groups of imported se rvices were travel, transport, and manufacturing 
services (Table 1.4). "Other business services" have traditionally been an important subsector in both exports and imports of services.  
Table 1.4 Composition of trade in services, 2010-13 
(HK$ million and %) 
  2010  2011  2012  2013  
 Total credit (HK$ million)  625,719  710,716  764,026  817,948  
 % of total credit 
   Manufacturing services  0.0a 0.0a 0.0a 0.0a 
   Maintenance and repair services  0.4  0.3  0.3  .. 
   Transport  37.1  35.2  32.5  29.7  
   Travel  27.6  31.2  33.6  36.9  
   Construction  0.2  0.2  0.3  .. 
   Insurance and pension services  1.1  0.9  0.9  1.0  
   Financial services  16.2  15.7  15.8  15.8  
   Charges for the use of intellectual property  0.5  0.5  0.5  .. 
   Telecommunications, computer and information 
 services  2.3  2.4  2.4  .. 
   Other business services  14.1  13.0  13.0  .. 
   Personal, cultural and recreational services  0.5  0.5  0.5  .. 
   Government goods and services  0.1  0.1  0.1  .. 
 Total debit (HK$ million)  546,930  578,035  594,266  596,581  
 % of total debit 
   Manufacturing services  27.2  24.1  23.4  21.8  
   Maintenance and repair services  0.1  0.1  0.1  .. 
   Transport  22.3  24.1  24.0  23.8  
   Travel  24.7  25.6  26.2  27.6  
   Construction  0.1  0.1  0.4  .. 
   Insurance and pension services  1.7  1.6  1.6  1.6  
   Financial services  5.0  5.2  5.1  5.6  
   Charges for the use of intellectual property  2.8  2.7  2.6  .. 
                                               
13 This section is generally based on Government of the Hong Kong Special Administrative Region 
(2014). WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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    2010  2011  2012  2013  
   Telecommunications, computer and information 
 services  1.6  1.7  1.9  .. 
   Other business services  14.2  14.4  14.3  .. 
   Personal, cultural and recreational services  0.1  0.1  0.1  .. 
   Government goods and services  0.2  0.2  0.2  .. 
.. Not available. 
a Denotes a % share of less than 0.05%. 
Note: Figures for trade in goods and services are calc ulated according to conven tional methodology, i.e. 
without adopting the new principle in recording g oods sent abroad for proc essing and merchanting. 
Source: Census and Statistics Department online information. Viewed at: http://www.censtatd.gov.hk . 
1.3  Foreign Direct Investment 
1.31.  Foreign direct investment (FDI) is considered important for the economic growth and 
development of HKC. The territory's geographical location, its free port status, a business-friendly 
climate, the absence of restrictions on foreign investment in companies, and absence of foreign-
exchange controls are among the main factors explaining HKC's attractiveness to foreign investors.  
1.32.  At the end of 201214, HKC's stock of direct investment liabilities totalled HK$10,509 billion 
(US$1,400 billion), equivalent to over five times its GDP, while the stock of direct investment assets amounted to HK$9,973 billion.
15 In 2012, HKC ranked as the third-largest recipient of FDI 
flows worldwide, and the second-largest in Asia, after Mainland China. HKC is also a major source 
of FDI, ranking fourth in world FDI outflows in 2012.16 
1.33.   Mainland China remains the principal source of FDI, providing 37% of the total stock of 
inward direct investment at the end of 2012. It is closely followed by the British Virgin Islands 
(32.7%). Other important sources are the Netherlands, Bermuda, and the United States. Inward direct investment from the British Virgin Islands and Bermuda may reflect in part the practice of 
HKC enterprises establishing non-operating compan ies in financial centres to re-channel FDI back 
to HKC. As regards outward direct investment, Mainland China is also one of the main recipients of HKC overseas investment, accounting for 40.7% of the total stock of outward direct investment at the end of 2012, with the largest recipient being the British Virgin Islands (Table A1.7). In terms of 
direct investment flows, Mainland China accounted  for 42.8% of total inflows and 45.9% of total 
outflows in 2012.
17 
1.34.  Analysed by economic activity, both inward and outward direct investment are concentrated 
in the services sector and, in particular, in the ac tivities classified as "investment and holding, real 
estate, professional and business services", which accounted for 69% and 78% of total inward and outward direct investment, respectively at the end of 2012. Other major recipients of inward direct 
investment at the end of 2012 were banking (11.1%) and import/export, wholesale and retail 
trades (9.2%); these two subsectors were also important as destinations for outward direct 
investment, along with manufacturing and insurance (Table A1.8).  
                                               
14 Data for 2013 were not available at the time of writing this report. 
15 Figures provided by the HKC authorities. Aggregate direct investment statistics are compiled based on 
the asset/liability principle according to the standards stipulated in the IMF's Sixth Edition of the Balance of 
Payments and International Investment Position Manual . They are different from the figures for total 
inward/outward stock by countries/terri tories and for total inward/outward st ock by economic activity shown in 
Tables A1.7 and A1.8 of this report, du e to different presen tation principles. 
16 Data on rankings are based on UNCTAD (2013). 
17 HKC Census and Statistics Departme nt online information. Viewed at: 
http://www.censtatd.gov.hk/hkstat/sub/sp260.jsp  (Tables 48 and 50).  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  2  TRADE AND INVESTMENT REGIME 
2.1  General Constitutional and Legal Framework 2.1.  Hong Kong, China (HKC) became a Special Admi nistrative Region of the People's Republic of 
China on 1 July 1997. The Basic Law
1 guarantees HKC "…a high degree of autonomy, with 
executive, legislative and independent judicial powers, including that of final adjudication".2 
In accordance with the Basic Law, HKC maintains an independent taxation system, and retains its status as a free port and a separate customs territory setting its own trade and investment 
policies. The Hong Kong dollar remains the legal currency. There have been no significant changes 
in the constitutional and legal framework of HKC since its last Trade Policy Review in 2010. 
2.2.  The Chief Executive, as head of the HKC Government, has policy-making and executive 
powers. The Chief Executive appoints the Executive Council of 29 members to assist with policy-
making.
3 The Government, the executive body of HKC,  is responsible for policy formulation and 
implementation, as well as carrying out other administrative affairs and maintaining external relations as authorized by the Central People's Government of China under the Basic Law. 
The Legislative Council is the legislative organ, responsible for general law-making. Laws passed 
by the Legislative Council take effect after bein g signed and promulgated by the Chief Executive.
4  
2.3.  The courts exercise judicial power independently. Court judges are appointed by the Chief 
Executive on the recommendation of an independ ent commission. The courts, through the Court of 
Final Appeal, must seek interpretation of relevant provisions of the Basic Law from the Standing Committee of the National People's Congress of China when handling cases concerning affairs that are the responsibility of the Central People's Gove rnment of China or concerning the relationship 
between the central authorities and HKC, and if such interpretation will affect the judgement.
5 As 
of date, the Court of Final Appeal had once sought interpretation of Basic Law provisions in relation 
to the immunity of foreign states.6 
2.4.  In descending order of importance, the Basic Law is followed by ordinances, and their 
subsidiary regulations and notices. The main legislation on international trade remains the Import and Export Ordinance (Chapter 60 of the Hong Kong Laws). The Ordinance and its subsidiary 
legislation lay out the principles of foreign trade and procedures for import, export, and transit of 
goods to/from HKC. The authorities maintain a public database with all its legislation in a bilingual format on the website of the Department of Justice.
7  
2.5.  A free-trade agreement between HKC and it s trading partners need not be subject to 
ratification by the legislature before the agreement enters into force. However, when legislative 
means are required in order to implement provisions in the free-trade agreement (e.g. introduction of new legislation, or amendment of existing legislation), the usual legislative 
procedures will be followed. 
2.2  Trade Policy Objectives 2.6.  Since its previous Trade Policy Review, HKC's overall trade policy objectives have not 
changed. These objectives include: to promote a free, open, and stable multilateral trading 
system; to safeguard its rights and fulfil its obli gations under multilateral, regional, and bilateral 
                                               
1 The Constitution of China and the Basic Law toge ther form the constituti onal framework of HKC. 
2 Article 2 of the Basic Law. Viewed at: http://www.basiclaw.gov.hk/e n/basiclawtext/chapter_1.html . 
3 Except for the appointment, removal, and disciplini ng of officials and the ad option of measures in 
emergencies, the Chief Executive consults the Executiv e Council before making impo rtant policy decisions, 
introducing bills to the Legislative Council, making subordinate legislation, or dissolving the Legislative Council. At present, the membership of the Executive Counc il comprises 15 appointed Principal Officials and 14 
non-officials.  
4 Articles 49 to 51 of the Basic Law lay out the provisions for the situations when disagreements occur 
between the Chief Executive and the Legislative Council. 
5 Article 158 of the Basic Law. Viewed at: http://www.basiclaw.gov.hk/en/basiclawtext/chapter_8.html . 
6 Government online information,  "The Basic Law". For details, see Instruments 17, 18, 20 and 22. 
Viewed at: http://www.basiclaw.gov.hk/e n/basiclawtext/index.html . 
7 Department of Justice online information, "Bilingual Laws In formation System". Viewed at: 
http://www.legislation.gov.hk/blis/eng/index.html . WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  trade and trade-related agreements and arrang ements; and to secure, maintain, and improve 
access for its domestic exports (of services in particular) to foreign markets. 
2.7.  As a separate customs territory, HKC may, on its own, maintain and develop relations and 
conclude and implement agreements with foreign st ates and regions/territories in the fields of 
economics, trade, financial and monetary issues, shipping, communications, tourism, cultural 
activities, science and technology, and sports.8 HKC maintains a separate status under the name 
Hong Kong, China  in 41 international organizations. 
2.8.  In addition, HKC participates in other multilateral agreements in two ways: in those to which 
China is a party and its application is extended to HKC, and in those agreements that HKC had implemented before the Handover but to which China is not a party.
9 Currently, about 
250 multilateral agreements are applicable to HKC, covering, inter alia , customs, civil aviation, 
shipping, health, and intellectual property.10  
2.9.  Trade and investment policies are formulated by the Secretary for Commerce and Economic 
Development.11 The Secretary is assisted by a number of  bodies and funds, including the Trade 
and Industry Department, the Innovation and Technology Commission, the Intellectual Property 
Department, the Office of Communications Authorities, and Invest Hong Kong. The Secretary is also supported by a worldwide network of HKC Economic and Trade Offices. When formulating 
major trade policies/measures, the Government will launch a public consultation exercise.
12 
2.10.  The Trade and Industry Department (TID) is the main agency responsible for maintaining 
HKC's external commercial relations. Its functions include implementing trade policies and agreements; issuing certificates of origin, export  and import licences and the Hong Kong Service 
Supplier (HKSS) certificate; as well as providing general support services for the industrial sector 
and small and medium-size enterprises (SMEs). A number of statutory bodies are also involved in promoting trade and industry, including the Hong  Kong Trade Development Council (HKTDC), the 
Hong Kong Export Credit Insurance Corporation (E CIC), the Hong Kong Productivity Council, and 
the Hong Kong Science and Technology Parks Corporation (HKSTPC). 
2.3  Trade Agreements and Arrangements 
2.3.1  WTO 
2.11.  HKC is a very open economy, and a firm  supporter of the multilateral trading system.
13 As 
an original Member of the WTO, Hong Kong, China continues its active participation as a separate customs territory to secure maximum market access for its exports of goods and services to 
international markets.
14 HKC is a signatory of the revised WTO plurilateral Agreement on 
Government Procurement (GPA), and the Information Technology Agreement (ITA), and is currently engaged in the plurilateral negotiation on environmental goods.  
2.12.  HKC was the first Member to notify the WTO that it would implement all provisions 
contained in Articles 1 to 12 of the Agreement on  Trade Facilitation upon its entry into force, 
without using any of the flexibilities provided in the Agreement.
15  
2.13.  HKC has an excellent record of providing notifications to the WTO. At the end of May 2014, 
there was no outstanding requirement for regular notifications from HKC (Table A2.1). 
                                               
8 Article 151 of the Basic Law. 
9 Article 153 of the Basic Law. 
10 For details see Department of Just ice online information, "List of Tr eaties in Force and Applicable to 
the Hong Kong Special Administrative Region". Viewed at: http://www.doj.gov.hk/eng/laws/interlaw.html .  
11 The Secretary is nominated by the Chief Executive and appointed by the Cent ral People's Government 
of China. 
12 Government online informat ion, "Government Information and Publication". Viewed at: 
http://www.gov.hk/en/residents/gover nment/publication/?/consultation/ .  
13 WTO document WT/MIN(13)/ST/26, 5 December 2013. 
14 Commerce and Economic Development Bureau online information, "2013 Policy Address at the 
Legislative Council Panel on Comm erce and Industry". Viewed at: http://www.cedb.gov. hk/about/citb.pdf . 
15 WTO document WT/PCTF/N/HKG/1, 13 May 2014. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  2.14.  During the period under review, HKC was not involved in any WTO dispute settlement cases 
either as a complainant or a respondent; HKC partic ipated as a third party in three cases, all of 
which were related to tariff treatment on ITA products.16  
2.3.2  Regional and preferential trade agreements 
2.15.  Since its last TPR in 2010, HKC has been active in forging free-trade arrangements (FTAs) 
with its trading partners, with the aim of securing more favourable market access for its goods and services.
17 The HKC authorities state that, in general, they maintain an open mind on bilateral, 
plurilateral, and regional free-trade initiatives and are prepared to explore the possibility of 
entering into FTAs with other economies, so long  as the agreements are in HKC's interests, are 
consistent with WTO principles and provisions, and can contribute to multilateral trade liberalization. 
2.16.  Within the review period, two free-trade arrangements involving HKC entered into force: the 
Closer Economic Partnership Agreement (CEP Agreement) with New Zealand (effective 1 January 2011)
18, and the comprehensive Free Trade Agr eement with the European Free Trade 
Association (EFTA) member states (effective 1 October 2012 with Iceland, Liechtenstein, and 
Switzerland, and 1 November 2012 with Norway).19 In addition, HKC signed a free-trade 
agreement with Chile in September 2012, which will enter into force after both parties complete 
domestic ratification procedures.20 In the meantime, HKC has continued to deepen integration with 
Mainland China in the framework of their Closer  Economic Partnership Arrangement (CEPA): four 
supplements to CEPA were signed between 2010 and 2013.21  
2.17.  In the free-trade arrangements in which it  takes part, HKC has bound its tariff-free regime 
and agreed to substantial sectoral coverage and liberalization in services, notably through the use 
of a negative-list approach in some of them. The agreements also cover other areas, including government procurement, intellectual property, trade facilitation, and recognition of qualifications. 
2.18.  In November 2011, HKC submitted a request to ASEAN join the Free Trade Area between 
China and ASEAN (CAFTA); in April 2013, HKC and ASEAN agreed to pursue a separate free-trade agreement instead. Public consultation documents for these negotiations were published on the 
TID website in May 2014.
22 
2.3.2.1  Closer Economic Partners hip Agreement with New Zealand 
2.19.  The CEP Agreement binds tariffs at zero fo r all goods originating from New Zealand; upon 
its entry into force23, it provided duty-free treatment for 63.4% of New Zealand's tariff lines for 
goods originating from HKC. The remaining tariff duties for products of Hong Kong origin will be 
removed gradually until 2016. As of early 2014, 7,143 lines (98% of total lines in the New Zealand schedule) were duty-free for Hong Kong-origin good s. The remaining lines affect products such as 
textiles, clothing, and footwear. 
2.20.  The CEP Agreement covers trade in services  with a negative-list approach for services in 
modes 1 to 3, while a positive list is provided for services in mode 4. New Zealand liberalized all its 
business, communication, financial, and transport services, with reservations in certain subsectors, 
including a "GATS-floor" reservation. In terms of horizontal commitments, New Zealand has made a number of reservations, some of which coincide  with its GATS commitments, while others do 
not.
24 HKC opened almost all of the 46 subsectors of  business services; most of the 24 subsectors 
                                               
16 WT/DS375, WT/DS376, and WT/DS377. 
17 Commerce and Economic Development Bureau online information, "2013 Policy Address at the 
Legislative Council Panel on Comm erce and Industry". Viewed at: http://www.cedb.gov. hk/about/citb.pdf . 
18 WTO document WT/REG291/N/1, 7 January 2011. 
19 WTO document WT/REG322/N/1, 1 October 2012. 
20 Trade and Industry Department online in formation, "Trade Relations". Viewed at: 
http://www.tid.gov.hk/english/trade_relations/hkclfta/index.html. 
21 Trade and Industry Department onli ne information, "CEPA". Viewed at: 
http://www.tid.gov.hk/english/cepa /legaltext/cepa_legaltext.html. 
22 Trade and Industry Department online in formation, "Notice Board". Viewed at: 
http://www.tid.gov.hk/english/aboutu s/noticeboard/asea n_agreement.html. 
23 57.7% of tariff lines in New Zealand are already duty-free on an MFN basis. 
24 WTO document WT/REG291/1/Rev.1, 26 March 2012. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 25 - 
 
  in communication services; five subsectors in construction services; transport; and tourism, with a 
"GATS-floor" reservation or a "GATS + offer fl oor" reservation in certain subsectors (e.g. 
telecommunications). The liberalization of financial services by HKC coincides with its GATS commitments and its offer under the Doha Development Agenda. HKC offered New Zealand further 
liberalization in distribution, education, and environmental services, which are not covered by its 
GATS commitments. 
2.21.  Under the CEP Agreement, HKC offered New Zealand similar coverage to that in its GPA 
commitments (New Zealand is not a signatory to the GPA)
25, while New Zeal and scheduled 
30 public services departments as subject to its commitments under the CEP.26 
2.22.  In addition, the CEP Agreement has provisions on non-tariff measures, including customs 
procedures and cooperation, sanitary and phytosanitary (SPS) measures, and technical barriers to 
trade. Both parties to the agreement may accredit or recognize the other's conformity assessment 
bodies on terms no less favourable than those accorded to their own conformity assessment bodies. The agreement also covers competition, e-commerce, and intellectual property, among 
others. 
2.3.2.2  Free Trade Agreement with EFTA 2.23.  The free-trade agreement between HKC and the EFTA member states covers, inter alia,  
trade in goods, trade in services, investment, go vernment procurement, and intellectual property 
protection.
27 In addition, three bilateral agreements on  agriculture (i.e. between HKC on one side, 
and Iceland, Norway, and Switzerland/Liechtenstein, on the other side) form an integral part of the 
instruments establishing a free-trade area between HKC and the EFTA member states.28 
2.24.  HKC bound tariffs at zero on all imported goods originating from the EFTA member states. 
All industrial goods as well as fish and certain marine products originating from HKC receive duty-free treatment when entering EFTA markets, with certain exceptions.
29  
2.25.  HKC eliminated all tariffs on agricultural products, upon entry into force of the FTA. Each 
E F T A  m e m b e r  e l i m i n a t e d  t a r i f f s  o n l y  o n  p r o d u c t s  identified by them in the respective bilateral 
agreements on agriculture. As a result, the level of tariff elimination in the agriculture sector by 
EFTA member States is modest: 551 tariff lines (mai nly on agricultural goods) remain dutiable in 
Iceland; 1,133 in Norway; and 1,503 in Switzerland/Liechtenstein.30 At a meeting of the WTO 
Committee on Regional Trade Agreements, one Member noted the low level of tariff elimination in agriculture under this arrangement.
31 
2.26.  A negative-list approach is adopted for the commitments on trade in services; therefore, all 
service sectors are deemed to be liberalized except those under reservations. HKC has access to EFTA member states' markets for, inter alia , telecommunications services, financial services, 
business services, education services, environmental services, and testing and certification 
services. Meanwhile, several services, including financial services, telecommunications, logistics services, business services, energy services, tourism and travel related services, and construction 
and related engineering services are liberalized for the EFTA member states. Commitments by the 
parties are similar to, or go beyond their respective GATS commitments.
32 EFTA member states 
maintain some specific horizontal limitations, generally on market access and/or national 
                                               
25 HKC did not commit five An nex-3 entities in its GPA commitments to New Zealand. 
26 According to the New Zealand authorities, these commitments are the same as its Trans-Pacific 
Strategic Economic Partnership (SEP) Agreement commitments, and exclude procurement of public education, 
health, welfare, and research and development services. See WTO document WT/REG291/1/Rev.1, page 35, 
26 March 2012. 
27 The Norwegian territory of Svalbard is excluded  from the provisions of the agreement except for 
those on trade in goods. 
28 WTO document WT/REG322/M/1, 4 October 2013. 
29 For industrial goods, the exceptions apply for Norway, and/or Liechtenst ein, and/or Switzerland 
(depending on the products) to certain chemicals under HS headings 35.01, 35.02, 35.05, 38.09, and 38.23. 
30 This includes tariff quotas on 25 lines in th e Agreement on Agricult ure with Switzerland. 
31 WTO document WT/REG322/M/1, 4 October 2013. 
32 For details see WTO document WT/REG322/1, 9 July 2013. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 26 - 
 
  treatment, in addition to their MFN reservations under the GATS.33 For instance, EFTA member 
States impose a limitation on HKC's acquisition of real estate. 
2.3.2.3  Free Trade Agreement with Chile 2.27.  The FTA with Chile was signed in September 2012, but was not yet in effect at the time of 
writing this report. Upon its entry into force, 88% of lines in the Chilean tariff schedule will be duty 
free for imports originating from HKC. Chile will eliminate tariffs on another 10% of lines within three years of the application of the Agreement. Some 2% of tariff lines will remain dutiable for 
Hong Kong-origin imports, affecting products such as cereals, sugar, and iron and steel articles. 
2.28.  With regard to trade in services, a positive-list approach is adopted in the FTA with Chile. 
HKC gains market access to Chile's financial services, telecommunications, tourism, environmental services, and certain business services; while HKC liberalizes sectors/subsectors where Chile has 
priority interests, such as architectural services, engineering services, audiovisual services, and 
construction services. 
2.29.  Chile is not a party to the GPA. In the FTA, HKC offers Chilean suppliers a concession similar 
to its GPA commitments.
34 
2.3.2.4  Closer Economic Partnership A rrangement (CEPA) with Mainland China 
2.30.  CEPA covers three broad areas: trade in goods, trade in services, and trade and investment 
facilitation.35 During the period under review, four supp lements to CEPA were signed and entered 
into force.36 These provide HKC with further liberalized trade in goods and services in Mainland 
China as well as other measures covering trade and investment facilitation. In particular, Supplement VIII to CEPA provides for the enhancemen t of origin criteria for goods originating in 
HKC, and, in trade in services, a more relaxed de finition of "Hong Kong Service Suppliers" (HKSS) 
and related requirements. 
2.31.  Under CEPA provisions for trade in goods, products originating in HKC may enter the 
Chinese market with a zero-tariff preference.
37 The rules of origin to determine whether a product 
originates in HKC are the result of consultations between the relevant authorities of Mainland China and HKC, which are held twice a year. At end 2013, the parties had negotiated rules of 
origin covering about 22% of China's tariff lines (1,788 lines), accounting for 69% of HKC's 
domestic exports to Mainland China in 2013. In order to benefit from the preference, a Certificate of Hong Kong Origin for CEPA (CO- CEPA) must accompany the shipment. 
2.32.  As a general rule, at least 30% of a product's total value added must be incurred in HKC in 
order to claim HKC origin and preferences. In December 2011, Supplement VIII to CEPA lowered 
this value-added criterion to 15%, provided that the difference is made up with the value of raw materials and components originating from Mainland China.  
2.33.  HKC's use of CEPA preferences for goods exports gradually increased during the review 
period, accounting for nearly 39% of the value of total domestic exports to Mainland China in 2013 (Table 2.1). Between 2010 and 2013, plastics and plastic articles accounted for the largest share 
of CEPA preferential exports to Mainland China in terms of export value (36.7%), followed by 
pharmaceutical products (24.1%), and textiles and clothing (9.9%). 
                                               
33 According to the parties to the FTA, reservations in Liechtenstein are the same as in the GATS, but 
adjusted to the negative-list approach; there is no difference in content. See WTO document WT/REG322/1, 
page 30, 9 July 2013.  
34 HKC did not commit five Annex-3 entities in its GPA commitments to Chile. 
35 WTO document WT/TPR/S/241/Rev.1, 25 January 2011. 
36 WTO documents WT/REG162/N/1/Add.4, 3 December 2010; WT/REG162/N/1/Add.5, 5 March 2012; 
WT/REG/162/N/1/Add.6, 17 September 2012; WT/REG/162/N/1/Add.7, 13 November 2013. See also Trade and Industry Department online information, "CEPA". Viewed at: 
http://www.tid.gov.hk/english/cepa /legaltext/cepa_legaltext.html. 
37 The CEPA rules of origin basically include change s of HS headings, value-added thresholds, and major 
processing operations. Products covered by the CEPA rules of origin are included on a consolidated list, which is 
amended every six months after consultations with the stakeholders of both parties. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Table 2.1 CEPA preference  utilization rates, 2009-13 
 Export value of CO-CEPA 
products (HK$ million) Export value of CO-CEPA products as 
a %age of total domestic exports to 
China CEPA preference 
utilization ratea 
2009 5,447 20.4 32.5 
2010 7,158 22.9 33.9 
2011 8,870 28.9 47.8 
2012 9,676 37.2 54.8 
2013 9,635 38.9 56.1 
a Export value of CO-CEPA products as a percentage of total domestic exports to Mainland China with 
agreed rules of origin. 
Source: Information provided  by the HKC authorities. 
2.34.  Under CEPA provisions for trade in services, Hong Kong service suppliers (HKSS) enjoy 
preferential access to the Chinese market. To be qualified as an HKSS, any business that provides 
services in the form of a juridical person must have "substantive business operations" in HKC.38 
Supplement VIII amended the definition of HKSS and relaxed the requirements for "substantive 
business operations". After the amendment, an HKSS that applies to Mainland China for CEPA preferences for service activities is no longer rest ricted to the scope of its business operations in 
HKC, except as otherwise provided for in individu al regulations or the CEPA provisions. The HKSS 
certificate is issued by the Trade and Industry Department, and is a pre-requisite for applying to the Chinese authorities for CEPA preferential  treatment. As of end-May 2014, 2,800 HKSS 
certificates had been issued, up from 2,233 in May 2010. Service sectors with most certificates 
issued include transport and logistics, distribution services, placement services, and advertising services. CEPA is "nationality blind" as it allows Hong Kong-based companies of any nationality to 
use preferential access opportunities to Mainland Ch ina. The authorities note that almost half of 
the HKSS certificates have been issued to companies with majority foreign ownership, including service providers from HKC's FTA partners. 
2.35.  Liberalization in services trade under CEPA is based on a positive-list approach, covering 
modes 1 to 4, depending on the sector/subsector. Through a series of supplements to CEPA, the 
scope of liberalization of services trade has been further broadened. The entry into force of Supplement X to CEPA, on 1 January 2014, took the number of services trade liberalization 
measures to 403, covering 48 sectors/subsectors (Table 2.2). 
Table 2.2 Services sectors or subsec tors covered under CEPA, January 2014 
Services Services 
1. Accounting 25. Other business services 
(1) Specialty design; 
(2) Factoring; 
(3)After-death services facilities 
2. Advertizing 26. Patent agency 
3. Air Transport  27. Photographic  
4. Audiovisual 
(1) Video and sound recording products; 
(2) Cinema theatre services, Chinese language 
motion pictures and motion pictures jointly 
produced, motion picture distribution services; 
(3) Jointly produced television dramas; 
(4) Technical service of cable television;  
(5) Mainland television dramas with Hong Kong 
participation 28. Placement and supply services of personnel 
(1) Job intermediary services; 
(2) Job referral agency services 
5. Banking 29. Printing 
(1) Printing services; 
(2)Duplicating services 
6. Building-cleaning  30. Public utility 
                                               
38 The definition and criteria for qualifying as an HKSS are provided in Annex V to CEPA, which include: 
having substantive business operations (i.e. three to five years of operation in HKC, depending on the sector); 
liability to payment of profit tax in HKC; rental or ow nership of business premises; and employment of 50% of 
the staff locally. Viewed at: http://www.tid.gov.hk/english/cepa/legaltext/consolidated.html.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Services Services 
7. Computer and related services 
(1) Computer and related services; 
(2) Information technology services  31. Rail transport 
8. Construction and related engineering 
(1) Construction and related engineering services; 
(2) Architectural services; 
(3) Urban planning and landscape architectural 
services (except general urban planning); 
(4) Construction engineering cost consulting 
services; 
(5) Engineering services; 
(6) Integrated Engine ering services 32. Real estate  
9. Convention and exhibition  33. Rela ted scientific and technical consulting 
 services 
10. Cultural  34. Research and development 
11. Distribution  
(1) Distribution services; 
(2) Franchising 35. Road transport 
(1) Road freight transportation services; 
(2)Road passenger transportation services 
12. Education 36. Securities  and futures 
13. Environmental  37. Services incidental to manufacturing 
14. Freight forwarding agency  38. Services incidental to mining 
15. Individually-owned stores 39. Servic es related to management consulting 
16. Insurance 40. Social Services  
17. Inter-disciplinary re search and experimental 
 development devices 41. Sporting  
18. Legal  42. Storage and warehousing 
19. Library, museum and other cultural services 43. Technical testing, analysis and product testing  
20. Logistics 44. Telecommunications 
21. Management consulting 45. Tourism 
(1) Hotels (including apartment buildings) and 
restaurants; 
(2)Travel agency and tour operators 
22. Maritime transport  46. Trade mark agency  
23. Market research  47. Tr anslation and interpretation 
24. Medical 48. Examinations for prof essional and technical 
qualification 
Source: Trade and Industry Department on line information, "CEPA". Viewed at: 
http://www.tid.gov.hk/english/cepa/legaltext/TIS_Liberalization.html. 
2.36.  A feature of CEPA is the liberalization of services trade through pilot measures, first 
introduced in the neighbouring province of Guangdong in Mainland China with the aim, inter alia , 
of serving as role models for further liberalization nationwide in Mainland China.  
2.37.  CEPA also covers trade and investment facilitation. Measures include establishing a 
mechanism to strengthen cooperation between the parties in a number of areas, including trade 
and investment promotion; customs clearance facilitation; commodity inspection and quarantine; food safety, quality, and standardization; el ectronic business; transparency in laws and 
regulations; cooperation of small and medium enterp rises; cooperation in industries; protection of 
intellectual property; cooperation on branding; and cooperation on education.
39  
2.38.  Government procurement and competition policy are not covered under CEPA.  2.3.3  Other agreements and arrangements 
2.39.  HKC has been a member of the Asia-Pacific Economic Cooperation (APEC) forum since 1991. 
In 2013, 84.6% of merchandise imports into HKC were from APEC Members, and 81.4% of its merchandise exports went to them. In the 20
th Meeting of APEC Ministers responsible for trade 
                                               
39 Trade and Industry Department online informat ion, "CEPA –Summary of Trade and Investment 
Facilitation". Viewed at: http://www.tid.gov.hk/english/cepa/facilitation/summary_invest.html. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 29 - 
 
  (MRTs) in May 2014, the HKC Government reaffirmed, together with other APEC MRTs, its support 
to the multilateral trading system, and its efforts for striking further regional integration.40 
2.40.  HKC is involved in the negotiation of the plurilateral Trade in Services Agreement (TISA). It 
considers TISA an effective platform to take services negotiations forward. The authorities note 
that HKC shares the goal of TISA participants to multilateralize the outcomes of the negotiations 
eventually, and to bring the agreement back to the WTO as a building block for multilateral services liberalization for the entire WTO membership. 
2.41.  HKC is a beneficiary of no n-reciprocal tariff preference schemes operated by Canada and the 
Russian Federation. It appears that HKC's trade covered under these schemes is very small. In 2013, there were no HKC exports under the GSP of  the Russian Federation. HKC's entitlement to 
benefits under Canada's General Preferential Tariff scheme will be discontinued with effect from 
1 January 2015. 
2.4  Investment Regime 2.42.  Under the Basic Law, HKC does not maintain any restriction on investment, capital flows, 
and foreign exchange.
41 All service sectors are open to foreign investment, and foreign services 
providers and foreign investors generally receive national treatment, except for (limited) regulatory requirements on investment in the banking (section 4.5.2)
42 and broadcasting sectors, 
which, according to the authorities, are aligned with international standards. There are no 
minimum capital requirements for investments. 
2.43.  With the aim of modernizing company law and further enhancing the role of HKC as a major 
international business and financial centre, the Companies Ordinance was re-written and approved 
by the legislature in July 2012; the legislation (Chapter 622) entered into force in March 2014. The 
new Companies Ordinance provides a number of measures for facilitating business operations, including streamlined procedures and the simplification of companies' reporting obligations, in 
particular for SMEs. The Ordinance also has provisions to enhance corporate governance to ensure 
better regulation, such as provisions for improving company information disclosure and shareholder protection.
43 
2.44.  Another distinctive feature of the new legisl ation is the introduction of a mandatory no-par 
regime for all companies with share capital. The abolition of par value for shares is expected to solve practical problems such as inhibiting the raising of new capital and unnecessarily complicating the accounting regime. The capital duty levied on local companies was abolished in 
June 2012. Under the no-par regime, it is no longer necessary for new companies to pay capital 
duty or for companies to pay capital duty when they increase their share capital.  
2.45.  A company operating in HKC must be incorporated locally or registered as a non-Hong Kong 
company.
44 Company incorporation and/or registration are handled by the Companies Registry 
(CR). The CR administers the Companies Ordinance (Chapter 622) and other relevant legislation. The CR maintains an Index of Company Names for public information. Incorporation or registration 
of a company in HKC is quick and simple. In 2013, it  took 4 working days fo r incorporation of local 
companies and 14 working days for registration of non-Hong Kong companies. Incorporation will take less than one hour if done through e-submission facilities.
45 
2.46.  All businesses are required to register with  the Business Registration Office of the Inland 
Revenue Department. For a business in the form of a company, through the one-stop company 
and business registration service jointly im plemented by the CR and the Inland Revenue 
                                               
40 Asia-Pacific Economic Cooperation online information. Viewed at: http://www.apec.org/Meeting-
Papers/Ministerial-Statements/Trade/2014_trade.aspx . 
41 Chapter V of the Basic Law. Viewed at: http://www.basiclaw.gov.hk/en/basiclawtext/chapter_5.html .  
42 See Monetary Authority Guide to Authorization. Viewed at: http://www.hkma.gov.hk/eng/key-
functions/banking-stability/guide-authorization.shtm. 
43 Company Registry online information, "New Companies Ordinance – Overview". Viewed at: 
http://www.cr.gov.hk/en/comp anies_ordinance/overview.htm .  
44 Non-Hong Kong companies refer to companies inco rporated outside HKC but that have established a 
place of business in HKC. 
45 Companies Registry online informatio n, "Performance Pledges". Viewed at: 
http://www.cr.gov.hk/en/about/performance.htm . WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Department, the CR will issue a Certificate of Incorporation/Registration and the Business 
Registration Certificate at the same time, upon approval of an application for incorporation/registration. Businesses in sectors requiring specific licences must acquire these from the relevant authorities before commencing business operations.
46 These sectors include 
restaurants, karaokes, travel agencies, employment agencies, banks, fund managers, and 
insurance brokers. 
2.47.  Invest Hong Kong is the Government agency responsible for promoting and retaining 
foreign direct investment from over seas. It offers facilitation services and sector-specific advice to 
support companies throughout the investment proce ss, and provides aftercare support services to 
companies already established in HKC.47  
2.48.  A new Arbitration Ordinance (Chapter 609) entered into force in June 2011. This Ordinance 
creates a single regime for all types of arbitration on the basis of the Model Law on International 
Commercial Arbitration of the United Nations Commission on International Trade Law (UNCITRAL), replacing the old regimes, which differentiate between domestic and international arbitration. In 
July 2013, the Arbitration Ordinance was amended to introduce provisions for the judicial 
enforcement of emergency relief granted by an emergency arbitrator before an arbitral tribunal is constituted.
48  
2.49.  During the review period, HKC's taxation regime remained largely unchanged. The system is 
based on territoriality, i.e. only income/profit sourced locally is subject to tax, and income derived from a source outside HKC by a local resident is not taxed in most cases. According to the authorities, businesses operating in HKC do not generally have problems with double taxation of 
income.
49 Nevertheless, HKC pursues comprehensive double taxation agreements/arrangement 
(DTAs) with its trading partners, with the aim of  providing certainty to investors. As of end-
May 2014, HKC had signed DTAs with 29 jurisdic tions, most of which were signed between 
January 2010 and January 2014.50 Furthermore, HKC is able to enter into tax information 
exchange agreements with other jurisdictions, following the passage of relevant legislative amendments in July 2013. 
2.50.  HKC considers investment promotion and protection agreements (IPPAs) as a means to 
attract foreign investment and to enhance prot ection of HKC's outbound investment. As of 
June 2014, HKC had signed 17 IPPAs, with Australia; Austria; Belgo-Luxembourg Economic Union; Denmark; France; Finland; Germany; Italy; Japan; Korea, Rep. of; Kuwait, the State of; 
the Netherlands; New Zealand; Sweden; Switzerland; Thailand; and the United Kingdom. In 
December 2013, HKC concluded IPPA negotiations with the Kingdom of Bahrain and Myanmar.
51 
HKC will start negotiations on an investment agreement with Chile upon the entry into force of the 
HKC-Chile FTA.52 
                                               
46 Business Licence Information Services. Viewed at: 
https://www.success.ti d.gov.hk/tid/eng/bli cs/index.jsp#.  
47 For details, see InvestHK online inform ation, "How we can help". Viewed at: 
http://www.investhk.gov.hk/how-we-can-help.html . 
48 Arbitration (Amendment) Ordinance 2013. The amendm ent also introduced provisions to implement 
the Arrangement Concerning Recipr ocal Recognition and Enforcement of Arbitral Awards between the 
Hong Kong Special Administrative Region and the Maca u Special Administrative Region concluded in January 
2013. 
49 Inland Revenue Department online informat ion, "Double Taxation Relief". Viewed at: 
http://www.ird.gov.hk/eng/pol/dta.htm .  
50 Inland Revenue Department on line information. Viewed at: 
http://www.ird.gov.hk/eng/tax/dta_inc.htm .  
51 Signature of these IPPAs awaits the completion of the necessary internal procedures by the parties. 
52 Commerce and Economic Development Bureau online information, "2013 Policy Address at the 
Legislative Council Panel on Comm erce and Industry". Viewed at: http://www.cedb.gov. hk/about/citb.pdf . WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  3  TRADE POLICIES AND PRACTICES BY MEASURE 
3.1  Overview 3.1.  Procedures in Hong Kong, China (HKC) for trading across borders are amongst the easiest 
and fastest worldwide. Practically all customs declaration procedures are done electronically 
through the services of government-appointed priv ate service providers. During the period under 
review, HKC implemented a number of measures to facilitate trade and strengthen its role as a regional transit hub, including the official introduction of an authorized economic operator 
programme, an intermodal transhipment facili tation scheme, and the reduction of customs 
declaration fees. Moreover, HKC has committed to implementing all measures laid out in the WTO Agreement on Trade Facilitation upon its entry into force without using any flexibilities provided in 
the Agreement.  
3.2.  HKC remains one of the most open economies with very few trade and investment 
restrictions. All applied tariffs are zero, although only 46% are subject to WTO bindings (bound tariffs are at zero-rate, including all agriculture and fisheries tariff lines). Non-tariff border 
measures are few, and import prohibitions and licensing are maintained mostly on the grounds of 
health, safety and environmental protection, and for the administration of excise duties. HKC has no legal instruments against the entry of dumped or subsidized products, and there is no 
legislation on safeguards. The authorities have indicated that no such measures have been taken. 
3.3.  HKC does not establish its own standards but adopts prevailing international standards and 
technical requirements. During the review period, HKC made a number of amendments to its laws on sanitary and phytosanitary (SPS) measures with the aim of enhancing food safety. For 
example, the Food Safety Ordinance, effective February 2012, established a registration scheme 
for food importers and distributors, and requires f ood traders to keep transactions records for up 
to 24 months to improve food traceability.  
3.4.  HKC does not impose export taxes. In general, export prohibitions and licensing apply to the 
same goods as those subject to import licences, and are applied mainly to protect the environment, public health, and safety; comply with international obligations; and enforce 
intellectual property rights (IPRs). Licensing and notification requirements for textiles trade with 
"non-sensitive markets" and for textiles transhipments were lifted in 2011. Since March 2013, powdered formula for infants and young children is subject to export licencing in order to ensure local supply of the product. Excise duties may be refunded, if the goods on which they were paid 
are exported. HKC, as a free port, does not maintain any other special economic or free zones 
schemes. The Government supports exporters mainly through export credit insurance and funding for export promotion activities.  
3.5.  HKC maintains a simple tax structure, with low tax rates. Nevertheless, several tax incentives 
are offered, including for the purchase of environmentally friendly commercial vehicles and for IPR-related expenditures. Non-tax incentives, mainly to support small and medium-size 
enterprises (SMEs), R&D activities, and the develo pment of brands, are provided in the form of 
loans, loan guarantees, and cash grants. Overall, incentives are granted at modest levels. 
3.6.  In June 2012, HKC adopted its first comprehensive competition law, which is being 
implemented in phases. The new law applies to all sectors and deals with anti-competitive conduct 
such as price fixing, collusion, and abuse of mark et power. However, merger control is limited to 
the telecommunications sector. The law creates a Competition Commission with ample investigative powers and a Competition Tribunal to adjudicate enforcement proceedings and grant 
remedies. Generally, HKC does not impose price controls on goods or services, but it does monitor 
the prices of some energy products, and the fees for pilotage services in ports are set by the Government in consultation with the relevant stakeholders.  
3.7.  Hong Kong, China was one of the first Members to ratify the Protocol amending the WTO 
Agreement on Government Procurement (GPA), which entered into force in April 2014. HKC improved its commitments under the revised GPA by adding two government entities and six new types of services in its schedule. In 2013, total government procurement by HKC 
represented 5.8% of GDP, and over 82% of the goods purchased were imported. HKC has notified 
the WTO that it does not maintain state-trading enterprises. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 32 - 
 
  3.8.  The legal framework protecting intellectu al property rights remained largely unchanged 
during the review period. However, there are ongoing initiatives to amend legislation on copyrights, with the aim of addressing protection in the digital environment, and on patents, to 
introduce an original grant patent system that would coexist with the current registration system. 
HKC has gained international recognition for its actions to improve IPRs awareness and 
enforcement, and is taking steps to fight the new global challenges raised by IPR-infringing activities in the digital environment. 
3.2  Measures Directly Affecting Imports 
3.2.1  Customs procedures and requirements 3.9.  In accordance with the Basic Law, HKC retains its status as a free port. International trade is 
regulated mainly under the Import and Export  Ordinance (Chapter 60), and its subsidiary 
regulations, including Import and Export (Gen eral) Regulations, Import and Export (Fees) 
Regulations, and Import and Export (Registr ation) Regulations. The Customs and Excise 
Department (C&ED) is responsible for implementing border measures, including with respect to 
enforcement of intellectual property rights. The Agriculture, Fisheries and Conservation 
Department (AFCD), as well as the Food and Environmental Hygiene Department (FEHD), are 
responsible for the enforcement of sanitary and phytosanitary (SPS) measures at the border. 
3.10.  The C&ED maintains a website on customs legislation and related operational guidelines.
1 It 
also sets up various customer liaison groups with stakeholders with the aim of enhancing communication and cooperation. For customs control and related matters, should there be any disagreements about customs decisions, traders may lodge an objection with the Chief Secretary 
for Administration within 14 days from the date the decision was known; traders may also appeal 
to a court. No administrative reviews or appe als were registered during the review period. 
3.11.  Anyone in HKC may engage in import and export business. However, prior to 
commencement of business, traders of dutiable g oods and controlled chemicals must be licensed 
by the C&ED; and traders of foods must register wi th the FEHD in accordance with the Food Safety 
Ordinance (Chapter 612).  
3.12.  According to the World Bank
2, HKC ranked second among 189 economies for ease of trading 
across borders. HKC has fewer document requirements, and faster and less costly procedures than most other constituencies (Table 3.1) 
3.13.  Importers must lodge a declaration within 14 days after a consignment's arrival, except for 
exempted articles.
3 All import declarations must be submitted electronically via one of the three 
government-appointed service providers, whose ceili ng prices are set in their service agreements 
with the Government.4 In 2014, two services providers incr eased their service charges by 16.3% 
and 22.5%.5 
Table 3.1 Summary of procedures and documents for trading across borders 
  HK, China East Asia and 
Pacific average OECD high 
income 
average 
Number of documents required Import 3 7 4 
Export 3 6 4 
Days required to complete procedures Import 5 22 10 
Export 6 21 11 
                                               
1 The Customs and Excise Department  online information. Viewed at: 
http://www.customs.gov.hk/en/home/index.html . 
2 The World Bank Group (2013). 
3 Exempted articles are stipulated in Regulation 3 of  the Import and Export (R egistration) Regulations. 
They include transhipped or transit goods and g oods imported or exported by the Government. 
4 The three services providers are Brio Electronic Commerce Limited (Brio), Global e-Trading Service 
Limited (Ge-TS), and Tradelink Electronic Commerce Limited (Tra delink). Viewed at: 
http://www.cedb.gov.hk /citb/doc/en/gets/EMAN _Guidebook_(Eng).pdf   
5 Ge-TS' service charge has not changed since 2010. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 33 - 
 
    HK, China East Asia and 
Pacific average OECD high 
income 
average 
Cost to complete procedures (US$ per 
container) Import 565 884 1,090 
Export 590 856 1,070 
Source: World Bank Group (2013), Doing Business 2014 , Economy Profile . Viewed at: 
http://www.doingbusiness.org/reports/globa l-reports/~/media/giaw b/doing%20business/ 
documents/profile s/country/HKG.pdf . 
3.14.  For air cargo, carriers may submit advance cargo information electronically to Customs at 
least one hour before the arrival of the aircraft. In most cases, Customs can complete clearance 
prior to the flight's arrival. For sea cargo, the selection of vessels or cargoes for customs action is 
based on a range of risk indicators. Unless selected for inspection, sea cargoes may be discharged immediately upon arrival of the vessel. In October 2010, the C&ED introduced the e-Sea Customs 
Clearance (e-SCC) Scheme to simplify customs clearance procedures. The e-SCC allows sea freight 
forwarders to submit advance bill-of-lading information (for inbound/transhipment ocean mode consignments) in Excel/CSV formatted files to the C&ED via email. Under normal circumstances, 
e-SCC participants will not be issued a notice for consignee verification (Detention Notice Form 1), 
and when detention for physical examination is required (Detention Notice Form 2), only the suspicious articles in the consignment will be detained, so as to reduce the delay.
6 
3.15.  During the period under review, HKC adopted a number of other trade facilitation measures, 
including mandatory use of the Road Cargo Syst em (ROCARS); introduction of the Intermodal 
Transhipment Facilitation Scheme (ITFS); the Hong Kong Facilitation Scheme for Cross-strait Transhipment Cargoes; and the e-SCC Scheme; as well as the reduction of customs declaration 
fees. Hong Kong, China was the first developing Member to notify the WTO that it designates all 
provisions contained in Articles 1 to 12 of the WTO Trade Facilitation Agreement (TFA) under Category A.
7 This means that HKC will implement all trade facilitation measures laid out in the TFA 
upon its entry into force, without making use of  the flexibilities provided in the agreement. 
3.16.  The use of ROCARS, an electronic customs clearance infrastructure for road cargoes, 
became mandatory in November 2011. A carrier or it s agent is required to submit a predefined set 
of cargo information to the C&ED through ROCARS at least 30 minutes and at most 14 days before 
the arrival or departure of truck cargo consignments. The authorities note that the average 
clearance time at the land border for goods vehicles has been reduced from one minute to 20 seconds since the implementation of ROCARS. 
3.17.  The C&ED launched the Intermodal Transhipment Facilitation Scheme in November 2010 as 
a complement to the operation of ROCARS. The IT FS facilitates the movement of air–land and 
sea–land transhipment cargoes through a simplified clearance process. With the application of 
electronic lock and GPS technology in tracking the transhipment cargoes and their conveying 
trucks, such cargoes will normally be subject to on ly one inspection at either the entry or exit 
point. Participation in the ITFS is voluntary and open to carriers and forwarders of transhipment cargoes. Moreover, in response to the Cross-Straits Economic Cooperation Framework Agreement 
(ECFA) between Mainland China and Chinese Taipei , from January 2011, the C&ED offers to issue 
a confirmation certificate to traders for ECFA-preferential goods in transit through HKC.
8 The C&ED 
also provides confirmation certificates, upon request, for non-U.S. frozen chicken products in 
transit to Mainland China through HKC.  
3.18.  The new facilitation measures are free of  charge except the issuance of confirmation 
certificates for ECFA preferential goods. On 1 August 2012, HKC halved the customs declaration 
fees for imports and exports. 
                                               
6 Under the Import and Export Ordinance, the C&ED may issue a carrier a Detention Notice (Form 1) for 
the purpose of verifying the identity of a consignee,  and a Detention Notice (Form 2) for the purpose of 
consignment examination. 
7 WTO document WT/PCTF/N/HKG/1, 13 May 2014. 
8 For transhipment cargoes that re quire change of transport conveyan ce in HKC, the C&ED conducts 
random checks under the risk-management principle, in  addition to documentary checks, before issuing a 
Confirmation Certificate. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 34 - 
 
  3.19.  After a pilot phase, HKC started formal implementation of the Authorized Economic Operator 
(AEO) Programme in April 2012, to grant local companies that satisfy pre-determined security criteria accredited trader status.
9 There are two tiers of AEOs, Tier 1 AEOs and Tier 2 AEO; the 
latter have to comply with additional criteria.10 The benefits for AEOs include fewer customs 
controls, such as less customs inspection and prio rity customs clearance. The authorities expect 
that the 2-tier mechanism will attract more operators, in particular SMEs. Usually, Tier 1 AEOs will further enhance their security measures to acquire Tier 2 status. Participation in the AEO 
programme is voluntary and free of charge. The AEO programme is not open to companies not 
established in HKC. An AEO certificate is valid for three years, renewable.
11 As of 30 April 2014, 
16 applicants held accredited trader status.  
3.20.  HKC has signed AEO mutual recognition arrangements with Mainland China (October 2013), 
India (November 2013), and the Republic of Korea (February 2014), through which traders 
accredited as AEOs by the C&ED receive the benefits provided under the AEO schemes in Mainland China, India, and the Republic of Korea, and vice versa . HKC is also holding discussions on an AEO 
MRA with Singapore.  
3.21.  HKC does not require the use of customs brokers or pre-shipment inspection.  3.2.2  Rules of origin 
3.22.  In general, no certificate of origin is required for imports of goods into HKC; however, it is 
mandatory to indicate the origin of imported goods when lodging an import/export declaration for statistical purposes. 
3.23.  HKC maintains preferential rules of origin under its free-trade arrangements with Mainland 
China, the EFTA member states, and New Zealand. In the case of exports, HKC implements a 
certification of origin system (section 3.3.1); for re-exports, the origin initially conferred by the place where goods originated is maintained. 
3.2.3  Tariffs 
3.24.  All applied MFN tariffs are at zero. HKC does not operate tariff-rate quotas.  
3.25.  HKC is not a contracting party to the International Convention on the Harmonized 
Commodity Description and Coding System (HS Co nvention), but indicates that it applies the 
Harmonized System.
12 In 2014, 45.6% of HKC's tariff lines (HS 2012 nomenclature) were bound; 
all at a zero rate (Table 3.2). The slight increase in the percentage of bound lines (from 44.8% in 2010) merely reflects the change of nomenclature . HKC did not change its bound rate coverage 
during the review period. 
Table 3.2 Bound tariff struct ure by WTO definitions, 2014 
 Total number  
of lines Number of 
bound linesa Percentage of 
total linesa 
Total lines  7,341 3,349 45.6 
    
WTO agriculture 1,030 1,030 100.0 
  Animals and products thereof 172 172 100.0 
  Dairy products 27 27 100.0 
                                               
9 Local companies include manufacturers, importers, exporters, carriers, term inal operators, freight 
forwarders, warehouse-keepers, etc., irrespecti ve of the company size and business model. 
10 The criteria for the two types of AEOs are listed on the C&ED website. Viewed at: 
http://www.customs.gov.hk/en/trade_facilitation/aeo/status/index.html . 
11 An AEO certificate may be suspen ded or revoked for breach of cust oms security. Upon revocation, the 
company will have its AEO status and associated benefi ts removed and may not re-apply for AEO certification 
within two years. 
12 World Customs Organization online information, "N omenclature and Classification of Goods". Viewed 
at: 
http://www.wcoomd.org/en/topics/nomenclature/~/media/WCO/Public/Global/PDF/Topics/Nomenclature/Over
view/HS%20Contracting%20Parties/List%20of %20Countries/Countries_applying_HS.ashx . WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 35 - 
 
   Total number  
of lines Number of 
bound linesa Percentage of 
total linesa 
  Fruit, vegeta bles and plants 314 314 100.0 
  Coffee and tea 28 28 100.0 
  Cereals and preparations 125 125 100.0 
  Oil seeds, fats and oils and their products 90 90 100.0 
  Sugars and confectionary 26 26 100.0 
  Beverages, spirits and tobacco 71 71 100.0 
  Cotton 5 5 100.0 
  Other agricultural products n.e.s. 172 172 100.0 
WTO non-agriculture (incl. petroleum) 6,311 2,319 36.7 
    Fish and fishery products 354 354 100.0 
    Minerals and metals 1,020 667 65.4 
    Chemicals and photographic supplies 1,416 142 10.0 
    Wood, pulp, paper and furniture 298 283 95.0 
    Textiles 697 100 14.3 
    Clothing 528 8 1.5 
    Leather, rubber, footwe ar and travel goods 217 88 40.6 
    Non-electric machinery 662 194 29.3 
    Electric machinery 350 155 44.3 
    Transport equipment 167 19 11.4 
    Non-agriculture articles n.e.s. 553 309 55.9 
    Petroleum 49 0 0.0 
a Including 56 partially bound tariff lines. 
Source: WTO Secretariat calculations, based on data provided by the authorities. 
3.26.  Of the 3,349 bound tariff lines (all at a ze ro rate), 1,030 lines cover agriculture (Table 3.2). 
All agricultural tariff lines are bound, as are all lines on fish and fishery products. In contrast, only 
36.7% of non-agricultural lines are bo und. Petroleum products remain unbound. 
3.2.4  Other duties and charges  
3.2.4.1  Internal taxes collected at the border 
3.27.  Liquor, tobacco, hydrocarbon oil, and meth yl alcohol are subject to excise duties when 
consumed locally, whether they are locally manufactured or imported.13 Duties are prepaid by the 
seller and included in the price. As there is littl e or no domestic production of these goods, the 
taxes fall mostly on imports. Since the last TPR of HKC, the only change in the rates of excise 
duties has been on tobacco, which increased by 41.5% on the grounds of public health (Table A3.1). In fiscal year 2013/14, excise duties collected at the border amounted to 
HK$9,720 million or 3.4% of total tax revenue in HKC (Table 3.3). 
Table 3.3 Internal tax collection, 2010-14 
(HK$ million) 
Fiscal year 2010/11  2011/12  2012/13 2013/14  
Excise Duties 7,552 7,725 8,976 9,720 
Liquor Local 0.6 0.2 0.2 0.2 
Import 298 363 383 415 
Tobacco Local 208 175 207 191 
Import 4,013 4,032 5,106 5,658 
Hydrocarbon oil Local n.a. n.a. n.a. n.a. 
Import 3,027 3,147 3,273 3,451 
                                               
13 Liquor with an alcoholic strength of less than  30% by volume is exempted from excise duties. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 36 - 
 
  Fiscal year 2010/11  2011/12  2012/13 2013/14  
Methyl alcohol Local n.a. n.a. n.a. n.a. 
Import 5 8 7 5 
First registration tax 6,657 7,070 7,466 8,338 
Total tax revenue 241,526 275,115 279,563 288,065 
n.a. Not applicable. 
Source: Information provided by the authorities. 
3.28.  The first registration tax is a progressive tax on the taxable value of new motor vehicles. 
Tax rates range from 40% to 115% for private cars. As no vehicles are produced in HKC, this tax 
is levied exclusively on imports. During the review period, first registration tax rates on private 
cars increased by 5 to 15 percentage points in a bid to relieve traffic congestion (Table A3.2). For environmental reasons, electric vehicles and environment-friendly vehicles continue to benefit 
from exemptions and reductions from this tax, respectively (section 3.4.1.2). The first registration 
tax accounted for about 2.9% of total tax revenue in fiscal year 2013/14. 
3.29.  Importers of goods subject to excise duties  require licences/removal permits from the C&ED 
(section 3.2.6.2). These duties must be paid before customs clearance. If the imported goods are 
subsequently re-exported, the excise duties may be refunded. 
3.2.4.2  Other charges 3.30.  Apart from the import declaration fee and im port licensing administrative charges, HKC does 
not apply any other charges on imports.  
3.2.5  Customs valuation 3.31.  Given that all applied tariff rates in HKC are zero, customs valuation is used essentially to 
facilitate internal tax (e.g. excise duties) collection at the border. There are no general laws, 
regulations, or administrative procedures  for valuing goods for tariff purposes.
14 
3.32.  The valuation method to assess excise duties is stipulated in Section 26A of the Dutiable 
Commodities Ordinance (Chapter 109). Under the Ordinance, the value of goods is its "normal 
price", which is the sales price of the goods in  the open market between a buyer and a seller 
independent of each other. "Normal price" does not include the costs of transport and insurance 
and other related charges. Where a "normal price" cannot be determined, Customs may fix a value 
to assess and calculate the excise duties. For impo rted and domestically produced liquor, the ex-
factory price is the basis for assessing the excise duty. 
3.33.  The first registration tax for vehicles is levi ed on the vehicle's published retail price. If there 
is no published price, the tax is assessed on th e purchase price plus insurance and freight fees, 
together with any brokerage or agency fee related to the purchase and importation of the vehicle.  
3.2.6  Import controls 
3.34.  The basic framework for import controls (including prohibitions, restrictions, and licensing) 
has remained largely unchanged since the previous Review of HKC, apart from steps taken to align the regime more closely with international practices. 
3.2.6.1  Import prohibitions and restrictions 
3.35.  The authorities state that HKC imposes import prohibitions for reasons of public health, 
security, environmental protection, and compliance with international obligations. Prohibited imports include ozone-depleting substances, rough diamonds from countries outside the Kimberley 
Process, hazardous waste, and (more recently) certain radio-communications apparatus.
15  
                                               
14 WTO document G/VAL/N/1/HKG/1, 31 January 1996. 
15 The WTO Secretariat could not locate a comprehensiv e list of items for which importation is strictly 
prohibited.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 37 - 
 
  3.36.  In November 2011, radio jammers that cause radio interference to existing services were 
banned from importation unless they are for subsequent re-export. In May 2013, PHS radio-communications apparatus operating within 1895–1906.1 MHz were also banned, except for re-export. This measure aims to vacate this radio band for other mobile radio-communications 
services. The authorities note that imports and exports of other radio-transmitting apparatus are 
not affected. 
3.37.  Imports of ozone-depleting substances, including methyl bromide are banned unless they 
are under the Montreal Protocol. Imports of ozone-depleting substances under the Montreal 
Protocol are subject to licensing requirements (section 3.2.6.2).  
3.38.  All imports of rough diamonds from non-pa rticipants of the Kimberley Process have been 
banned since 2 January 2003. Imports of rough diamonds must be covered by valid Kimberley 
Process Import Certificates issued by the Trade and Industry Department prior to importation 
(Table 3.4). 
3.39.  Under the Waste Disposal Ordinance (Chapter 354), imports of hazardous waste from 
countries listed in the Ninth Schedule of the Ordinance are prohibited.
16  
3.2.6.2  Import licensing 3.40.  The application of import licensing in HKC is mainly for reasons of health, safety, 
environmental protection, public security, compliance with international obligations, and 
administration of excise duties collection (Table  3.4). Generally, products subject to licensing are 
listed in Schedule 1 of the Import  and Export (General) Regulation.
17 During the review period, a 
few amendments were made to the import licensing schemes to bring them fully into line with the 
requirements of relevant international conventions.18 
Table 3.4 Import licensing schemes, 2013 
Goods Licensing authority Rationale 
Strategic commoditiesa Trade and Industry Department To prevent HKC from being used as a 
conduit for proliferation of weapons of mass destruction, an d to ensure HKC's 
continuous access to technology and high-tech products 
Textiles from China Trade and Industry Department Surveillance for HKC' s textiles export 
control system 
Rice Trade and Industry Department To maintain a stable supply and a 
reserve stock for emergencies 
Pesticides  Trade and Industry Department 
(for pesticides containing methyl 
bromide); 
Agriculture, Fisheries and 
Conservation Department (for 
pesticides other than methyl 
bromide) Public health concerns 
Rough diamonds Trade and Industry Depa rtment International obligation under 
Kimberley Process 
Ozone-depleting substances Trade and Industry Department International obligation under the 
Montreal Protocol 
Pharmaceutical products and 
medicines; proprietary Chinese medicines and 36 Chinese herbal medicines; and radioactive substances and irradiating apparatus Department of Health Public health, safety, and security; 
international obligation 
                                               
16 These are mostly EU and OECD member countries. For the Ninth Schedule, see: 
http://www.legislation.gov.hk/blis_ind .nsf/E1BF50C09A33D3DC 482564840019D2F4/0ED23B4B855161184825
715A0025EAD4?OpenDocument . 
17 The Department of Justice online  information, "Bilingual Laws Information System". Viewed at: 
http://www.legislation.gov.hk/blis_ind.nsf/CurAllEngDoc/84B69C805C2EF1E2C82564800042AAF4?OpenDocum
ent.  
18 For example, the amendments to the schedules of the Protection of Endangered Species of Animal 
and Plants Ordinance (effective 2011) and to the Pesticides Ordinance (effective January 2014). WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 38 - 
 
  Goods Licensing authority Rationale 
Tobacco, liquors, methyl 
alcohol and hydrocarbon oilb Customs and Excise Department Excise duties collection and 
administration 
Controlled chemicalsb Customs and Excise Department To  prevent diversion of controlled 
chemicals into illicit manufacture of narcotic drugs and psychotropic substances 
Optical disc mastering and 
replication equipment Customs and Excise Department To enforce the intellectual property 
rights regime and to prevent the use of 
optical disc mastering and replication 
equipment for copyright infringing 
activities 
Sand Civil Engineering and 
Development Department To protect beaches and seabeds 
Frozen or chilled meat and 
poultry Food and Environmental Hygiene 
Department Public health and food safety 
Genetically modified organisms 
(intended for release into environment) Agriculture, Fisheries and 
Conservation Department Biosafety; conservation of local 
biodiversity; international obligation under the Cartagena Protocol on Biosafety to the Convention on Biological Diversity 
Live animals Agriculture, Fisheries and 
Conservation Department Sanitary consideration 
Plants, plant pests, and soil Agriculture, Fisheries and 
Conservation Department Phytosanitary consideration 
Endangered species of animals 
and plants Agriculture, Fisheries and 
Conservation Department International obligation under CITES 
Non-pesticid e hazardous 
chemicalsc Environmental Protection 
Department To protect human health and the 
environment in accordance with , inter 
alia, the principles of the Stockholm 
Convention and the Rotterdam Convention 
Waste Environmental Protection 
Department To fulfil international obligations under 
the Basel Convention and to ensure 
environmentally sound management of 
waste 
a Radio-transmitting equipment, arms, ammunition, and explosive are subject to additional controls 
by other relevant authorities. 
b Importers must apply to the Customs and Excise  Department to become  a licensed importer. 
c The permit/licensing system does not apply to the controlled chemical, with exceptions, if the 
chemical is a constituent element of a manufactured product. 
Source: WTO document G/LIC/N/3/HKG/17, 30 Septem ber 2013; and information provided by the HKC 
authorities. 
3.41.  Importers of dutiable goods and controlled  chemicals must be licensed as traders before 
they can apply for removal permits (for dutiable goods) or for import authorization (for controlled 
chemicals). All these formalities are concluded with the Customs and Excise Department. The 
licence for traders is valid for one year, renewable; the removal permit/import authorization is consignment-specific.
19 
3.42.  HKC maintains a comprehensive control system on the import and export of strategic 
commodities. Control of strategic commodities is administered through licences per consignment. Transhipment and transits cargoes
20 of strategic commodities are regarded as separate import and 
export operations, i.e . separate licences are required for import and export. Products subject to 
control are listed in the schedules to the Import and Export (Strategic Commodities) Regulations, 
                                               
19 There is an administrative charge for issuance/renewal of a licence (HK$1,090 for dutiable 
commodities importers; and HK$1,530 for controlled chemicals importers). There are no fees for issuance of a removal permit for dutiable goods or import author ization for controlled chemicals. See WTO document 
G/LIC/N/3/HKG/17, 30 September 2013. 
20 Under HKC legislation, there are two distinctive definitions for transhipment and transit. 
"Transhipment cargo" refers to any imported article that  is consigned on a through bill of lading or a through 
air waybill from a place outside HKC to another place outside HKC, and is or  is to be removed from the vessel, 
aircraft or vehicle in which it was imported and either returned to the same vessel, aircra ft or vehicle or 
transferred to another vessel, aircraft or vehicle before being exported. "A rticle in transit" re fers to an article 
brought in to HKC solely for the purpose of taking it ou t of HKC and remains at all times in or on the vessel or 
aircraft in or on which it is brought into HKC. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 39 - 
 
  covering, inter alia , arms, ammunition, chemical and biological weapons and their precursors, 
nuclear materials and equipment, and industrial dual-use goods. The schedules were amended and entered into force in July 2013. 
3.43.  Under the Reserved Commodities Ordinance and its subsidiary legislation, any product 
designated as a reserved commodity is subject to  import and export licensing. Currently, the only 
reserved commodity is rice.  
3.44.  Imports licences for ozone-depleting substances under the Montreal Protocol are issued by 
the Trade and Industry Department on individual  consignments. Import quotas are applied to 
hydrochlorofluorocarbons (HCFCs); the quota is determined annually according to the requirements of the Montreal Protocol. Part of th e quota (normal quotas) is allocated to registered 
importers based on their performance in the past year; the remainder (free quotas) is allocated on 
a first-come first-served basis. A common ceiling amount of quota is assigned to each importer 
applying for free quota; the ceiling is subject to change and review in accordance with the market situation. Following the phase-out schedule in the Montreal Protocol, all imports of HCFCs will be 
banned in January 2020. 
3.45.  In most cases, importers pay a fee for the application form for an import licence. The 
authorities state that all these fees are commensurate with the service cost. Import licences are 
valid from 28 days to one year, depending on the type of licence. Import licences are not 
transferable. 
3.46.  Textile imports from Mainland China are subject to an import licence per consignment 
entering HKC. Licences are issued by the Direct or-General of Trade and Industry, and serve as a 
surveillance system to back up the export cont rol system. Importers registered under the Textiles 
Trader Registration Scheme (TTRS) are exempt fr om the licensing requirements, but are required 
to lodge import notifications. In 2013, almost all textiles imports from Mainland China were under 
the TTRS. The licensing and notification requirement was removed on 21 November 2014.
21 
According to the authorities, the TTRS will remain in operation at least in the initial stage of post-liberalization to allow traders to familiarise the licensing exemption in case textile licensing is 
reinstated when circumstances required. Registration with the TTRS is voluntary. 
3.2.7  Contingency measures 3.47.  HKC has not established an authority for initiating and conducting investigations on anti-
dumping and countervailing measures. The authorities notified the WTO that HKC has taken no 
anti-dumping or countervailing actions, and they do not anticipate any in the foreseeable future.
22 
3.48.  HKC has no legislation or institutional framework on safeguard measures. No safeguard 
measures have ever been adopted . 
3.2.8  Sanitary and phytosanitary requirements 
3.49.  The institutional framework for SPS measur es in HKC remains largely unchanged since its 
last Trade Policies Review in 2010. The Trade and Industry Department is the SPS enquiry point 
for the WTO.23 
3.50.  HKC notified 8 regular SPS measures to the WTO between January 2010 and April 2014; no 
notifications of emergency measures were submitted. The regular notifications covered, inter alia , 
foodstuffs, dairy products, sweeteners, genetically modified organisms, and horses from certain 
countries.24 
3.51.  There was a relevant international standa rd for five of the notified measures, and HKC 
considers that all five were in conformity with that international standard. All notifications specified 
a period of at least eight weeks for comment. In addition, three addenda were submitted during 
                                               
21 Trade and Industry Department ci rcular TID CL 10-3/2. Viewed at: 
http://www.tid.gov.hk/english/aboutus/tradecircular/all_in_one/2014/as072014.html. 
22 WTO documents G/ADP/N/193/HKG and G/SCM/N/202/HKG, 14 July 2010. 
23 WTO document G/SPS/ENQ/26, 11 March 2011. 
24 WTO documents G/SPS/N/HKG/32-39. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 40 - 
 
  the period under review, providing additional information on the date of entry into force of 
previously notified SPS measures. In the SPS Committee, Japan raised concerns regarding HKC's import restrictions following the Japanese nuclear power plant accident
25; similar restrictions were 
also applied by a number of other WTO Members. 
3.52.  HKC participates in meetings of the World Organization for Animal Health (OIE) and the 
Commission on Phytosanitary Measures of the International Plant Protection Convention (IPPC) under the auspices of China. HKC also particip ates in meetings of the Codex Alimentarius 
Commission and its committees as part of China's delegation. 
3.53.  Since the last TPR, new laws and amendments to SPS legislation were passed and became 
effective. The Food Safety Ordinance entered into force on 1 February 2012; the Genetically Modified Organism Ordinance on 1 March 2011; the amendment to the Harmful Substances in 
Food Regulation on 1 March 2012; the amendmen t to the Sweetener in Food Regulation on 
1 August 2010; and the amendment to the Pesticid e Residues in Food Regulation entered into 
force on 1 August 2014. 
3.54.  The Food and Health Bureau (FHB) and the Food and Environmental Hygiene Department 
(FEHD) are the competent authorities for food an d related issues, under the mandate of the Food 
Safety Ordinance (Chapter 612) as well as the Public Health and Municipal Services Ordinance 
(Chapter 132) and its subsidiary regulations.
26 Under the new Food Safety Ordinance (2012), live 
aquatic products and edible ice are included in the definition of food.27 The new ordinance requires 
importers and distributors of food to register  with the FEHD prior to their commencement of 
business; and food importers/distributors must keep transaction records in order to enhance food 
traceability.28 The Food Safety Ordinance also empowers the Director of Food and Environmental 
Hygiene to prohibit imports/supply of any food, through Food Safety Orders, on the grounds of public health.
29 There is no time limit for the prohibition but the Director of Food and 
Environmental Health may revoke the Order when he believes it is no longer necessary to prohibit 
the imports/supply. 
3.55.  Importers of certain high-risk food items are required to obtain an import licence and/or 
written permission from the FEHD prior to importation. High-risk food items include frozen 
confections; milk and milk beverage; and meat and poultry. Imports of these products are confined to sources recognized by the FEHD. In general, game, meat, and poultry sources are country-specific; whereas sources for frozen confections, milk, and milk beverage, are 
manufacturing plant-specific. No transhipment certificate is required for imports of meat and 
poultry transhipped in sealed refrigerated containers, if the seals have remained intact during transport. 
3.56.  Food importers are responsible for ensuring that food items comply with the relevant 
legislation and requirements, for instance, health certificates from the competent authorities of exporting countries.  
3.57.  Effective 17 June 2014, the import restriction on U.S. beef was relaxed: specified offal, 
bone-in beef (excluding cuts with vertebral column from cattle of 30 months of age or older), and boneless beef from cattle of all ages are allowed.  Every consignment of such U.S. beef product 
imports must have prior permission from the Cent re for Food Safety (CFS) under the FEHD and be 
accompanied by a health certificate. In line with  notifications from the OIE, the Centre for Food 
Safety will temporarily suspend imports of poultr y meat and poultry products (including poultry 
eggs) for human consumption from areas where avian influenza in poultry is reported. The WTO 
has not received any information on these temporary measures.  
                                               
25 WTO document G/SPS/R/71, 28 August 2013.  
26 Centre for Food Safety online inform ation, "Food Legislation". Viewed at: 
http://www.cfs.gov.hk/english/food_leg/food_leg.html . 
27 Drink; chewing gum and other products of a lik e nature and use; smokeless tobacco products; 
articles and substances used as ingredients in the preparat ion of food or drink or of such products, as well as 
live shell fish are defined as food under the Public Heal th and Municipal Services Ordinance (amended in 2011).  
28 For foods with shelf life of not more than thr ee months, the transaction re cords must be kept for 
three months; for other foods, the requirement is 24 months. 
29 Section 30, "Food Safety Orders",  the Food Safety Ordinance.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 41 - 
 
  3.58.  Sanitary controls on imported food are im posed on public health grounds and on the basis 
of risk assessment. According to the authorities, risk assessment is conducted using best available 
scientific evidence, and to provide input to suppo rt risk-management decisions. The CFS operates 
a Food Surveillance Programme to take samples of food, including vegetables and fruits at import, 
wholesale, and retail stages for testing. 
3.59.  The Pesticide Residues in Food Regulation entered into force in August 2014.30 The 
Regulation promulgates a list of residue limits for certain pesticide food products formulated 
mainly with reference to international stan dards recommended by the Codex Alimentarius 
Commission, and supplemented by the standards of major food exporting economies to HKC. 
Import and sale of food containing pesticide residues whose limits are not specified in the Regulation is permitted only if consumption of such food is not dangerous or prejudicial to health, 
as confirmed by risk assessment carried out by  the Centre for Food Safety under the FEHD. 
3.60.  Imports of live animals and plants are subjec t to strict inspection at the border to prevent 
the introduction and dissemination of animal dise ases and plant pests. Importers of live animals 
and poultry for human consumption are encouraged to participate in the Voluntary Registration 
Scheme for Live Food Animals and Live Poultry Importers/Distributors. Imports of live animals and poultry are subject to a special permit from the Agriculture, Fisheries and Conservation 
Department (AFCD) (section 3.2.6.2) except imports of non-CITES animals and poultry from 
Mainland China.
31 
3.61.  Imports of plants are regulated under the Plant (Importation and Pest Control) Ordinance, 
administered by the AFCD. Its principles and procedures are based on the Plant Protection 
Agreement for the Asia Pacific Region, and the Inte rnational Plant Protection Convention (IPPC). A 
Plant Import Licence (PIL) issued by the AFCD, and a phytosanitary certificate are required to 
import plants except for plants and soil imported from Mainland China. 
3.62.  Provisions pertaining to genetically modified organisms (GMOs) are laid down in the 
Genetically Modified Organisms (Control of Release) Ordinance (Chapter 607), which entered into force in March 2011. No GMOs are allowed to be released into the environment, unless the GMOs 
are pharmaceutical products for use by human beings or certain criteria have been met.
32 Release 
of GMOs into the environment requires authorization from the AFCD. Two varieties of GM papaya (i.e. the variety with the unique identifier code CUH-CP551-8 and the variety with the transformation event code Huanong 1) and any GMO that is contained in a veterinary vaccine are 
exempted from the requirement.
33 Imports of GMOs intended for release into the environment 
require prior approval from the AFCD; exports of GMOs for the same purpose are prohibited in general.
34 
3.63.  Applicants who wish to release a GMO into the environment or import a GMO for release 
into the environment must submit a specified appl ication form and a risk-assessment report on the 
possible adverse biosafety effect of the GMO.35 Results of risk assessments conducted by foreign 
institutions are accepted. The approval procedure requires no longer than 270 days, unless 
additional information or supporting documents are required, but may be extended with written notice from the AFCD. Since this ordinance became effective in 2011, there has been no applications for release of GMOs into the environment.  
3.64.  Imports of GMOs (including those intended for release into the environment, contained use, 
and direct consumption as food or feed, or fo r processing (FFP)), must be accompanied by 
prescribed documents. These documents must contain information including the GMO identity, its 
common name, and scientific name, the importer an d exporter, and other information as required 
                                               
30 Centre for Food Safety online inform ation, "Food Legislation". Viewed at: 
http://www.cfs.gov.hk/english/whatsnew/wha tsnew_fstr/whatsnew_fstr_21_Pesticide.html . 
31 Imports of non-CITES animals and poultry from Mainla nd China are regulated in separate legislation. 
The authorities note that the exemption from special permits is on the grounds of trade facilitation given that Mainland China is the major supplier of live anim als and poultry for human consumption in HKC. The 
authorities also note that the control measures on these imports from Mainland China are not less strict than on imports from other sources. 
32 Section 5, the Genetically Modified Orga nisms (Control of Release) Ordinance. 
33 Genetically Modified Organisms (Contr ol of Release) (Exemption) Notice. 
34 Section 7 & 23, the Genetically Modified Or ganisms (Control of Release) Ordinance. 
35 Section 8, the Genetically Modified Orga nisms (Control of Release) Ordinance. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 42 - 
 
  in the relevant regulation.36 If an import shipment is unintentionally mixed with GMOs intended for 
contained use or FFP, and the quantity of the GMOs in the total quantity of living organisms in the 
lot does not exceed the prescribed percentage, the GMO in question is not required to be 
accompanied by a document.37 Currently, the prescribed percentage of GMOs is 5%. 
3.2.9  Standards and other technical requirements 
3.65.  HKC has no official institution for standards, and there is no comprehensive legislation in 
this area. HKC has not developed its own standards. The authorities maintain that HKC adopts 
international standards or overseas standards, wh ere appropriate. The Innovation and Technology 
Commission (ITC) is the TBT enquiry point for the WTO.38 
3.66.  HKC notified 12 technical regulations and conformity assessment procedures to the WTO in 
the period January 2010 to June 2014.39 The notifications cover as foodstuffs, dairy products, 
genetically modified organisms, and household appliances. The notifications normally specify a 
comment period of at least 60 days and a propos ed date of adoption after the expiry of the 
comment period. HKC also submitted four addend a, providing additional information on the 
adoption of technical regulations. 
3.67.  Compulsory standards, i.e. technical requirements, apply to motor vehicles, machinery, 
fuels, consumer goods, toys, children's products40, household electrical apparatus, portable 
firefighting equipment, and telecommunication appa ratus and equipment. The authorities note that 
these technical requirements are imposed for safety, health, and environmental protection reasons (Table A3.3).  
3.68.  Generally, mandatory product certification is not required; different regulatory agencies 
formulate their own conformity assessment requirem ents and procedures to suit specific needs. 
Importers are responsible for ensuring that consumer products (including toys) comply with the relevant safety requirements/standards. The C&ED is the competent authority for ensuring product 
safety compliance.
41  
3.69.  The Hong Kong Accreditation Service (HKAS), under the ITC, provides accreditation services 
to laboratories, certification bodies, and inspecti on bodies. The HKAS operates three accreditation 
schemes: the Hong Kong Laboratory Accreditation Scheme (HOKLAS), the Hong Kong Certification 
Body Accreditation Scheme (HKCAS), and the Hong  Kong Inspection Body Accreditation Scheme 
(HKIAS). At end 2013, there were 206 laboratories, 20 inspection bodies, and 19 certification bodies accredited by the HKAS. These institutions  must undergo on-site assessments before they 
are accredited. There are statutory requirements fo r testing and certification by accredited bodies. 
3.70.  The HKAS is a member of the International Accreditation Forum (IAF), the International 
Laboratory Accreditation Cooperation (ILAC), the Pacific Accreditation Cooperation (PAC), and the 
Asia Pacific Laboratory Accreditation Cooperation (APLAC). It is also a signatory to the multilateral 
mutual recognition arrangements administered by these organizations. As of May 2014, the HKAS had concluded 87 MRAs with 69 economies.
42  
                                               
36 Section 26, the Genetically Modified Orga nisms (Control of Release) Ordinance.  
37 The Genetically Modified Organisms (Documen tation for Import An d Export) Regulation. 
38 WTO document G/TBT/ENQ/38/Rev.1, 8 July 2011. 
39 WTO documents G/TBT/N/HKG/34-45. 
40 The Toys and Children’s Products Safety Ordinance was amended in December 2013 to enable 
regulations to be made to control the concentration of six types of phthalates in toys and children's products. 
The Toys and Children's Products Sa fety (Additional Safety Standards or  Requirements) Regulation was made 
under the amended Ordinance in February 2014 to stipulate the concentration limits of the six types of phthalates in toys as well as children's products intend ed to facilitate the feeding, hygiene, relaxation, sleep, 
sucking or teething of a child under 4 years of age an d containing any plasticize d material. The Regulation 
entered into effect in July 2014.
 See Customs online information, "Toys and Children's Products Safety" at: 
http://www.customs.gov.hk/en/consumer_protection/toys_safety/index.html . 
41 C&ED online information, "Con sumer Protection". Viewed at: 
http://www.customs.gov.hk/en/consumer_protection/toys_safety/index.html  and 
http://www.customs.gov.hk/en/consume r_protection/goods_safety/index.html .  
42 ITC online information.  Viewed at: http://www.itc.gov.hk/en/quality/hkas/about.htm .  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 43 - 
 
  3.71.  The Government  considers that testing and certification services is an industry where HKC 
has a clear advantage. In March 2010, the Hong Kong Council for Testing and Certification (HKCTC)
43 proposed a three-year market-oriented development plan for the testing and 
certification industry. In March 2013, the HKCTC made a number of recommendations in its review 
of the development plan with the aim of converting HKC into a testing and certification hub in the 
region. The recommendations include improving HKC's accreditation system and exploring new opportunities in six specified trades (Chinese me dicine, construction materials, food, jewellery, 
environmental protection, as well as information and communication technologies) for testing and 
certification services.
44 The HKCTC recommendations were  accepted by the Government. 
3.72.  Food labelling requirements are specified in  Schedule 3 of the Food and Drugs (Composition 
and Labelling) Regulations. Manufacturers or pa ckers of pre-packaged food must declare the 
presence of allergenic substances in food and the functional use and specific name or International 
Numbering System (INS) number of food additives in the food. Regular inspections are carried out 
and random food samples are tested to verify the labelled content. Penalties for violations are a 
maximum fine of HK$50,000 and 6 months imprisonment.  
3.73.  Labelling of GM food follows a voluntary "positive labelling" approach, i.e. any food with 5% 
or more GM materials in their respective food ingredient(s) should be labelled as "genetically 
modified". The negative labelling approach, i.e. "GM free" or similar labels, is not recommended, 
as the authorities consider this might be misleading to consumers.  
3.3  Measures Directly Affecting Exports 3.3.1  Export documents and procedures 
3.74.  An export declaration must be lodged electronically with the Customs and Excise 
Department (C&ED) within 14 days of the export of a consignment, except for exempted articles.
45 
Declarations are also required for re-exports. In general, required shipping documents include the 
manifest, commercial invoice, bill of lading/air waybill, packing list, and other documents, such as 
removal permits (licence/permit/certificate/authorization required by law upon exportation of controlled items). Exports are not subject to any customs actions unless they are selected for 
customs verification and inspection through risk pr ofiling. Cargo detained for further checks, which 
is a very small percentage of the volume of consignments, is generally released within 30 minutes. 
3.75.  While a certificate of origin (CO) is no t mandatory for exports of goods, the authorities 
administer an origin certification system to facilitate HKC's exports.
46 In particular, this system 
helps exporters meet the requirements of importin g countries and benefit from trade preferences. 
Generalized Preference Certificates are issued for exports to Canada47 and Russia; Certificates of 
Hong Kong Origin – CEPA (CO-CEPA) for exports to Mainland China; and Certificates of Hong Kong 
Origin – New Zealand (CO-NZ) for exports to New Zealand.48 Only registered manufacturers with 
verified capability to perform the origin-conferri ng processes of their registered products may 
apply for COs.49 
                                               
43 The Hong Kong Council for Testing and Certification (HKCTC), established in 2009, is a non-statutory 
advisory body to the Government on the overall strategy to support the development of the testing and certification industry. 
44 For details, see the Review Report of the Hong Kong Council for Testing and Certification (2013).  
45 Exempted articles are stipulated in regulation 3 of  the Import and Export (Registration) Regulations. 
46 In addition to the Trade and In dustry Department (TID ), five organizations have been delegated 
authority to issue COs: the Hong Kong General Ch amber of Commerce; the Federation of Hong Kong 
Industries; the Indian Chamber of Commerce, Hong Ko ng; the Chinese Manufacturers' Association of Hong 
Kong; and the Chinese General Chambe r of Commerce. The TID ensures that  all issuing orga nizations adopt 
the same rules of origin, practices, an d procedures in the issuance of COs. 
47 HKC's entitlement to benefits under the General Preferential Ta riff Scheme of Canada will be 
discontinued with from 1 January 2015. 
48 This certificate is applicable to goods under HS Chapters 61 and 62. 
49 Prior to applying for COs (including CO–CEPA an d CO-NZ), the manufacturers must apply for Factory 
Registration (FR) with the TID to demonstrate their capa bility to produce their regi stered products. Production 
capability will be verified by the C&ED before granting registration. Pe riodic re-inspections will follow.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 44 - 
 
  3.3.2  Export taxes, charges, and levies 
3.76.  HKC does not impose any export-related duties or taxes. 3.77.  Excise duties may be refunded (up to th e amount of duty paid) if the goods subject to 
excise duties are exported.
50 
3.78.  Exports of locally manufactured clothing and footwear continue to be subject to a clothing 
industry training levy of HK$0.30 per HK$1,000. The levy is used for training courses for the clothing industry, the establishment and maintenanc e of industrial training centres, and placement 
assistance for persons completing training course s by the Clothing Industry Training Authority. 
3.3.3  Export prohibitions, restrictions, and licensing  3.79.  HKC applies trade sanctions imposed by the UN Security Council.
51 To fulfil international 
obligations, exports of rough diamonds to non-participants of the Kimberley Process, and exports 
of ozone-depleting substances to non-parties to the Montreal Protocol are banned. 
3.80.  Most goods subject to export licensing mi rror those subject to import licensing, except for 
powdered formula, frozen and chilled meat and poultry, live animals, plants, and waste 
(Table 3.5). Certain exports require an export licence/permit, or a removal permit or certificate on 
grounds of, inter alia , protection of the environment, security, public health, intellectual property 
rights, fulfilling international obligations, and revenue protection (from dutiable commodities). 
Table 3.5 Export licen sing schemes, 2013 
Goods Licensing authority Rationales 
Powdered formula for infants 
and young children aged under 36 months Trade and Industry Department To tackle the serious shortage of 
powdered formula in the local market caused by parallel traders, and to safeguard the health of local infant and young children aged under 36 months 
Strategic commoditiesa Trade and Industry Department To prevent HKC from being used as a 
conduit for proliferation of weapons of 
mass destruction an d to ensure HKC's 
continuous access to technology and 
high-tech products 
Textiles  Trade and Industry Department To  ensure origin compliance of textiles 
products claiming Hong Kong origin 
Radio-communications 
transmitting apparatus Office of the Communication 
Authority To comply with the relevant legislation 
requirement 
Rough diamonds Trade and Industry Department International obligation 
Ozone-depleting substances Trade and Industry Department International obligation 
Rice Trade and Industry Department To maintain a stable supply and a 
reserve stock for emergencies 
Pesticides  Trade and Industry Department 
(for pesticide containing methyl 
bromide); 
Agriculture, Fisheries and 
Conservation Department (for 
pesticide other than methyl 
bromide) International obligation 
Pharmaceutical products and medicines; proprietary Chinese medicines and 36 Chinese 
herbal medicines; and 
radioactive substances and Department of Health Public health, safety, and security; 
international obligation 
                                               
50 Excise duties may also be refunded on: imported goods that do  not correspond to the description of 
the contract of sale or are damaged in transit and th erefore destroyed in HKC or returned to the overseas 
suppliers; goods imported for consular  use; goods used in the manufacture of dutiable goods; samples drawn 
for analysis by the Governme nt; reasonable quantity of fuel in the fu el tank of any "pleasure vessel" (yacht) 
whose net registered weight is more than 60 tonnes, to reach an identified port ou tside HKC; and light diesel 
oil used in franchized buses and support vehicles. Viewed at: 
http://www.customs.gov.hk/en/trade_facilitation/dutiable/payment/index.html . 
51 UN Security Council Resolutions adopted by China extend to Hong Kong, China. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 45 - 
 
  Goods Licensing authority Rationales 
irradiating apparatus 
Tobacco, liquors, methyl 
alcohol and hydrocarbon oil Customs and Excise Department Excise duties collection and 
administration 
Controlled chemicals Customs and Excise Depa rtment To prevent diversion of controlled 
chemicals into illicit manufacture of narcotic drugs and psychotropic substances 
Optical disc mastering and 
replication equipment Customs and Excise Department To enforce the intellectual property 
rights regime and to prevent the use of 
optical disc mastering and replication 
equipment for copyright infringing 
activities 
Sand Civil Engineering and 
Development Department To protect beaches and seabeds 
Genetically modified organisms 
(intended for release into 
environment) Agriculture, Fisheries and 
Conservation Department International obligation under the 
Cartagena Protocol on Biosafety to the 
Convention on Biological Diversity 
Endangered species of animals 
and plants Agriculture, Fisheries and 
Conservation Department International obligation 
Non-pesticid e hazardous 
chemicalb Environmental Protection 
Department To protect human health and the 
environment in accordance with , inter 
alia, the principles of the Stockholm 
Convention and the Rotterdam 
Convention 
a Arms, ammunition, and explosives , munitions items, chemical an d biological weapons and their 
precursors, nuclear materials and equipm ent, and industrial dual-use goods. 
b The permit/licensing system does not apply to the controlled chemical, with exceptions, if the 
chemical is a constituent element of a manufactured product. 
Source: WTO document G/LIC/N/3/HKG/17, 30 September 2013; and information provided by the 
authorities. 
3.81.  The Textiles Control System has been further relaxed since 20 May 2011. Textiles imports 
and exports involving "non-sensitive markets" as well as textiles transhipments are no longer 
subject to textiles licence or notification. HKC categorizes markets for textiles and clothing products as "sensitive" and "non-sensitive". Sensitive markets are Mainland China for both imports 
and exports, and the United States for exports.
52 All other markets are non-sensitive. Textiles 
imports/exports for sensitive markets must be covered by either consignment-specific import/export licences, or textiles notifications by traders registered under the Textiles Trader 
Registration Scheme (TTRS) administered by the TID. The licensing and notification requirement 
was removed on 21 November 2014.
53 
3.82.  Effective 1 March 2013, an export licence from the Trade and Industry Department is 
required for powdered formula for infants and young children aged under 36 months.54 According 
to the authorities, this licensing requirement is not intended to be a long-term arrangement. It is to tackle the serious shortage caused by the di version of large quantities away from the local 
supply chain by parallel traders, as demand for powdered formula in HKC is met entirely by 
imports. To facilitate legitimate trading activities, such export licences are in general issued to 
importers of powdered formula registered under the Food Safety Ordinance (Chapter 612) and may only be used for re-exporting. The authorities consider that this licensing arrangement may 
prevent parallel traders from obtaining licences to export powdered formula acquired in the local 
market. No fees are charged for processing the licence application. As of 31 May 2014, around 10,110 licences had been issued. Transit or transhipment cargos are exempted from export 
licensing. 
                                               
52 The European Union has been categorized as "n on-sensitive" for exports since end-June 2009.  
53 Trade and Industry Department ci rcular TID CL 10-3/2. Viewed at: 
http://www.tid.gov.hk/english/aboutus/tradecircular/all_in_one/2014/as072014.html. 
54 This export licensing requirement is applied not only to traders but also individual persons, unless 
exempted under the law. For personal use, each indivi dual aged 16 or above is exempted from licensing for 
powdered formula that is exported in his/her accompan ied personal baggage with a total net weight up to 
1.8 kg on their first departure from HKC within a 24-hour period. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 46 - 
 
  3.3.4  Export assistance and facilitation 
3.83.  HKC's notifications to the WTO Committee on Subsidies and Countervailing Measures do not 
report any export subsidies.55 Given that HKC is a free port, it has not established special 
economic zones, export processing zones, or other free zones. 
3.84.  The Hong Kong Export Credit Insurance Corporation (ECIC) provides insurance to exporters 
against losses from non-payment by buyers due to commercial and political risks. Its contingent liability is guaranteed by the HKC Government (Table A3.4). In December 2012, the ECIC's 
statutory maximum liability was increased from HK$30 billion to HK$40 billion. In March 2013, the 
ECIC introduced a Small Business Policy (SBP) for enterprises with an annual business turnover of 
less than HK$50 million, providing exporters with mo re flexibility in taking out insurance cover.  
3.85.  The Export Marketing Fund (EMF), manage d by the TID, aims to help small and medium-
size enterprises (SMEs) expand their businesses through participation in export promotion 
activities such as exhibitions, trade missions, and placing advertisements in printed trade publications and eligible trade websites targeting export markets. The EMF provides each 
successful application with grants to cover 50% of  approved expenses with a ceiling of HK$50,000. 
On 10 June 2013, the EMF increased the cumulative ceiling for each SME from HK$150,000 to HK$200,000, subject to conditions.
56 
3.86.  In addition, the HKC Government set up the Dedicated Fund on Branding, Upgrading and 
Domestic Sales (the BUD Fund) in June 2012 to support local enterprises to develop their brands, upgrade and restructure their operations and promote sales in Mainland China's market (section 3.4.1.3). Subject to the fund's balance, the BUD Fund will be open for applications for five 
years. 
3.87.  Trade promotion activities are also suppo rted by the Hong Kong Trade Development Council 
(HKTDC). With more than 40 global offices, including 13 in Mainland China, the HKTDC promotes 
HKC as a platform for doing business with Mainland China and throughout Asia. The HKTDC 
promotes exports, with particular focus on exports by SMEs, through, inter alia , organizing trade 
fairs and overseas business missions, whilst providing information on industries and services 
through trade publications and research reports.  
3.4  Measures Affecting Production and Trade 3.4.1  Taxation and incentives 3.4.1.1  Taxation 
3.88.  In general, HKC has a simple tax structure and low tax rates. The taxation structure relies 
on direct taxes, i.e. profits tax and earnings  taxes, which accounted for 65.3% of total tax 
revenues in fiscal year 2012/13 (Table 3.6). 
Table 3.6 Government revenues, 2009-13 
 2009/10  2010/11  2011/12 2012/13  
Government revenue (HK$ million) 318,442 376,481 437,723 442,150 
of which:     
Taxes revenue (HK$ million) 207,865  241,526  275,115  279,563  
 (% of tax revenue) 
Direct taxes 59.26 59.21 64.27 65.26 
Profits tax 36.85 38.58 43.11 44.94 
Salaries tax and personal assessment 21.60 19.95 20.45 19.51 
Property tax 0.81 0.68 0.71 0.81 
                                               
55 WTO documents G/SCM/N/253/HKG, 16 July 2013; and G/SCM/N/220/HKG, 19 May 2011. 
56 The condition to benefit from the increment is that the extra HK$50,000 must be used in an export 
promotion event that has not been recorded in previous  applications under this programme. For details, see 
TID online information, "SME EMF, Amount of Grant". Viewed at: 
https://www.smefund.ti d.gov.hk/english/emf /emf_grant.html. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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   2009/10  2010/11  2011/12 2012/13  
Indirect taxes  40.74 40.81 35.72 34.75 
Bets and sweep tax 6.14 6.11 5.73 5.93 
Stamp duties 20.39 21.12 16.12 15.34 
Air passenger departure tax 0.78 0.75 0.71 0.73 
Duties 3.11 3.13 2.81 3.21 
General rates 4.79 3.71 3.53 4.01 
Motor vehicle tax 2.32 2.76 2.57 2.67 
Royalties and concessions 0.77 1.02 1.76 0.98 
Fees and charges (tax loaded fees) 2.35 2.12 2.46 1.83 
Estate duty 0.09 0.09 0.03 0.05 
Non-tax revenue (HK$ million)  110,577 134,955 162,608 162,587 
Source: Secretariat calculations based on Census and St atistics Department online  information, "Government 
Revenue". Viewed at: http://www.censtatd.gov.hk/hkstat/sub/sp110.jsp?tableID=193&ID=0&productType=8 . 
3.89.  Profits tax and salaries tax are the major direct taxes. All business taxpayers, irrespective of 
their resident status, are subject to a tax on profits arising in or derived from HKC, at a rate of 16.5% for incorporated business or 15% for unincorporated business. The law also allows for 
depreciation in respect of capital expenditures incurred on the construction of industrial and 
commercial buildings and structures, as well as on machinery and plant. There are also specific deductions of capital expenditures on mach inery and plant related to manufacturing and 
environmental protection. Depreciation allowances or write-offs on certain capital expenditures is 
to encourage businesses to upgrade production, protect the environment or enhance operations by making capital investment. 
3.90.  Salaries tax is imposed on all income arising in or derived from HKC from an office, 
employment, or pension, for residents and non-residents. The salaries tax rates remained unchanged during the review period. 
3.91.  Stamp duties account for almost half of indirect tax revenues. They apply to, among others, 
transfer of immovable property, and of Hong Kong  stock. Stamp duties on immovable property are 
charged at progressive ad valorem  rates. In addition to the ad valorem  stamp duty (AVD), any 
residential property acquired on or after 20 November 2010 and resold within 24 months
57 is 
subject to a Special Stamp Duty (SSD), with the objective of curbing short-term speculation on 
residential properties. On top of the AVD and th e SSD, any agreement for sale or conveyance on 
sale for acquisition of any residential property by non-Hong Kong permanent residents executed 
on or after 27 October 2012 is subject to a Buye r's Stamp Duty (BSD), with the purpose of 
ensuring that local buyers will be accorded pr iority amidst the supply-demand imbalance. The 
Stamp Duty (Amendment) Bill 2013, which was passed on 15 July 2014, includes provision for an increase of the AVD rates for properties acquired on or after 23 February 2013. This provision aims 
to enhance demand management in respect of the residential property market and to forestall the 
shifting of overheating in the residential property  market to the non-residential property market.  
3.4.1.2  Tax incentives 
3.92.  HKC maintains several tax concessions and exemptions. Exemptions from profits tax are 
granted on, inter alia , dividends received from a corporation that is subject to Hong Kong Profits 
Tax; interest on Tax Reserve Certificates; interest income and trading profits derived from long- 
term debt instruments; and interest on, and any profit made, in respect of renminbi sovereign 
bonds. 
3.93.  In addition, a number of incentives regarding profits tax were granted during the review 
period. These include: a 100% profits tax write-off in the first year of purchase of environment-
friendly commercial vehicles; a deduction for capital expenditure incurred on the purchase of 
registered trademarks, copyrights, and registered designs; and a general reduction of 75% of the 
profits tax (with a ceiling of HK$12,000 for fiscal year 2011/12, and HK$10,000 for 2012/13). 
                                               
57 For residential property acquired on or after 27 October 2012, a 36-month period is applied. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 48 - 
 
  3.94.  Other tax incentives include: a waiver of first registration tax for electric vehicles; 
concessions for environment-friendly vehicles; and extension of stamp duty concessions to cover exchange traded funds (ETFs) that track indices comprising not more than 40% Hong Kong stocks, to help promote the development of ETFs in HKC.  The authorities' estimate forgone revenue from 
these tax incentives was HK$26.3 billion in fiscal year 2013/14 (Table 3.7). In response to the 
global financial crisis, HKC offered a one-off reduction of 75% of salaries tax and tax under personal assessment; and a waiver of business registration fees.
58 
Table 3.7 Forgone revenues from tax incentives, 2010-14 
 (HK$ billion) 
Fiscal year 2010/11  2011/12  2012/13 2013/14a 
Profits tax n.a. 0.88 2.3 2.45 
Salaries tax and pe rsonal assessment 4.5 6.55 12.42 8.82 
Stamp duties 0.84 0.59 0.8 0.68 
General rates 8.8 9.9 12.5 11.6 
Motor vehicle tax 0.32 0.86 1.54 0.65 
Business registration fees 1 0.8 1.9 2.1 
Total 15.46  19.58  31.46 26.3  
n.a. Not applicable. 
a Estimate. Source: Information provided  by the HKC authorities. 
3.4.1.3  Non-tax incentives 
3.95.  The Government provides a number of non-tax incentives and assistance for agriculture and 
fisheries (section 4.2), small and medium-size enterprises (SMEs), research and development 
(R&D) activities, and certain services (Table A3 .5). Some of the major programmes and changes 
are highlighted below.  
3.96.  The authorities consider that SMEs ar e the backbone of the local economy, and are 
therefore committed to providing support to enha nce the competiveness of SMEs. Three funding 
schemes, administered by the Trade and Industry Department, provide assistance in the form of 
loan guarantees, and grants.59 In general, SMEs that are registered under the Business 
Registration Ordinance (Chapter 310) and have subs tantive business operations in HKC are eligible 
for assistance.60  
3.97.  The SME Loan Guarantee Scheme (SGS) helps SMEs secure loans from participating lending 
institutions (PLIs)61, by providing a guarantee for up to five years for business installation and 
equipment loans, and a guarantee for working capi tal loans (Table 3.8). The guarantee covers a 
maximum of 50% of the approved loans from the PLI, with a cap of HK$6 million for each SME. In July 2011, the Government increased the total lo an guarantee commitment by HK$10 billion to 
HK$30 billion.
62  
                                               
58 The HKC authorities note that these relief measures  are one-off, i.e. they are not recurre nt and will 
only be introduced having regard to the economic and financial position each year. 
59 Trade and Industry Department online info rmation, "SME Funding Schemes", viewed at: 
http://www.smefund.tid.gov.hk/eindex.html. 
60 The SME development funds are open to non-profit -distributing organizations  operating as support 
organizations, trade and industrial or ganizations, professional bodies or research institutes to enhance the 
competitiveness of SMEs in general or SMEs in specific sectors. 
61 All authorized institutions under the Banking Ordinance (Chapter 155) are eligible to join the SME 
Loan Guarantee Scheme as participating lending institutions (PLIs). PLIs' participation in the scheme is subject to the terms and conditions set out in a deed signed between individual PLIs and the HKC Government. At present, there are 36 PLIs actively providin g loan service under the scheme. Viewed at: 
http://www.smefund.tid.gov.hk/english/sgs/sgs_procedures.html.  
62 For details, see the HKC Legi slative Council Finance Committee discussion agenda. Viewed at: 
http://www.legco.gov.hk/yr10-11/english/fc/fc/papers/f11-43e.pdf. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Table 3.8 Support under SME Loan Guarantee Scheme, 2010-13 
(HK$ million) 
  2010  2011  2012 2013  
Business installation and equipment loans 
No. of applications 343 212 166 118 
No. of approvals 299 187 151 107 
Total amount of gu arantee committed  316.43 186.63 105.04 81.87 
Total amount of loans approved  665 383.48 214.85 163.76 
Working capital loans 
No. of applications 649 1,704 1,601 1,082 
No. of approvals 593 1,597 1,460 993 
Total amount of guarantee committed 1,719 1,927 1,770 1,272 
Total amount of loans approved  3,438 3,850 3,546 2,533 
Source: Information provided by the authorities. 
3.98.  The Special Loan Guarantee Scheme (SpGS), introduced in December 2008 as a response to 
the global financial crisis and providing up to 80% (70% before 15 June 2009) guarantees for loans for general business uses, was closed for application at end 2010. The maximum guarantee period for each loan (for the non-revolving loan or revolving credit line) was 60 months, or up to 
31 December 2015, whichever is earlier. As of end-March 2014, the SpGS had approved 39,298 
out of 43,000 applications; the cumulative approved loans reached HK$94.6 billion.
63 
3.99.  As a replacement for SpGS, an SME Financing Guarantee Scheme, managed by the Hong 
Kong Mortgage Corporation Limited (HKMC), has provided SMEs with similar guarantees for loans 
since January 2011. With a view to relieving cr edit tightening on SMEs under the uncertain 
external economic environment, the HKC Government provided a total loan guarantee 
commitment of HK$100 billion for HKMC to launch a special time-limited 80% guarantee product 
at a concessionary fee rate on 31 May 2012 under its existing SME Financing Guarantee Scheme.64 
The application period for this 80% guarantee product is extended until end-February 2015. As of end-April 2014, more than 8,600 applications had b een approved involving a total loan guarantee 
amount of around HK$29 billion.  
3.100.  A Dedicated Fund on Branding, Upgrading and Domestic Sales (the BUD Fund) of 
HK$1 billion was set up in June 2012. The BUD fund aims to support HKC enterprises to improve 
their competitiveness and further their business development in Mainland China through 
developing their brands, upgrading and restructur ing their operations, and promoting sales in the 
Chinese market. The BUD Fund comprises th e Enterprise Support Programme, and the 
Organization Support Programme. SMEs are eligible to apply for funding support under the 
Enterprise Support Programme. This programme, ma naged by the Hong Kong Productivity Council, 
p r o v i d e s  c a s h  g r a n t s  t o  c o v e r  u p  t o  5 0 %  o f  t h e total approved project cost, subject to cash 
contribution by the applicant enterprise of not less than 50%; each enterprise may obtain funding 
for a maximum of three approved projects, with a cumulative funding ceiling of HK$500,000. At 
end-March 2014, 1,027 applications had been received under the programme and 728 applications had been processed
65, amongst which 205 approvals and 24 conditional approvals.66 The total 
amount of funding approved was around HK$88.2 million. The Organization Support Programme, 
managed by the TID, provides funding for ap proved projects of non-profit-distributing 
organizations to assist HKC enterprises in general or in specific sectors. At end-March 2014, 38 out 
of 87 processed applications had been approved ; the average amount of grant per approved 
application was around HK$3.3 million, and the to tal funding approved was about HK$125 million. 
3.101.  Incentives and assistance for R&D activities in HKC are administered mainly by the 
Innovation and Technology Commission (ITC). These take the form of, inter alia , loan provision, 
                                               
63 Trade and Industry Department online informatio n, "Special Loan Guarantee Scheme". Viewed at: 
http://www.smefund.tid.gov.hk/english/spgs/spgs_statistics.html. 
64 The Hong Kong Mortgage Corporation Limited online information, "SME Financing Guarantee 
Scheme". Viewed at: http://www.hkmc.com.hk/eng/ops/ourbusiness/sme.html .  
65 221 applications were withdrawn by the applicant enterprises. 
66 Final approval of the applications and the amount of grant is subject to further information submitted 
by the applicants. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  grants, and cash rebate (Table A3.5). The ceiling for loans under the Small Entrepreneur Research 
Assistance Programme (SERAP) was lifted to HK$6 million in April 2012 (from HK$4 million before); under the R&D Cash Rebate Scheme, enterprises are now granted a cash rebate equivalent to 30% (10% in 2012) of their R&D expenditure.  In 2013, the two largest R&D schemes 
were the SERAP, under which US$6.51 million of loans were approved, and the Innovation and 
Technology Support Programme, which ex tended grants worth US$66.09 million.  
3.4.2  Competition policy and price controls 
3.4.2.1  Competition policy 
3.102.  HKC adopted its first comprehensive competition law (the Competition Ordinance, 
Chapter 619) on 14 June 2012. Until that date, anti-competitive conduct was discouraged through voluntary compliance by the business community with administrative guidelines. However, 
telecommunications and broadcasting were subject to competition-related regulation. The new 
Competition Ordinance applies to all sectors and provides a legal framework to deal with anti-competitive conduct such as cartels and abuse of market power. Unlike in many other 
jurisdictions, the Ordinance does not establish a cross-sector merger control regime, which 
remains limited to mergers in the telecommunications sector. To ensure enforcement, the Ordinance provides for the creation of a Competition Commission with ample investigative powers 
and a Competition Tribunal to adjudicate competition-related cases and grant remedies, including 
pecuniary penalties and relief. 
3.103.  The Ordinance is a significant step towards competition policy development and reform in 
HKC. It follows international best practices and adopts a prohibition approach. Some have argued, 
however, that being the result of years of legislative process, public consultations and heated 
debate, the Competition Ordinance contains a number of compromises and exclusions to take into account the concerns expressed during the debate
67, as well as the particularities of the business 
sector in HKC.68 The Commission is required under the Ordinance to issue guidelines on how it 
expects to interpret and give effect to key provisions.  
3.104.  The Competition Ordinance is being implem ented in phases. The institutional provisions 
related to the establishment and operation of the Commission took effect on 18 January 2013, and 
those related to the Tribunal on 1 August 2013.69 The substantive provisions will become effective 
at a date to be announced by the Secretary for Commerce and Economic Development. At the time of writing (June 2014), the Members of th e Commission had been appointed and preparatory 
work for the establishment of the Tribunal was under way. Also, the Commission had started 
drafting regulatory guidelines and was expected to consult the public in 2014. The Ordinance will 
be fully implemented when the preparatory work relating to the Commission and the Tribunal is 
completed.  
3.105.  The objective of the Ordinance is to curb possible anti-competitive conduct so as to 
maintain fair and sustainable competition in the market. It applies to "undertakings", defined as 
entities engaged in economic activity, regardless of their legal status or the way in which they are 
financed. However, the Ordinance exempts all statutory bodies (i.e. bodies established by law) from the application of its substantive provisions.
70 In addition, undertakings with turnover below 
specified thresholds are excluded from the appl ication of certain provisions of the Ordinance 
(paragraph 3.112). The latter exclusion was meant to address the concerns expressed by SMEs 
during the legislative process as well as the general public aspiration for an effective cross-sector competition law.
71  
                                               
67 The concerns related mainly to the impact of the new law on the costs of doing business (particularly 
on SMEs) and to the volume of litigation, and the appropriate level of sanctions.  
68 Hess and Evrard (2012). 
69 Competition Ordinance (Commencement) Notice 2012.  
70 During the legislative process, the HKC Government indicated the intention to apply, by way of a 
separate regulation, the Competition Ordinance to six statutory bodies (out of 581): Ocean Park, the Matilda and War Memorial Hospital, the Federation of Hong Kong  Industries, the General Committee of the Federation 
of Hong Kong Industries, Hele na May, and Kadoorie Farm.  
71 Competition Policy Advisory Group, Report 2010-2011, (English version) provided by the HKC 
authorities.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  3.106.  Three types of anti-competitive conduct are prohibited under the Ordinance: 
(i) anti-competitive agreements, concerted practices, and decisions of an association of undertakings (known as the First Conduct Rule); (ii) abuse of market power (Second Conduct Rule); and (iii) mergers that are likely to substantially lessen competition, the prohibition of which 
is applicable only to the telecommunications sector (Merger Rule). The three rules are collectively 
referred to as the "competition rules". 
3.107.  The First Conduct Rule prohibits agreemen ts, concerted practices, and decisions of an 
association of undertakings that have the object or effect of preventing, restricting or distorting 
competition in HKC, whether the conduct took place in HKC or abroad. The Rule makes a distinction between serious anti-competitive conduct (such as price fixing, market allocation, output control, and bid-rigging) and non-serious anti-competitive conduct. While both types of 
conduct are subject to the rule of reason analysis , different enforcement options to be pursued by 
the Commission apply (paragraph 3.112). The First Conduct Rule will not apply to agreements that enhance overall economic efficiency, i.e. agreem ents that help to increase production or 
distribution, or promote technical or economic progress, provided that consumers are allowed a 
fair share of the resulting benefit and that the ag reements do not go beyond what is necessary to 
reach such benefits and do not eliminate competition in respect of a substantial part of the 
relevant market. The Commission may issue block exemption orders excluding a certain category 
of agreements from the First Conduct Rule, if it considers that such agreements enhance economic efficiency. The Ordinance does not make any specific provision for vertical agreements; this is an area where further guidance from the Commission may be required. 
3.108.  The Second Conduct Rule forbids an under taking with a "substantial degree of market 
power" from abusing its power by engaging in cond uct that has the object or effect of preventing, 
restricting or distorting competition in HKC, whether the conduct took place in HKC or abroad. The 
Ordinance provides two examples of conduct that  may constitute an abuse of market power: 
(i) predatory behaviour towards competitors, and (ii) limiting production, markets, or technical development to the prejudice of consumers. Th e Ordinance does not provide a definition of 
substantial market power, which generally requires at least a 40% market share, but it is deemed 
to imply a lower threshold than that associated with a dominant position. Factors to be considered in determining whether an undertaking has substantial market power include its market share, its power to make pricing decisions, and barriers to entry into the market. The Commission is 
expected to include its interpretation of substantial market power in its guidelines. There is no 
explicit efficiency exclusion regarding the Second Conduct Rule, but it is likely that undertakings with a substantial degree of market power may be able to present an objective justification to 
defend their case. 
3.109.  An unusual feature of the Ordinance is that it does not provide for cross-sector merger 
regulations. It applies only to mergers in the telecommunications sector. As already established in 
the Telecommunications Ordinance, the Merger Rule prohibits holders of telecommunications 
carrier licences from, directly or indirectly, carrying out a merger that has, or is likely to have the effect of substantially lessening competition in HKC. The rule applies whether the merger takes place in or outside HKC. No merger notification is required under the Competition Ordinance. 
Moreover, the Merger Rule will not apply to a merger if the economic efficiencies that arise or may 
arise outweigh the adverse effects caused by any lessening of competition in HKC. 
3.110.  The Competition Ordinance provides for a number of exemptions and exclusions
72 from the 
application of the conduct rules:  
 HKC's Chief Executive in Council may exempt a specified agreement or conduct or a 
specified class of agreement or conduct from the First or Second Conduct Rule on 
"exceptional and compelling" public policy grounds or to avoid conflict between the 
Ordinance and an international obligation that directly or indirectly relates to HKC. 
 The First and the Second Conduct Rules do not apply to: (i) an agreement or a conduct if it 
is made to comply with a legal requirement, or (ii) an undertaking entrusted by the HKC 
Government with the operation of services of  general economic interest, insofar as the 
Conduct rules would obstruct the performance of the particular tasks assigned to it. 
                                               
72 The exemptions are provided for in Sections 31 and 32 of the Competition Ordinance, and the 
exclusions in Schedule 1. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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   The First Conduct Rule does not apply to agreements that enhance economic efficiency, 
provided that certain conditions are met (paragraph 3.107). 
 The First Conduct Rule does not apply to an agre ement, concerted practice, or decision of an 
association of undertakings if the combined annual turnover of the undertakings or 
association involved does not exceed HK$200 million73 (some US$25.8 million74), except 
where the agreement, concerted practice or decision of an association of undertakings involves serious anti-competitive conduct.  
 The Second Conduct Rule does not apply to the conduct of an undertaking whose annual 
turnover does not exceed HK$40 million (some US$5.2 million). 
3.111.  The Ordinance provides for a judicial en forcement system to separate the powers of 
investigation, prosecution, and adjudication. The main task of the recently established Commission 
is to investigate anti-competitive conduct and, where appropriate, bring proceedings before the 
Tribunal. The Commission may start an investigation either on its own initiative, on receipt of a complaint, or upon referral from the Government or a court. Its investigating powers include 
ordering the production of documents, requiring any person to attend before the Commission, 
entering and searching premises upon obtaining a court warrant. The Commission may also enter into leniency agreements with persons who have allegedly contravened the conduct rules. In 
exchange, these persons must cooperate with the Commission in its investigation or enforcement 
proceedings before the Tribunal. Other major tasks of the Commission are to issue regulatory guidelines as well as to promote public understanding of, and compliance with, the competition law.  
3.112.  The Commission has various enforcement options. If the alleged infringement is considered 
serious anti-competitive conduct under the First Conduct Rule, or a violation of the Second Conduct Rule, the Commission may bring proceedings directly before the Tribunal, or issue an 
"infringement notice" offering not to bring proceedings if the undertaking concerned makes a 
commitment to comply with the requirements of the notice. In the case of non-serious anti-
competitive conduct under the First Conduct Rule, the Commission's must issue a "warning notice" 
requesting the undertaking to put an end to the relevant conduct. If the defendant fails to comply, 
the Commission may bring proceedings before the Tribunal. The Commission may apply for an interim order from the Tribunal, pending determination of a contravention of a competition rule. However, the Commission may not request payment from the infringing undertakings.
75 Only the 
Competition Tribunal is empowered to impose penalties and fines.  
3.113.  In the telecommunications sector, the Competition Commission has concurrent jurisdiction 
with the Communications Authority. The Competitio n Ordinance requires the two bodies to sign a 
memorandum of understanding on how they inte nd to exercise their shared jurisdiction. 
3.114.  The Competition Tribunal is a superior court with specialized jurisdiction on competition 
cases. It is responsible for hearing and adjudicating proceedings brought by the Commission and 
for reviews of the Commission's decisions. The Tribunal may impose a pecuniary penalty on any 
person who has contravened a competition rule. The penalty must not exceed 10% of the local turnover of the undertaking concerned, for each year of infringement up to a maximum of three 
years.
76 The Tribunal may grant a wide range of other remedies, such as ordering an undertaking 
to refrain from engaging in the infringing conduct;  declaring an agreement to be void or voidable, 
or requiring the parties to modify or terminate an agreement; ordering the contravening party to pay damages to a person who has suffered loss or damage as a result of the contravention; and 
                                               
73 In the case of a decision of an association, the HK$200 million refers to the turnover of all the 
members of the association. 
74 At the exchange rate of US$1=HK$7.752 (8 May 2014).  
75 One of the concessions made duri ng the legislative process to ensu re support for the Bill was to 
remove a provision giving the Commission the right to require payment of up to HK$10 million to the 
Government when issuing an infringement notice. Competition Policy Advisory Group, Report 2010-2011 (English version). 
76 Initially, the Competition Bill provided for the cap on pecuniary penalty at 10% of the global turnover 
of the undertaking for each year of contravention. In order to strike a balance between maintaining a sufficient 
level of deterrence and keeping HKC' s competitive edge in the region, the penalty cap was modified. Bills 
Committee on Competition Bill: Respon ses to Concerns on the Competition Bill, CB(1)91/11-12(01). Viewed at: 
http://www.legco.gov.hk/yr09-10/english/bc/bc12/papers/bc121025cb1-91-1-e.pdf. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  disqualifying an individual from acting as a company director for up to five years. The Tribunal's 
determinations, decisions, and orders are subject to appeal before the Court of Appeal. At the time of writing, the HKC Judiciary was formulating the ru les to prepare for the operation of the Tribunal. 
3.115.  The right to bring private lawsuits before the Tribunal is limited to persons who have 
suffered loss or damage as a result of any act dete rmined to be a contravention of a conduct rule 
(follow-on actions). The limit for follow-on actions is three years.
77 
3.116.   Pending the full operation of the Commi ssion and the Tribunal, the existing Competition 
Policy Advisory Group (COMPAG) has continued to review competition-related complaints, referring 
them to the appropriate departments and bureaux for follow-up action.78 Between 2010 and 2013, 
a total of 15 cases were brought to the attention of COMPAG, relating to alleged anti-competitive conduct such as collusion, price fixing, market allocation, abuse of dominant position, and certain 
government practices (e.g., relating to tenders) . The complaints covered a range of industry 
sectors such as TV and broadcasting (including pay and free TV services), mobile telephony, the 
exhibition industry, market management and food stalls, bus transport services, the medical 
profession, supermarket and retail stores chains, and the property management industry. In some 
instances, the complaints were made against the practices of certain statutory bodies. In ten cases, the complaints were not substantiated or not established, in one case the investigation was 
terminated because there was no evidence of a competition concern, four cases were still under 
investigation by the end of 2013, and another was under appeal.
79  
3.117.   The enactment of the Competition Ordinance reflects the Administration's commitment to 
curb potential anti-competitive conduct in HKC, an d should contribute to levelling the playing field 
for businesses. It also brings HKC's regulatory framework closer to international competition law, 
although there is substantial preparatory work to be done by the Government, the Commission, and the Judiciary to bring the Ordinance into full operation. The Administration has indicated that 
it will review the Competition Ordinance a few years after it has been in full effect, taking account 
of the experience acquired and issues encountered in its operation. 
3.4.2.2  Price controls 
3.118.  Generally, HKC does not impose price controls on goods or services. However, the prices of 
some energy products are monitored (section 4. 3), and the fees for the provision of pilotage 
services in ports are set by the Director of the Marine Department, after consultation with the relevant stakeholders.
80 In 2012, all pilotage dues were revised upwards to adapt them to changes 
in the market environment. The basic pilota ge due was increased from HK$4,100 to HK$4,400.81  
3.4.3  State trading and state-owned enterprises 
3.119.  Hong Kong, China has notified the WTO that  it does not maintain state-trading enterprises 
in accordance with the working definition of such enterprises in Paragraph 1 of the Understanding 
on the Interpretation of Article XVII.82  
3.120.  As one of the most open economies in the world, HKC is largely free from government 
intervention. Nevertheless, the Government maintains an important promoting role in certain key 
sectors (notably transport services and infrastructure, and science and technology infrastructure) through its financial participation in several enterprises (Table 3.9). Since the previous Review of HKC, the only change reported in this respect was that the HKC Government disposed of its entire 
shareholding in Tradelink Electronic Commerce Limited in October 2012.  
                                               
77 During the legislative process, SMEs expressed co ncerns that a stand-alone right of private action 
might be used by large companies to harass small businesses and re sult in a flood of litigation.  
78 COMPAG was created in 1997 to provide a dedicated forum for examining, reviewing, and advising on 
competition-related issues. It does not have statutory power to conduct investigations or impose sanctions. 
79 COMPAG Reports for 2009-2010 to 2012-2013 (English version), provided by the HKC authorities. 
80 Section 22 of the Pilotage Ordinance (Chapter 84). 
81 Increases were also made to the additional pilota ge due and the due for cancellation of engagement 
(Pilotage (Dues) (Amendment) Order 2011, published in the Gazette on 9 December 2011).  
82 WTO document G/STR/N/14/HKG, 23 February 2012. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Table 3.9 Enterprises in which the Govern ment has financial stakes, January 2014 
Company Government shareholding (%) 
Airport Authority (AA) 100.0 
Hong Kong Cyberport Deve lopment Holdings Limited 100.0 
Hong Kong Science and Technology Parks Corporation (HKSTPC) 100.0 
Kowloon-Canton Railway Corporation (KCRC) 100.0 
IEC Holdings Ltd.  88.2 
MTR Corporation Limited (MTRCL) 76.5 
Hong Kong International Theme Parks Limited (HKITP)  52.4 
West Rail Property Development Limited (WRPDL) 49.0 
New Hong Kong Tunnel Company Ltd. 7.5 
Hong Kong Exchanges and Clearing Ltd. (HKEx) 5.8 
Source: Treasury online information, "Accounts of the Government for the year ended 31 March 2013". 
Viewed at: http://www.try.gov.hk/internet/eharch_annu_statend13.html#p. 
3.4.4  Government procurement 
3.121.  Reflecting HKC's laissez-faire approach to economic activities, the share of government 
procurement to GDP remains relatively modest. It ranged from 3.9% to 5.8% during 2010-13 
(Table 3.10). In 2013, procurement by the HKC Government and other public entities of goods, 
services, and construction services above specif ied thresholds amounted to HK$122 billion. Over 
82% of goods purchased in 2013 were imported.83  
3.122.  Hong Kong, China joined the WTO Agreem ent on Government Procurement (GPA) in 1997, 
and was one of the first Members to ratify the 2012 Protocol amending the GPA.84 HKC improved 
its commitments under the revised GPA by including two further government entities and six additional services in its schedule.
85 Upon its entry into force, in respect of HKC, the revised GPA 
will apply to: (i) 62 central government entities for contracts of goods and specified services of a 
value not less than SDR 130,00086, and for contracts of construction services of a value not less 
than SDR 5,000,000; and (ii) five non-government public bodies for contracts of goods and 
services of a value not less than SDR 400,00087, and for contracts of construction services of a 
value not less than SDR 5,000,000. Hong Kong, China has regularly notified to the WTO Committee on Government Procurement the national currency equivalences of the thresholds of 
the GPA
88, as well as the statistical reports required by the agreement.89 
Table 3.10 Government procurement, 2010-13 
(HK$ million and %) 
 Central government 
entitiesa Other entitiesb Totalc Ratio to 
GDP 
Total 2010 38,246.40 44, 977.41 83,223.81 4.76 
Goods 3,432.00 5,003.16 8,435.16  
Services (other than 
construction) 1,062.80 2,290.85 3,353.65  
Construction services 33,751.59 37,683.41 71,435.00  
Total 2011 34,596.92 38, 845.81 73,442.73 3.88 
Goods 4,759.79 5,914.78 10,674.57  
                                               
83 Information provided by  the HKC authorities. 
84 WTO document GPA/113, 2 April 2012. 
85 The Secretariat, Commissioner on Interception of  Communications and Surv eillance; and additional 
telecommunications services, services incidental to forestry and logging, services incidental to mining, 
sanitation and similar services, cleaning services of  exhaust gases, and nature and landscape protection 
services. 
86 Specified services are listed in Annex 5 of the "Cer tification of Modifications by Hong Kong, China to 
Annexes 1 to 7 of Appendix I", WTO document WT/LET/946, 26 May 2014.  
87 The Airport Authority, the Hospital Authority, the Housing Authority and Housing Department, the 
Kowloon-Canton Railway Corporation, and the MTR Corporation Limited. 
88 HKC's local currency thresholds for the calendar years 2014 and 2015 are contained in WTO 
document GPA/W/325, 9 December 2013 (SDR 130,000=HK$1,541,000; SDR 400,000=HK$4,740,000; and 
SDR 5,000,000=HK$59,256,000). 
89 HKC's procurement statistics for 2012 were notified in WTO document GPA/119/Add.2, 
26 November 2013 (the latest notification at the time of writing this report).  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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   Central government 
entitiesa Other entitiesb Totalc Ratio to 
GDP 
Services (other than 
construction) 1,389.66 2,813.37 4,203.03  
Construction services 28,447.48 30,117.66 58,565.13  
Total 2012 48,800.34 63, 231.54 112,031.88 5.49 
Goods 4,235.76 13,631.26 17,867.01  
Services (other than 
construction) 1,465.70 7,049.19 8,514.89  
Construction services 43,098.88 42,551.09 85,649.98  
Total 2013 71,855.45 50, 151.01 122,006.46 5.75 
Goods 4,948.20 8,945.64 13,893.84  
Services (other than 
construction) 2,816.57 4,281.01 7,097.58  
Construction services 64,090.68 36,924.36 101,015.04  
a For central government entities, statistics include only procurement of goods and services of a value 
exceeding HK$1.43 million, and construction services of a value exceeding HK$4 million. 
b For other entities, statistics include only procur ement of goods and services of a value exceeding 
SDR 0.4 million (approximately HK$4.85 million in 2010-11 and HK$4.84 million in 2012-13), and construction services of a value exceeding SDR 5 million (approximately HK$60.65 million in 2010-11 and HK$60.46 million in 2012-13). 
c There may be a slight discrepancy between the sum of individual items and the totals due to 
rounding. 
Source: Information provided  by the HKC authorities. 
3.123.  Hong Kong, China has endorsed APEC's Transparency Standards on Government 
Procurement. In 2010, it signed a closer economic partnership agreement with New Zealand, 
which, among other disciplines, includes commitments on both parties to open up their government procurement markets.
90 The agreement entered into effect on 1 January 2011.  
3.124.  Government procurement in HKC is guided by the twin policy objectives of achieving best 
value for money and open and fair competition. Moreover, the basic principles underpinning 
government procurement are public accountability,  value for money, transparency, and open and 
fair competition. According to the policy statement in the Financial Services and Treasury Bureau 
(FSTB) website, the authorities are committed to providing equal opportunities for domestic and 
foreign suppliers and service providers, participating or competing in government procurement.91  
3.125.  The procedures for government procurement are set out in the Stores and Procurement 
Regulations (SPR), issued under the Public Fina nce Ordinance, and supplemented by financial 
circulars. The SPR govern all steps of the procur ement process and apply to stores purchased or 
acquired on behalf of the Government (excluding  land and buildings) and services performed by 
contractors for or on behalf of the Government, including construction and engineering services.  
3.126.  The Government Logistics Department (GLD) is the central procurement agency. It 
purchases through bulk contracts a wide range of items commonly used by most HKC government entities. GLD is also the purchasing agent for specific goods and equipment required by user 
departments and a few non-government organizations. GLD provides user departments with 
expertise in sourcing, tendering, negotiations, and contract administration. Construction services are mainly procured by individual work depart ments that operate under the supervision of the 
Development Bureau. The latter provides general guidance and technical advice on tendering 
procedures and contract administration with respect to works contracts, and keeps a register of approved works contractors and a performance reporting system.  
3.127.  The SPR allow for three types of tendering procedures: open tendering, selective 
tendering, and restrictive tendering (including single tendering). Government procurement of a 
value exceeding HK$1.43 million (for goods and general services) and HK$4 million (for construction and engineering services) is genera lly subject to open and competitive tendering 
procedures so as to achieve best value for money. Invitations to tender are published in the 
Government Gazette
92, and if considered appropriate, in the local press, on the internet and/or in 
                                               
90 Chapter 12 of the partnership ag reement contains HKC commitments on government procurement.  
91 Financial Services and Treasury Bureau, Trea sury Branch online information. Viewed at: 
http://www.fstb.gov.hk/tn/en/guide-to-procurement.htm. 
92 Government Gazettes are also accessible online. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  selected overseas journals for the particular trad e/product. The tender notice must specify whether 
the intended procurement is covered by the WTO GPA. 
3.128.  Selective tendering may be used when the nature of a contract (e.g. demanding high-tech 
skills, proven reliability, or time-critical) requires that tenders be invited from pre-qualified 
suppliers/contractors on the approved lists. The qualification criteria and assessment method must 
not discriminate among foreign suppliers/contractors or between domestic and foreign suppliers/contractors. For procurements covered by the GPA, tenders from non-prequalified 
suppliers/contractors will be considered unless there are exceptional circumstances; and the 
qualification criteria are limited to those essential to ensure that the suppliers/contractors are able to provide the services or goods. Updates of the lists of prequalified suppliers/contractors, their 
period of validity, the method of applicatio n and assessment, and the means for renewal or 
termination, where applicable, must be posted  on the internet homepage of the procuring 
bureau/department. Invitations for prequalification are published in the Government Gazette . If 
necessary, the invitation may also be published on the internet, in the local press, and selected 
overseas journals for the particular trade or product. New applications for admission to the 
prequalification lists are allowed at any time and must be dealt with expeditiously.
93  
3.129.  Restricted and single tendering ("limited tendering" under the GPA) are only allowed under 
specified, exceptional circumstances that do not permit open tendering, for example, on grounds 
of extreme urgency, in order to protect intellectual  property rights, or to meet interchangeability 
and interoperability requirements with previously procured equipment, software, services or installations. Invitations to tender are sent to one or a few suppliers/contractors approved by the 
Permanent Secretary of the FSTB or the Director of the GLD.  
3.130.  During 2010-13, a total of 1,680 government procurement contracts (above the thresholds 
specified in the SPR) were awarded, of which 68% through open tender procedures 26% through 
selective tendering, and 6% through restricted or single tendering (Table 3.11).  
3.131.  In its 2012 review of the GLD's procurement and supplies services, the Audit Commission 
recommended the GLD Director to establish proced ures to monitor user bureaux and departments' 
repeated requests for procuring stores of similar nature by quotation, and to advise those with 
procurement requirements exceeding HK$1.43 millio n to adopt tender procedures for the bulk 
purchase of those stores.
94 This suggests that some fragmentation of contracts under the SPR 
threshold may have taken place.  The Commission also recommended exploring ways to shorten 
the time required to complete the tender exercises. 
Table 3.11 Government procurement cont racts awarded by type of procedurea, 2010-13 
 2010  2011  2012 2013  
Contracts awarded 400 327 462 491 
Open tender 268 223 321 336 
Selective tender 114 77 117 127 
Restricted tender (inc luding single tender) 18 27 24 28 
Complaints by suppliers, contractors or consulting firmsb  2 9 5 6 
a The statistics cover only procurement of goods and services of a value exceeding HK$1.43 million, 
and construction services of a value exceeding HK$4 million. 
b Complaints submitted to the relevant tender board, the Office of the Ombudsman, or the 
Independent Review Body  on Bid Challenges. 
Source: Information provided  by the HKC authorities. 
3.132.  Tender documents must provide all necessary information to assist bidders to prepare their 
tenders. The characteristics/specifications of the products or services to be procured must be 
based on functional and performance requirements and, where practicable, on international standards. They must not be drawn up to suit a pa rticular brand or country of origin. Generally, at 
least three weeks are allowed for submission of bi ds, and for procurements covered by the GPA, at 
least 40 days are allowed for receipt of tenders and no less than 25 days for applications to be prequalified to tender.  
                                               
93 ADB/OECD Anti-Corruption Initiative for Asia and the Pacific (undated). 
94 Audit Commission (2012).  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  3.133.  Under the SPR, tenders are examined against the conditions and specifications laid down in 
the tender document. Award of a contract is based on the result of the evaluation process. Value 
for money is a key procurement principle, and it takes into account not only price competitiveness but also compliance with users' requirements, reliability of performance, qualitative superiority, 
time of delivery/completion, whole-life costs and after sale support, where applicable. The 
procuring entity must recommend the most adva ntageous tender, and submit its recommendation 
to the relevant tender board or departmental tender committee for approval.  
3.134.  The tender boards and committees authorized to consider and decide on tenders are:  
 the Central Tender Board, which considers hi gh value tenders, i.e. exceeding HK$15 million 
for goods and general services, and HK$30 million for construction services;  
 the Government Logistics Department Tender Board, which deals with tenders whose value 
is between HK$5 million and HK$15 million;  
 the Public Works Tender Board, responsible for deciding on tenders for works and related 
contracts not exceeding HK$30 million; and 
 departmental tender committees of departments and bureaux, which have the authority to 
deal with their own tenders (other than contracts for construction and engineering works), provided their value does not exceed HK$5 million. 
3.135.  The result of the tender, including the na me of the successful bidder, the accepted tender 
sum and the month of the award of the contract, is  published on the homepage of the GLD or the 
procuring entity. Unsuccessful bidders are informed of the outcome of the bid evaluation and, upon 
request, of the reasons why their tenders were unsuccessful.  
3.136.  Several review mechanisms ensure due process and accountability, including the Audit 
Commission, the Office of the Ombudsman, the Legislative Council, and the Independent Commission Against Corruption. The Review Body on  Bid Challenges handles complaints regarding 
alleged breaches of the GPA.  
3.137.  The SPR set out the procedures to handle procurement-related complaints. There is no 
time-limit for a supplier to submit a complaint. Any aggrieved supplier/contractor may lodge a 
complaint about the process or result of a tender  directly with the procurement entity, or the 
relevant tender board, the Office of the Ombudsma n, or the Review Body on Bid Challenges. In the 
latter case, a challenge must be lodged within ten working days after the supplier/contractor knew or reasonably should have known the basis of the challenge. All complaints must be handled in an 
impartial and timely manner, and an early and substantial reply given to the complainant.  
3.138.  The resolution of a complaint may lead to a change in the procurement policy and/or the 
application of sanctions to the relevant procurement officer. For procurement covered under the 
GPA, the Review Body may recommend a remedy  in the form of corrective measures or 
compensation, which is limited to the cost for tender preparation or protest.
95 Between 2010 and 
2013, 22 procurement-related complaints were submitted to the relevant tender board, the Office 
of the Ombudsman, or the Review  Body on Bid Challenges (Table 3.11). Complaints regarding 
alleged corruption are submitted to the Independent Commission against Corruption.  
3.4.5  Intellectual property rights 3.4.5.1  Legislation 
3.139.  HKC maintains an independent and compre hensive legal framework for the protection of 
intellectual property rights (IPRs). Protected IP Rs include patents, plant varieties, trademarks, 
designs, copyrights, layout-designs of integrated circuits, geographical indications and undisclosed 
                                               
95 For an analysis of the works and jurisprudence of  the HKC Review Body on Bid Challenges, see Gao 
(2013). WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  information96 (Table 3.12). The HKC Government recognizes a number of international intellectual 
property treaties, conv entions, and agreements97, and is a signatory of the WTO Agreement on 
Trade-Related Aspects of Intellectual Property Rights (TRIPS). 
Table 3.12 Framework protecting som e intellectual property rights, 2014  
IPRs Eligibility of protection Length of protection 
Patents 
Standard patent Inventions that are new, involve an 
inventive step and susceptible of 
industrial application. Grant of a 
standard patent is based on re-
registration of the corresponding patent 
already granted by the State Intellectual 
Property Office of the People's Republic 
of China; the European Patent Office 
(designating the UK); or the 
United Kingdom Patent Office 20 years from the filing date 
Short-term patent Inventions that are new, involve an 
inventive step and susceptible of industrial application  8 years from the filing date 
Trade marks 
Registered trade marks Marks that are capable of distinguishing 
the goods or services of one undertaking from those of other undertakings; there are absolute and relative grounds for refusal of registration 10 years from the filing date of 
the application for registration; may be renewed indefinitely for periods of 10 years 
Industrial designs 
Registered industrial designs Designs that are new and applied to an 
article the appearance of which is 
material Renewable for periods of 5 years 
up to a maximum of 25 years 
Copyright 
Unregistered industrial designs Protected under the Copyright 
Ordinance, for articles produced from the 
original design drawing. Protection is automatic 15 years from first marketing of 
the article 
Copyrights in original literary 
(including computer programs), 
dramatic, musical, and artistic 
works; sound recordings, films, 
broadcasts, cable programmes; 
typographical arrangement of 
published editions of literary, 
dramatic or musical works; 
performers and persons who have 
exclusive recording contracts with 
performers No formalities are required for copyright 
protection for a work in HKC. Works of 
authors from anywhere  in the world, or 
works first published anywhere in the 
world (including those made available to 
the public on the internet), also qualify  Protection usually extends for 
50 years after the death of the 
creator or from the end of the 
year in which the work was made 
Exceptions:  
(1) Protection for the 
typographical arrangement of 
published editions of literary, 
dramatic or musical works is for 
25 years from the end of the year 
in which the edition was first 
published 
 
(2) Government copyright is 
protected for 125 years from the 
end of the year in which the work 
was made 
                                               
96 HKC's IP legislation is based on Articles 139 an d 140 of the Basic Law, and includes: the Patents 
Ordinance (Chapter 514), the Trade Marks Ordinance (Chapter 559), the Trade Descriptions Ordinance (Chapter 362), the Copyright Ordinance (Chapter 528), the Prevention of Copyright Piracy Ordinance (Chapter 544), the Registered Designs Ordinance (Chapter 522), the Plant Varieties Protection Ordinance (Chapter 490), the Layout- Design (Topography) of Inte grated Circuits Ordinance (Chapter 445). Trade secrets 
and undisclosed commercial information are protected by the common law of confidence. 
97 The main international IP conventions applied to HKC by the People's Republic of China are: the Paris 
Convention for the Protection of Indu strial Property, the Berne Convention for the Protection of Literary and 
Artistic Works, the Universal Co pyright Convention, the Nice Agreement concerning the International 
Classification of Goods and Services for the purposes of  the Registration of Marks,  the Geneva Convention for 
the Protection of Producers of Phonograms Against Unau thorized Duplication of Their Phonograms, the Patent 
Cooperation Treaty, the Convention establishing the World Intellectual Property Organization (WIPO), the WIPO Copyright Treaty, and the WIPO Performances and Phonograms Treaty.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  IPRs Eligibility of protection Length of protection 
Other IPRs  
Geographical indications (GIs)  Same as for registered trademarks but 
only registrable as collective or 
certification trademarks. The use of a 
false geographical indication applied to 
goods in a fashion calculated to mislead 
consumers may be a criminal offence 
under the Trade Descriptions Ordinance Same as for registered trade 
marks 
Plant varieties  Proprietary rights of  plant breeders, or 
the owners of the variety, over cultivated plant varieties they have bred 
or discovered and developed 25 years for trees and vines, and 
20 years in other cases 
Layout-designs (topographies) of 
integrated circuits Layout-designs (topographies) that are 
original Where the layout-design has 
been commercially exploited with 
the owner's consent, 10 years 
after the end of the year in which 
it was first exploited. Otherwise, 
15 years after the end of the year 
in which it was created 
Trade secrets and undisclosed 
information Information disclosed to a person who is 
under a duty to keep it confidential, 
including confidential information in a commercial setting, such as formulae, methods, technologies, designs, product specifications, business plans, and client lists Until the information becomes 
public knowledge 
Source: Information provided by the authorities. 
3.140.  There were no fundamental changes to HKC's legal framework protecting intellectual 
property during the review period (Table A3.6). The latest HKC notifications to the WTO regarding 
IP legislation mainly refer to amendments to update the membership coverage of international 
conventions.98 However, there have been some important initiatives to amend the legislation on 
copyrights and patents, as well as the introducti on of new practices, such as the IPRs trading 
platform (section 3.4.5.1.4).  
3.4.5.1.1  Copyright law 
3.141.  Copyright law is principally governed by the Copyright Ordinance of 1997 (Chapter 528), 
which was significantly amended in 2007 and 2009.99 One of the main amendments that took 
effect during the review period (July 2010) was the introduction of criminal sanctions against 
unauthorized copying or distribution of infringing copies of certain printed works on a regular or 
frequent basis in the course of business, to an ex tent in excess of prescribed numeric limits, that 
results in a financial loss to the copyright owner. 
3.142.  After extensive public consultations to am end the copyright law to enhance protection in 
the digital environment, the Copyright (Amendme nt) Bill 2011 was submitted to the Legislative 
Council (LegCo) in June 2011. Among the proposed amendments were the recognition of copyright 
owners' exclusive right to communicate their works through any mode of electronic transmission 
and the introduction of criminal liability for the electronic communication of copyright works; a safe harbour for online service providers (OSPs), underpinned by a Code of Practices for OSPs; and 
additional factors to assist the courts in considering the award of damages in civil proceedings 
pertaining to online infringement.
100 However, due to a very tight legislative agenda, it was not 
possible for the LegCo to have a second reading of the Bill before the expiration of its term. A new 
Bill introduced in June 2014, includes the aforementioned amendments as well as new provisions 
regarding the treatment of parodies on the internet.  
                                               
98 The latest notifications are contained in WTO documents IP/N/1/HKG/22, 2 September 2010; and 
IP/N/1/HKG/23, 30 April 2014.  
99 See WTO (2011). 
100 Legislative Council Brief, Copyright Ordinance (Chapter 528), Copyright (Amendment) Bill 2011. 
Viewed at: http://www.C&EDb.gov.hk/citb/doc/en/legcoBriefs/LegCo_Brief_Copyright_Amendment_Bill_2011.pdf. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 60 - 
 
  3.4.5.1.2  Patent law 
3.143.  Patent law is principally governed by the Patents Ordinance of 1997 (Chapter 514). Only 
minor amendments were made to the Ordinance during the review period (in 2010 and 2013) (Table A3.6). 
3.144.  Two types of patents are granted in HKC, standard patents and short-term patents. 
Standard patents are granted based on the re-registration of corresponding patents already granted by one of the three "designated patent o ffices", i.e. the patent offices of the People's 
Republic of China, the United Kingdom or the European Patent Office (designating the UK). An 
application for a standard patent may also be based on an international application under the Patent Cooperation Treaty (PCT) that has been pu blished and entered its national phase in one of 
the designated patent offices. Standard patents are granted subject to formality examination; no 
substantive examination is carried out.  
3.145.  Short-term patents are granted to protect products or processes with a short commercial 
life. An application for a short-term patent may be filed directly with HKC's Patents Registry based 
on a search report from an international searching authority or one of the three designated patent 
offices (i.e. no prior application elsewhere is needed). It may also be based on an international patent application for a utility model, designating Mainland China under the PCT that has entered 
its national phase in Mainland China. There is also no substantive examination of an application for 
a short-term patent.  
3.146.  Both standard patents and short-term patents are enforceable in HKC courts. Patent 
owners may take civil action to prevent infringeme nt of their rights and seek remedies such as 
injunctions, orders for delivery, damages, or an account of profits made by the infringing party. 
3.147.  In order to keep the patent system up-t o-date and facilitate the development of Hong 
Kong, China as a regional innovation and technology hub, in October 2011 the HKC Government 
conducted a public consultation on the review of  the patent regime and appointed a committee to 
provide advice on relevant issues. In February 2013, the Government endorsed the recommendations made by the committee, and announced the way forward for the development 
of the patent system in HKC
101:  
 Introduce an original grant patent (OGP) system with substantive examination 
outsourced to other patent offices in the beginning, while keeping the existing re-registration system for grant of standard patents. 
 Retain the short-term patent system, but with certain refinements such as introducing 
substantive examination into the system as a pre-requisite to commence infringement proceedings and requiring the short-term patentee to disclose full particulars about the 
patent (i.e. documentation, research report, etc.) to the person to whom the threat of 
infringement is made. 
 Develop a full-fledged regulatory regime for patent agency services in the long-run to be 
achieved in stages, with possible transitional measures.  
3.148.  The committee report recommended that HKC should have its own OGP system so that 
patentees may apply for an HKC standard patent with out having to first file an application in any 
of the designated patent offices. This will benefit persons interested primarily in a local patent. 
Introduction of substantive examination for short-term patents, as a pre-condition to 
commencement of infringement procedures should help reduce the risk of groundless threats of infringement, while development of a regulatory re gime for patent services should contribute to 
the overall professionalization of the patent profession.
102 The HKC Government is engaged in the 
implementation plan with a view to launching th e OGP and the refined short-term patent systems 
in 2016/17 at the earliest.  
                                               
101 Legislative Council Panel on Commerce and Industry , Review of the Patent System in Hong Kong, 
China, 19 February 2013. Viewed at: http://www.legc o.gov.hk/yr12-13/english/panels/ci/papers/ci0219cb1-
534-5-e.pdf. 
102 Lin (2013). WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  3.149.  As part of these efforts, HKC's Intellectual Property Department (IPD) signed a cooperation 
arrangement on patents with the State Intellectual Property Office (SIPO) of Mainland China, on 6 December 2013. Under the arrangement, SIPO will provide technical assistance and support to the IPD for substantive examination of patent applications and the training of staff.  
3.150.  Under the Patents Ordinance, compulsory licences for standard patents may be allowed on 
limited grounds, including where the patented invention is not being commercially worked in HKC, or where the demand for a patented product is not being met on reasonable terms, for example, 
through imports. Government use of a patented in vention is allowed during a period of extreme 
urgency declared by the Chief Executive, and the proprietor must be compensated. Prior to the present Trade Policy Review, HKC amended its le gislation to implement the WTO "Paragraph 6 
system" enabling it to grant compulsory licences for exports of pharmaceutical products to WTO 
Members with no or insufficient capacity to manufacture the patented products. Import 
compulsory licences for these products may only be granted during a period of extreme urgency. No compulsory licences have ever been issued. 
3.151.  Under the free-trade agreement signed with the member states of the European Free 
Trade Association, in June 2011, HKC committed to  comply with data protection exclusivity for 
"originator" pharmaceutical products and their clinical data. This means that the Department of 
Health will not approve the registration of a generi c product that involves using clinical data of the 
originator product for a specified period (presently eight years from the registration of the originator product in HKC), unless the applicant provides its own clinical data to substantiate the safety and efficacy of the generic product.
103 The authorities indicated that HKC grants exclusivity 
data protection to originator pharmaceutical products and their clinical data on an erga omnes  
basis.  
3.4.5.1.3  Parallel imports  
3.152.  The Copyright Ordinance prohibits paralle l importation of a copyright work or use of 
parallel imported copies for the purpose of dealing in (selling, letting for hiring, offering for sale or hire, or distributing for profit), and playing or  showing the works to the public, if the copies 
concerned are movies, TV dramas or musical (sound or visual) recordings.
104 Any of these acts is 
liable to both civil and criminal sanctions with in 15 months (shortened from 18 months in 2007) 
following the work's first publication anywhere in the world. Where the work has been published for more than 15 months, civil liability will continue to apply. There are no restrictions on parallel 
imports of computer software products, including for commercial dealings, except if the principal 
attraction of the product involves musical sound or visual recordings, movies, TV dramas, e-books, or a combination of them. As for other types of copyright works, there are generally no restrictions 
for end-users to import or possess parallel imported copies, whether for personal or business 
use.
105 Parallel imports of trademarked goods are permissible, unless the goods have been 
impaired or changed and the distinctive character or  reputation of the mark is adversely affected. 
The Patents Ordinance expressly provides that proprietor of a patent for a product or process has 
the exclusive right to import a patented product or a product made with a patented process. 
3.4.5.1.4  IP trading 3.153.  Hong Kong, China is seeking to capitalise on the increasing global and regional demand for 
IP, as well as on its geographical position and sound legal and institutional framework, to become 
an IP trading hub. It is already a regional market for copyright trading, licensing, and franchising, 
with many companies offering IP-related services (e.g. IP brokering, valuation, financing, 
consultancy, and legal services), and a number of online services for IP trading matching.  
3.154.  In March 2013, the Government established a Working Group on IP trading, led by the 
Secretary for Commerce and Economic Development, to advise on strategies to enhance the 
development of HKC as an IP trading hub, and on policy and support measures to facilitate IP 
                                               
103 See Guidance Notes on Registration of Phar maceutical Products/Substances. Viewed at: 
http://www.drugoffice.gov.hk/eps/do/en/level.html . 
104 Except when the playing or showing in public is by an educational establishment for the educational 
purposes of the establishment or by a specified library for use of the library. 
105 The prohibition against parallel imports of copy right works by business end-users was relaxed in 
2007. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  trading. In November 2013, the Working Group endorsed a strategic framework that covers four 
strategic areas: enhancing the IP protection re gime; supporting IP creation and exploitation; 
fostering IP intermediary services and manpower capacity; and pursuing promotion, education, and external collaboration efforts.
106 The Working Group will explore specific policies and support 
measures under each strategic area. In addition, an online IP trading portal was launched by the 
Hong Kong Trade Development Council in December 2013. 
3.4.5.2  Enforcement 
3.155.  The institutional framework for the enforcem ent of IPRs comprises the Intellectual Property 
Department (IPD) and the Customs and Excise Department (C&ED). The IPD is responsible for advising the Secretary for Commerce and Economic Development on IP policy and legislation; operating HKC registries for patents, designs, trademarks, and copyright licensing bodies; and 
promoting public awareness of the importance of IPR protection, mainly through educational 
programmes and publicity campaigns (e.g. the "No Fakes Pledge" campaign). The IPD is also HKC's WTO contact point on IPRs matters.  
3.156.  The C&ED is responsible for enforcing the criminal aspects of IPR infringement, by 
investigating and prosecuting copyright and trade mark offences, and false trade descriptions. The 
C&ED has ample investigative and seizure powers, and cooperates with overseas enforcement 
authorities as well as the private sector. The C&ED fights against piracy and counterfeiting 
activities, including manufacture, storage, retail, import and export of infringing goods and the use of pirated software and copyright works by comp anies in running their business. In order to 
combat online piracy, the C&ED has established anti-internet-piracy teams, whose work is 
supplemented by the Customs Computer Forensic Laboratory and the Computer Analysis and 
Response Team, which assists in collecting and analysing digital evidence. The C&ED has seconded an officer to the INTERPOL's Trafficking in Illicit Goods and Counterfeiting Sub-Directorate since 
2011, to strengthen international cooperation. 
3.157.  Under the Prevention of Copyright Pira cy Ordinance, local optical disc and stamper 
manufacturers require licences from the C&ED and must mark identification codes on all their 
products. The C&ED may also take enforcement action against commercial goods with forged 
trademarks or false trade descriptions under the Trade Descriptions Ordinance (Chap. 362). 
3.158.  The C&ED promotes awareness of IPRs through a number of schemes such as the Youth 
Ambassador Against Internet Piracy (to fight online piracy), the E-auctioning with Integrity (to 
prevent online auctioning of counterfeit goods, in collaboration with auction sites and IPR owners), 
and several schemes that reward informers for information leading to the seizure of pirated or counterfeit goods. The C&ED manages the Intellec tual Property Rights Protection Alliance, a 
platform to strengthen strategic partnership with IPR owners to monitor infringements and 
improve protection. 
3.159.  Both the IPD and the C&ED have gained international recognition for their actions to 
improve IPRs awareness and enforcement in HKC, an d for their close collaboration with the private 
sector.
107 For example, the C&ED won the Global An ti-Counterfeiting Award 2014 presented by the 
Global Anti-Counterfeiting Group (GACG), in recognition of its outstanding achievement in combating counterfeiting and piracy.
108 
3.160.  C&ED statistics show that the number of cases relating to IPR offences is in general on a 
downward trend. Officials indicated that the surg e of trade mark and trade description cases in 
2013 was due to stepped-up enforcement against online infringements (Table 3.13). For more 
details on the types of penalties imposed (prison sentences and fines), see Table A3.7. 
                                               
106 Government of HKC, "Overall st rategic framework formulated to promote Hong Kong as regional IP 
trading hub", 22 November 2013. Viewed at: http://www.info.gov.hk/gia/general/201311/22/P201311220572.htm.  
107 See, for example, joint report by European Chamber of Commerce in Hong Kong, KPMG, Mayer 
Brown JSM and TNS (2013).  
108 GACG is an informal network of national and re gional IP protection and enforcement organizations 
(22 members covering nearly 40 countries), whose objective is to exchange information, participate in joint activities and cooperate in the resolution of specific IP problems in their respective national or regional areas. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 63 - 
 
  Table 3.13 Customs and Excise Department : cases, seizures, and arrests, 2010-13 
 2010  2011  2012 2013  
Copyright 
No. of cases 610 323 116 99 
Persons arrested 532 436 166 143 
Value of seizure (HK$ million) 26 32 7 9 
Trade mark and trade descriptions 
No. of cases 947 647 533 752 
  - Online infringement cases 47 46 56 157 
Persons arrested 832 543 506 663 
Value of seizure (HK$ million)  173 197 158 146 
Source: Customs and Excise Department (C&ED). Viewed at: 
http://www.customs.gov.hk/filemanager/commo n/pdf/statistics/enforcement_cases_en.pdf . 
3.161.  IPR infringement through the internet has taken on an increasingly transnational 
dimension, posing new challenges to IPR enforcers globally, including the C&ED. This is the case of 
the operations of cyberlockers109, and the use of set-top boxes for the illegal transmission of 
copyright works. The C&ED has taken strong action against these activities. In January 2012, in 
cooperation with the U.S. authorities, the C&ED smashed an international cyberlocker syndicate 
and restrained over HK$335 million worth of crime proceeds. Also, in June 2014, in cooperation with a copyright owner, the C&ED detected and smashed a syndicate circumventing paid channels by uploading the channels to overseas servers for transmission to set-top boxes through the 
internet.
110 The C&ED has indicated that it will continue to monitor the situation and work closely 
with copyright owners to detect and combat infrin ging activities. On the other hand, the growth of 
e-commerce, in particular trading through online auction sales, has led to higher volumes of 
counterfeit products being shipped in smaller quantities in the form of postal packages, 
representing another new challenge to intelligence and enforcements efforts.  
3.162.  Inevitably, IPR infringing items may be transhipped through HKC along with the vast 
majority of legitimate goods. The C&ED has developed partnership arrangements with major 
courier service providers and the Hong Kong Post to facilitate enforcement actions on suspicious parcels. It has also maintained close cooperation with overseas enforcement authorities to exchange intelligence, and mount parallel and joint operations.
111 In addition, the C&ED has 
participated in operations coordinated by international organizations, such as Operation "Pangea" 
by the WCO, Operation "Short Circuit" by APEC, Operation "Hurricane" by INTERPOL, and 
Operation "In-Our-Sites" with the U.S. IPR Centre and EUROPOL. 
3.163.  The C&ED has developed and launched three systems (Lineament Monitoring Systems) for 
monitoring and tracing infringement on the internet with a view to strengthening enforcement capabilities and 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. According to the HKC authorities, the significant increase in the detection of internet cases in 2013 indicates the effectiveness in deploying enforcement technologies to fight crime. In February 2013, the C&ED established the Electronic Crime 
Investigation Centre (ECIC) to undertake research and development into the latest technologies, 
formulate online investigation procedures, and conduct training courses for front-line enforcement officers.  
3.164.  In April 2014, the C&ED established the Electronic Recordation and Triage Centre (ERTC), 
which has helped right holders, especially those based outside HKC, to complete recordation of their copyrights and trademarks and conduct pr eliminary examination of the offending goods 
                                               
109 A type of internet hosting service that allows user s to upload one or more files from their hard drives 
(or from a remote location) onto the one-click host's server, which then others can download. File hosting 
services can be used to distribute or share files without the consent of the copyright owner.  
110 According to the C&ED, most set-top boxes are connected to servers outs ide HKC, and different 
models of set-top boxes ha ve different operation syst ems, so whether the act of  using a set-top-box is 
criminally liable needs to be assessed on a case-by-ca se basis taking into account its overall circumstances. 
111 C&ED has indicated that controlled delivery operations have been conducted with U.S. Immigration 
and Customs Enforcement with  regard to counterfeit medicines contai ned in parcels bein g delivered to the 
United States. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 64 - 
 
  without having to visit Customs offices in person. Hence, the ERTC helps right owners save travel 
costs while improving the enforcement effectiveness.  
3.165.  Using an innovative enforcement approach, developing new technologies, sharing 
intelligence, and maintaining cooperation with stakeholders are key aspects in the fight against 
IPRs infringing activities, in the physical mark et and the rapidly changing digital environment. 
Legislative proposals currently being formulated by the HKC Government to update and enhance 
the copyright regime may also facilitate enforcement of IPRs in the digital environment.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  4  TRADE POLICIES BY SECTOR 
4.1  Overview 4.1.  The contribution of the agricultural and fisheries sector to the economy is very modest, 
representing only 0.1% of GDP. Government interven tion in the sector is minimal, focusing on the 
provision of basic infrastructure, extension services, and loan facilities. Licences for imports and 
exports of rice remain in place, as well as a mandatory reserve-stock to cope with short-term shortages. Most rice imports come from Thailand and Viet Nam. Amendments to the Fisheries 
Protection Ordinance in 2012 included measures to further enhance the conservation and 
management of fisheries resources. 
4.2.  HKC is a net importer of energy. The Government considers that the private sector is best 
placed to supply local energy requirements in response to market demands. There have been no 
significant policy or market structure changes in this sector. Five companies operate in the market 
of refined oil products, three of which are foreign companies; whereas in the electricity market two local companies hold de facto  territorial monopolies. The authorities envision the liberalization of 
the electricity market in 2018. The effects of the recent Competition Ordinance on the evolution of 
the energy markets remain to be seen. 
4.3.  Manufacturing contributes 1.5% to GDP and 3% to total employment. In response to high 
production costs, low-valued-added operations have been relocated outside HKC since the late 
1980s. The remaining manufacturing firms aim to mo ve up the value chain and focus on producing 
higher value-added contents. CEPA may provide some room for HKC's manufacturers to expand their production networks, thus helping the sector to transform and upgrade. 
4.4.  Hong Kong, China's economy is essentially services based, with a clear position as a regional 
hub in financial services, telecommunications, ma ritime transport, and air transport. Services 
account for 93% of GDP and 88% of total employment (2012). This Review covers the sectors 
traditionally dealt with by TPRs with a specific focus on regulatory changes since the last report in 
2010, and with a comparison of trade regimes bo und in the context of the GATS, the free-trade 
agreements signed by HKC, and the applied regime. In addition, this report covers services that 
are inherently more domestic in nature but that constitute an essential part of the economy, in 
terms of employment and activity and because th ey are large and vibrant markets: distribution 
services and the cluster formed by architecture services, construction services and real estate 
services.  
4.5.  HKC's GATS commitments are not always extensive, but the applied regime is quite liberal, 
as reflected in the standstill-based, negative list in the HKC-EFTA agreement. This contains very 
few reservations notably for future measures, most of which are purely precautionary. The regime 
defined by this agreement is applied erga omnes . Mainland China benefits from a special standstill 
whose scope tailored to its concessions to HKC, bu t this does not translate into any preferential 
treatment for Mainland China. Under the CEPA, HKC has made no specific services commitments, 
meaning that the MFN regime applies to Mainland China. 
4.6.  HKC is a significant and vibrant telecommunications market, with high penetration rates for 
mobile and broadband services, numerous competing operators (21 for fixed telephony), and low prices by global standards. The regime was entirely liberalized in 2003. HKC's GATS commitments, 
while extensive, are not as liberal as the applied regime, since they contain several restrictions. 
The Hong Kong, China (HKC)–New Zealand Closer Economic Partnership Agreement, and to a lesser extent the FTA with EFTA states, although signed much later than the 2003 liberalization, 
echo the few restrictions listed in the GATS co mmitments. The main regulatory changes during the 
review period were the establishment of a new unifi ed regulator for both broadcasting services and 
telecommunication services, to take into account digital convergence, the withdrawal of regulatory 
guidance on the charging principles for narrowband interconnection between fixed carriers, 
number portability, the increase in transparency in several areas, including interconnection arrangements, mobile services information, mobile and fixed broadband services information, the contracting process and pricing information related to mobile content services (MCS), and 
consumer protection. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 66 - 
 
  4.7.  HKC is a regional if not a global hub for financial services. It has 70 of the top 100 global 
banks operating there, the world's fifth largest forex market, and the sixth largest stock exchange with a particularly thriving initial public offering (IPO) market, notably for companies originating from Mainland China. HKC's GATS commitments for insurance services cover all subsectors except 
claims settlement for goods-in-transit insurance. The regime is quite liberal and the only 
restrictions are a requirement of commercial presence, a requirement of residency for the chief executive, and a prohibition on soliciting business or conducting marketing on a cross-border 
basis. This latter restriction applies to all financial services. The main regulatory changes for the 
insurance sector since the last Review concern consumer protection: initiatives on the establishment of a new independent insurance authority in charge of supervision and licencing, establishment of a Policyholders Protection Fund, reinforced measures to protect the purchasers of 
investment linked assurance schemes (ILAS), group and cross-sector supervision, resolution 
regime, and development of a risk-based capital framework.  
4.8.  HKC's GATS commitments on banking and other financial services, cover all except three 
sectors listed in the GATS financial services annex. Restrictions listed vary by subsector but 
concern essentially commercial presence, preliminary experience, and residency. The HKC-EFTA states free-trade agreement by-and-large echoes these restrictions. One restriction, i.e. the 
requirement of three continuing years of presen ce in Hong Kong, China for overseas banks to 
establish a locally incorporated fully licensed bank, was removed in July 2012. This autonomous liberalization has been applied erga omnes . Mainland China benefits from a standstill via the CEPA. 
The main regulatory changes for banking implemen ted or anticipated since the last Review are 
mostly linked to prudential and consumer protection considerations: the proposed expansion of the 
supervision of the Hong Kong Monetary Authority to stored value facilities and retail payment systems, Basel III implementation, various policy measures to address the "too big to fail" issue 
(including the implementation of a systemically  important banks framework, and the development 
of proposals for legislative reform to establish a cross-sectoral resolution regime for financial institutions), reinforcement of the bank deposi t insurance scheme, and enactment of anti-money 
laundering legislation.  
4.9.  Regarding securities, stock exchanges, mutual funds, and asset management, the main 
regulatory changes relate to shareholders rights  and disclosure obligations for listed companies, 
the creation of a securities and futures handbook  for unit trust and mutual funds, new reporting 
rules for securities and futures short positions, cr eation of a regulatory regime for credit rating 
agencies, the amendment of the trust law, the openin g of a public consultation on the introduction 
of an open-ended fund company (OFC) structure,  and enactment of primary legislation for the 
regulation of over-the-counter (OTC) derivatives. 
4.10.  Hong Kong, China is a regional and a global aviation hub, in terms of airport traffic (cargo 
and passenger) and the number of local airlines based there. It is the world's number one cargo 
airport and eleventh passenger airport, and the cont ribution of aviation services to GDP was 2.4% 
in 2008. HKC has 5 designated airlines with a total fleet of 218 aircraft, and is an important centre for business aviation and aircraft repair and maintenance.  
4.11.  With regard to the air transport services covered by the GATS and its FTAs (aircraft repair 
and maintenance, computer reservation services, and selling and marketing), Hong Kong, China 
has no GATS commitments and a reservation for future measures in its agreements with the EFTA states and New Zealand. In terms of the applied regime, computer reservation and selling and 
marketing are not specifically regulated, while maintenance is subject to a limited number of 
licences due to spatial constraints and qualification requirements. Ground handling for cargo services is subject to a limited number of licences for the same reasons, while self-handling, 
mutual handling, and third-party handling is allowed for passengers. The airport is state-owned 
and managed by a statutory corporation followin g prudent commercial principles. The designation 
rules are liberal and retain the criterion of principal place of business. The charter policy takes into account existing scheduled services and, for foreign carriers, reciprocity. There is no specific 
all-cargo flights policy. The bilateral aero-policy is overall relatively liberal granting fifth freedom 
rights, principal place of business withholding crit eria and multi-designation, often combined with 
less liberal features such as double approval of tariffs and predetermination of capacity.  
4.12.  Hong Kong, China's port remained fourth in the world, in terms of container traffic, behind 
Shanghai, Singapore, and Shenzhen, in 2013. It is  successfully competing with the neighbouring 
Pearl River delta harbours, with a specific comparative advantage on transhipment. The HKC WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  terminal operators, notably Hutchison Ports Holdings, manage numerous ports abroad. The HKC 
registry is the fourth largest in the world (in te rms of tonnage), with 138.13 million dead weight 
tonnes (DWT), i.e. 8.24% of the world's fleet in January 2014. Favourable operating conditions and the cluster of maritime-related services offered by HKC have attracted investment from global 
shipowners, which explains why a large part of the tonnage of the registry is beneficially owned by 
foreign interests. In terms of locally beneficially owned fleet, HKC ranks eighth worldwide, with 1.54% of world tonnage. The shipping policy is liberal with no subsidies or cargo reservation 
attached to the flag, no restrictions on access to and use of port services and multimodal 
transport, and no restrictions on onshore activities  by foreign firms. The only significant regulatory 
development since the last Review of HKC is the launch of an Authorized Economic Operator scheme to facilitate trade while improving security.  
4.13.  Distribution is a major sector of the HKC economy, representing nearly 10% of employment 
and almost 5% of GDP. Numerous foreign distributors are present but the supermarket segment is largely dominated by local interests. Traditional open-air fresh-food markets ("wet markets") 
remain an important component of the distribution system. HKC's GATS commitments on 
distribution services are limited to retail services, with a liberal regime (no restriction for market access under mode 3). The free-trade agreement with the EFTA states contains no reservation for 
existing non-conforming measures regarding distribution services but includes a reservation for 
future measures for "other distribution services". The authorities have indicated that for the time being no such measure exist and that the regime defined by this agreement is applied erga 
omnes . The sector appears largely unregulated. In particular, HKC has no specific regulation 
establishing economic needs tests for the creation of supermarkets or any legislation regulating 
market access for franchising. The general competition regime applies to the sector. There have been no significant regulatory changes since the last Review.  
4.14.  The cluster composed by architecture services, construction services and real estate 
services constitutes an important and dynamic se ctor of the economy as can be expected in a 
territory where land is scarce and construction vertical. HKC has no GATS commitments for 
architecture services and limited commitments, sector-wise, for construction and real estate 
services. However, the level of commitments made by HKC under its free-trade agreement with the EFTA states is notably more liberal. Foreign architects can fully practice in Hong Kong, China provided they reside and are registered locally. Re gistration is only granted after applicants have 
passed the local examination. The licencing regime for construction is subject to non-
discriminatory qualification requirements. The licensing regime for real estate agents is open to foreigners provided they fulfill the requirements and have passed the local qualification 
examination. 
4.2  Agriculture and fisheries 4.2.1  Agriculture  
4.15.  Hong Kong, China's agriculture and fisheries sector is very small, accounting for 0.1% of 
GDP and total employment. Only seven square kilome tres of land are cultivated. Hence, HKC relies 
heavily on imports, particularly from Mainland China, to feed its population. It imports over 90% of its total food supply. Local agriculture is characte rized by small, intensive vegetable and livestock 
farms, whose produce is sold on the domestic market. There are around 2,400 farms, employing 
some 4,400 people.
1 The main agricultural products are vegetables, ornamental flowers, pigs, and 
poultry. These products have taken ov er from the traditional paddy fields.2  
4.16.  The Agriculture, Fisheries and Conservation Department (AFCD) is responsible for securing 
orderly production and marketing of agricultural produce, enforcing regulations, and preserving 
ecological integrity. The Food and Environmental Hygiene Department (FEHD) is in charge of 
agri-food import certification and the administrati on of food safety programmes (section 3.2.8).   
                                               
1 Agriculture, Fisheries and Conservation Depart ment (AFCD) online in formation. Viewed at 
http://www.afcd.gov.hk/english /agriculture/agr_hk.html.  
2 In 2013, local production accounted for 2% of fresh  vegetables, 60% of live poultry, and 7% of live 
pigs consumed in HKC. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  4.2.2  Farm support measures  
4.17.   According to the HKC authorities, agricult ural policy follows the free-market principle of 
minimal government intervention.3 It focusses on providing basic infrastructure, extension, and 
advisory services, and credit facilities to farmers. The AFCD carries out research in pest control, 
crop husbandry, soil management, new product varieties, and production techniques to assist 
farmers to improve productivity. Infrastructure support includes rehabilitation of fallow land, improvement of irrigation and drainage facilitie s, and farm management. Loans on concessional 
terms and emergency relief from natural disasters are also made available to farmers. The total 
value of loans for farm production under the various funds administered by the AFCD was HK$29 million in 2010-13.
4 
4.18.  Under the Accredited Farm Scheme, farms are supervised for pest control and proper use of 
pesticides. Certified farms may sell their produce at accredited retail outlets with the help of the 
Vegetable Marketing Organization. At end 2013, a total of 297 farms were accredited under the 
scheme, supplying some 56 tonnes of produce daily. To gain a competitive edge on quality, local 
farmers have been turning to organic agriculture in recent years; conversion is supported by 
AFCD's technical advice. At end 2013, there were 225 organic farms, producing some 5.5 tonnes of organic vegetables a day.
5 
4.19.   Legislation requires all livestock farms to be licensed and possess appropriate livestock 
waste treatment facilities.6 As a result of the voluntary surrender and buy-out schemes for pig and 
poultry farms implemented in the mid-2000s on pu blic health grounds, the structure of the 
livestock industry has been reshaped towards fewer but bigger farms. In 2013, there were 43 pig 
farms (down from 265 in 2006) with a production value of HK$273 million; and 30 poultry farms 
producing chicken and eggs worth HK$247 million. 
4.20.  During the review period, HKC notified the WTO Committee on Agriculture that all its 
domestic support measures were under the "G reen box" (i.e. exempt from the reduction 
commitment).7 Total monetary outlays for these measures increased over the review period, 
amounting to HK$103.7 million in 2013-14 (HK$85.7 million in 2009-10). Pest and disease control 
measures accounted for over 50% of total annual  o u t l a y s .  H K C  a l s o  n o t i f i e d  t h a t  n o  e x p o r t  
subsidies were provided to agriculture during the years under review.8  
4.2.3  Rice 4.21.  Considered a staple food in HKC, rice is designated as a reserved commodity in accordance 
with the Reserved Commodities Ordinance (Chapter  296). Hence, imports and exports of rice are 
subject to licences, and the Government enforces a reserve-stock to ensure sufficient supply for local consumption. Businesses registered as stockholders with the Trade and Industry Department 
may import rice. Upon registration, they are required to make an undertaking to import specific 
quantities on a quarterly basis and to import such quantities within the relevant period. By April 2014, there were 176 registered stockholders of rice.
9 
4.22.  The reserve-stock is maintained at all time s to meet sudden surges in demand in case of 
short-term supply shortages or other emergencies, and all registered stockholders are required to contribute to it by holding a quantity of rice  proportionate to their import volumes. During 
2010-13, the reserve stock was maintained at a level "sufficient for consumption by the local 
population for 15 days", which was on averag e 13,675 tonnes a year. In the event of an 
emergency or a supply shortage, the Government has the power to ask rice stockholders to 
                                               
3 AFCD online information. Viewed at: http://www .afcd.gov.hk/ebglish/agriculture/ag_hk/ag_hk.html. 
4 Information provided by the HKC authorities.  
5 HKC Government online informatio n, "Hong Kong: The Facts. Agriculture and Fisheries". Viewed at: 
http://www.gov.hk/en/about/abouthk /factsheets/docs /agriculture.pdf . 
6 Livestock keeping is regulated under the Public He alth (Animals and Birds) (Licensing of Livestock 
keeping) Regulation, Chapter 139L.  
7 WTO documents G/AG/N/HKG/28, 6 May 2010; G/AG/N/HKG/30, 19 May 2011; G/AG/N/HKG/32, 
14 May 2012; G/AG/N/HKG/34, 1 May 2013; and G/AG/N/HKG/36, 28 April 2014. 
8 WTO documents G/AG/N/HKG/29, 20 January 2011; G/AG/N/HKG/31, 12 January 2012; 
G/AG/N/HKG/33, 16 January 2013; and G/AG/N/HKG/35, 15 January 2014. 
9 Trade and Industry Department online information. Viewed at: 
http://www.tid.gov.hk/english/import_export/no ntextiles/nt_rice/monthly_rice.html#Summary. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  release stocks to the market or import rice in excess of their undertakings, and set maximum 
wholesale prices. The last time part of the stocks was released was in 1989.  
4.23.  In 2013, rice imports to HKC amounted to 346,287 tonnes (up 9.7% from 2012). On the 
other hand, per capita rice consumption declined (from 49 kg per year in 2005 to 45 kg in 2013) 
due to changes in eating habits. According to a recent study, since the liberalization of the HKC 
rice market in 2003, two of the most notable outc omes have been the increase in the number of 
importers (from 52 in 2002 to 176 in April 2014) an d changes in the market shares of overseas 
rice suppliers to HKC.10 Thailand remains the main source of rice imports by volume, but its 
market share has decreased significantly (from 80% in 2009 to 46% in 2013), while Viet Nam has progressively positioned itself as the second-lar gest supplier, accounting for 41% of imports in 
2013, primarily owing to its competitive prices.
11 Mainland China is the third largest source with a 
7.3% market share (Chart 4.1). Imports of rice from Mainland China are subject to registration 
requirements to allow for the implementation of Mainland China's export quotas for rice and other grain products (rice flour and wheat flour), in effect since 2008. Registered HKC importers may 
import rice from authorized exporters in the Mainland, provided that supplies are entirely used for 
local consumption and not re-exported. 
Chart 4.1 HKC rice imports by major suppliers, 2009-13 
050100150200250300350400
2009 2010 2011 2012 2013World
Thailand
Viet Nam
Mainland China
Australia
United States1,000 tonnes
 
Source: Census and Statistics on line information. Viewed at: http://www.censtatd.gov.hk . 
4.2.4  Fisheries 
4.24.  Although their contribution to employme nt is minimal, the fisheries and aquaculture 
industries supply about a third of HKC's seafood consumption. In 2013, the estimated production of the fishing industry was 170,000 tonnes, valued at HK$2.3 billion. The fishing fleet consists of 
about 4,000 vessels. In 2013, fish ponds produced  2,187 tonnes of freshwater fish, valued at 
HK$44 million, while marine fish culture prod uction was 1,005 tonnes, worth HK$94 million.
12  
4.25.  The AFCD provides basic infrastructure, te chnical advice, liaison services, marketing, and 
training to assist fishermen and encourage conversi on to sustainable fisheries. Fishermen and fish 
farmers may also benefit from low-interest loan s under funds administered by the AFCD. During 
2010-13, some 1,860 loans totalling HK$286 million were granted to the fisheries industry.13 HKC 
has notified its loan schemes for the fisheries sector to the WTO Committee on Subsidies and 
Countervailing Measures.14 In addition, the AFCD operates a voluntary Accredited Fish Farm 
Scheme to monitor the hygiene standards of fish farms and the quality of cultured fish, a fish health management programme, and a g ood aquaculture practices programme. 
                                               
10 USDA FAS (2014). 
11 In 2013, the average import price of Thailand rice was 76% higher than the average import price of 
Viet Nam rice. However, Thai rice is generally of a higher quality (USDA FAS, 2014).  
12 Information provided by  the HKC authorities. 
13 Information provided by  the HKC authorities. 
14 WTO documents G/SCM/N/220/HKG, 19 May 2011; and G/SCM/N/253/HKG, 16 July 2013. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  4.26.  During the review period, the AFCD cont inued to implement fisheries conservation and 
management measures. These included strict enforcement against destructive fishing practices, deployment of artificial reefs to contribute to  higher diversity and abundance of fish, and the 
introduction of a ban on trawling in HKC waters  (effective 31 December 2012). Amendments to the 
Fisheries Protection Ordinance in 2012 included the introduction of a registration system for local 
fishing vessels; limits on new entrants to control the number of fishing vessels; restrictions on fishing by non-fishing vessels; the prohibition of fishing activities of non-local fishing vessels in 
HKC waters; and the designation of fisheries protection areas. 
4.3  Energy 4.27.  HKC is a net energy importer as it has no indigenous energy resources. The objectives of 
HKC's energy policy remained unchanged during the review period: to ensure that the energy 
needs of the community are met safely, reliably, effi ciently, and at reasonable prices; to minimize 
the environmental impact of energy production ; and to use and promote the efficient use and 
conservation of energy. There is no legislation regulating market conditions per se  in the energy 
sector.
15 The Government considers it should intervene only to safeguard the interests of 
consumers where necessary, ensure public safety, and protect the environment.16 The 
Environment Bureau's policy functions include monito ring prices and the energy strategic reserves.  
4.28.  There are no restrictions on imports and distribution of refined oil products (e.g. petroleum, 
diesel, and liquefied petroleum gas).17 Currently, five oil companies are operating in the local 
market: Chevron, China Petroleum & Chemical Corporation (Sinopec), Exxon-Mobil, and Shell have roughly the same market shares; Chinaoil (Hong Kong) Corporation Limited (PetroChina) also has 
business locally. Town gas is supplied solely by the Hong Kong and China Gas Company 
(Towngas), and produced from imported naphtha an d natural gas. Natural gas is also imported for 
electricity generation. All natural gas is imported through pipelines from Mainland China, by 
Towngas and two power companies (see below). Under a voluntary code of practice entered into 
with the HKC Government, the oil and gas companies maintain strategic reserves of gas oil and naphtha, respectively. The authorities view the maintenance of these strategic reserves as a tool 
to mitigate the consequences of any temporary di sruption of oil supply, ensuring that sufficient 
reserves of essential oil products are available over a period of shortage.
18 According to the 
authorities, the HKC Government does not hold (or sell) oils or oil products to respond to price hiking of these products in the international market.  
4.29.  Local electricity is generated from coal and natural gas.
19 There are two territorial de facto  
monopolies in electricity generation, transmission and distribution: CLP Power Hong Kong Ltd together with Castle Peak Power Company Limited (collectively, CLP) supplies electricity to 
Kowloon and the New Territories, including Lant au, Cheung Chau, and several other outlying 
islands (altogether covering about 80% of HKC' s population); while Hongkong Electric Company 
Ltd (HEC) supplies electricity to Hong Kong Island and the neighbouring islands of Ap Lei Chau and 
Lamma. CLP imports electricity from its neighbouring Chinese province Guangdong.
20 Both CLP 
and HEC are private-owned companies, and do not operate on a franchise basis. 
4.30.  The Environment Bureau monitors price-related issues of electricity and town gas. 
Monitoring is based on mutual agreements (S cheme of Control Agreements, or SCAs) with 
                                               
15 The Electricity Ordinance (Chapter 406) and the Gas Safety Ordinance (Chapter 51) regulate the safe 
supply of electricity and gas and the safety of household electrical prod ucts and gas appliances. Among other 
things, they cover the registration of generating fac ilities, contractors and workers for electrical and gas 
installations, wiring and gas installa tion standards, and safe distributi on and use of electricity and gas. 
16 Environment Bureau onli ne information, "Energy supplies". Viewed at: 
http://www.enb.gov.hk/en/about_us/policy_responsibilities/energy.html .  
17 In addition to being used as fuel gas for househ old, commercial and indust rial purpose, liquefied 
petroleum gas (LPG) is used as fuel by nearly all taxis and over 60% of public light buses in HKC. 
18 In general, situations of temporary oil supply disruption may include international events causing a 
shortage in the world's oil supply (e.g. embargo of o il supply) or local events causing physical damage to 
storage or distribution facilities of oil (e.g. industrial accidents). 
19 No new coal-fired plants have been permitted to be built since 1997; the existing coal-fired plants 
generate just over half of electricity in HKC. 
20 HKC Government online informat ion, "Hong Kong Factsheets – Water, Power, and Gas Supplies". 
Viewed at: http://www.gov.hk/en/about/abouthk /factsheets/docs/w p&g_supplies.pdf .  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  electricity companies, and an Information and Consultation Agreement (ICA) with Towngas. The 
Bureau also monitors retail prices of auto-fuels. 
4.31.  According to the authorities, the SCAs do not offer electricity companies any exclusive 
rights, nor do they define a supply area for either company, or exclude newcomers to the 
market.21 The SCAs involve, inter alia , the regulation of tariffs and permitted rates of return. They 
also require the companies to seek approval from  the Government for their five-year development 
plans, including projected basic tariff levels. 
4.32.  The electricity tariffs charged by the companies cover operating costs and fuel charges and 
include the permitted return for providing the serv ice. Under the current SCAs, the permitted rate 
of return on the average net fixed assets of the power companies is 9.99%; fixed assets for renewable energy permitted a higher rate of return of 11%. The basic tariffs, which include a 
"standard fuel cost", require appr oval from the Government. Differences between the standard fuel 
cost and actual fuel prices are captured in a Fuel Clause Recovery Account, with surpluses being returned to consumers or deficits being recovered from consumers by means of a rebate or a 
surcharge, respectively. A Tariff Stabilisation Fund  (TSF) accumulates funds to lessen the impact of 
tariff increases or facilitate tariff reduct ion, where appropriate, for consumers.  
4.33.  CLP and HEC maintain different tariff structures. In December 2013, the Government 
approved the two companies' development plans for 2014-18 as well as their tariffs for 2014: 
HEC's average net tariff rate remained unchanged, while that of CLP rose by 3.9%.
22 According to 
the CLP presentation to the Legislative Council, its tariffs are competitive compared with those in other major metropolitan cities such as Singapore, New York, London, and Sydney.
23 
4.34.  The current SCA with CLP has been effective since October 2008, and that with HEC since 
January 2009. Both SCAs are expected to expire in 2018, though the Government has the option to extend them for five more years. The Government is conducting a review of the overall 
development of the electricity market after 2018 and the regulatory framework. The review also 
covers the feasibility of introducing more competition in the sector. 
4.35.  The Government encourages the use of renewable energy in HKC, though it faces constrains 
such as scarcity of land for wind turbines. Lamma Winds, a wind-power station owned and 
operated by HEC, running a 800 kW wind turbine,  is the first commercial-scale wind turbine in 
HKC. There are also some small wind turbine proj ects funded by the Government or by private 
financial sources.
24 
4.4  Manufacturing 
4.36.  Manufacturing in HKC remains a small part of this service-oriented economy. In 2012, 
manufacturing accounted for about 1.5% of GDP and 3% of total employment. Nearly 99% of 
enterprises in the manufacturing sector are small or medium-size enterprises (SMEs), employing 
about ten persons each in 2012.25 The Government provides support in the form of loans and non-
tax incentives to SMEs (section 3.4.1.3).  
4.37.  From the late 1980s, HKC's manufacturers started relocating and expanding their 
lower-value-added operations to Mainland China and neighbouring countries in South-East Asia, in response to high local production costs, in part icular those of land and labour. According to the 
Industrial Production Index, all major manufacturing activities in HKC continued shrinking during 
the period 2007-2012, except for the food, beverage and tobacco sector. Today, this sector 
                                               
21 Environment Bureau online  information, "Policy resp onsibilities". Viewed at: 
http://www.enb.gov.hk/en/about_us/policy_responsibilities/financial_monitoring.html .  
22 The HKC Government press release. Viewed at: 
http://www.news.gov.hk/en/categories/environment/html/2013/12/20131210_204759.shtml .  
23 HKC Legislative Council Information Paper,  Development Plan (2014-2018) of CLP/CAPCO.  Viewed at: 
http://www.legco.gov.hk/yr13-14/english/panels/edev/papers/edev1210cb1-524-2-e.pdf.  
24 Electrical and Mechanical Services Department online information, "List of Small Wind Turbines 
Projects". Viewed at: http://re.emsd.gov.hk/english/wind/small/small_ep.html .  
25 Census and Statistics Department (2013).  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  employs the largest number of manufacturing wo rkers: 29,190 persons in 2012, accounting for 
28.4% of the manufacturing employment.26 
4.38.  The local manufacturing industry is focuse d on production of higher valued-added contents. 
In terms of value-added, the food, beverage an d tobacco sector created HK$9,357 million in 2012 
(accounting for 26.7% of total value-added in manufacturing); followed by the sectors of: paper 
products, printing and publishing (HK$5,407 mi llion or 15.4%); chemical and pharmaceutical 
products (HK$2,662 million or 7.6%); and electrical, electronic and optical products 
(HK$2,143 million or 6.1%).27 
4.39.  HKC's textile and apparel industry continued to contract during the review period, but it is 
moving up the value chain towards Original Brand Manufacturing (OBM) production, according to the authorities. In terms of value-added, th e apparel sector created HK$2,038 million in 2012, 
accounting for 5.8% of total value-added in manufacturing.
28 
4.40.  Although the manufacturing sector is small, it accounted for 98.6% of HKC's "domestic" 
merchandise exports in 2013.29 Similarly, manufactures represented 97.5% of merchandise 
imports in the same year.30 Considering that manufacturing has been relocated to areas with lower 
production costs (including land and labour), CEPA may provide HKC some room for further development of higher value-added manufacturing industries. Taking into account the economic 
integration with Mainland China, CEPA may encourage HKC enterprises to expand their production 
operations in the Mainland, which according to the HKC authorities would help local industrial transformation and upgrading. 
4.5  Services  
4.5.1  Telecommunication services  
4.5.1.1  Statistical overview 4.41.  HKC is a significant and mature telecommunications market as evidenced by the high 
penetrations rates of mobile and broadband. HK C's objective is to become a major telecom 
regional hub, notably as a node for submarine telecom cables.  
4.42.  Table 4.1 below describes the main economic indicators of the telecommunications sector. 
Table 4.1 Main economic indicators of  the telecommunications sector, 2011-13 
Gross output of the telecom industry (billion HK$) 2011: 63.4; 2012: 69  
Employment (2011): 18,000  
Exports (million US$)  
2011: 1,246; 2012: 1,398; 2013: 1,455 
 
Imports  (million US$)  
2011: 716; 2012: 884; 2013: 864  
Penetration rates (as of December 2013a) 
 
Total telephone subscribers (per 100 inhab.): 297.95 
Total mobile customers: 17,194,291b 
Total telephone lines: 4,317,152c 
Fixed telephone subscribers (per 100 inhab.): 62.9 
Mobile phone subscribers (per 100 inhab.): 238.2 
                                               
26 Census and Statistics Department (2013), Key Statistics on Business Performance and Operating 
Characteristics of th e Industrial Sector . Viewed at: 
http://www.censtatd.gov.hk/hkstat/sub/sp310.jsp?productCode=B1080012 . 
27 Information provided by  the HKC authorities. 
28 Information provided by  the HKC authorities. 
29 Domestic exports of goods refer to the natural pr oducts of HKC or the products of a manufacturing 
process in HKC, which has permanently changed the shape, nature, form or utility of the basic materials used 
in manufacture. 
30 Calculation based on the concordance from HS2007 to ISIC, Rev.2. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Fixed (wired)-broadband subscriptions (per 100 inhab.): 30.7 
Mobile broadband subscriptions (per 100 inhab): 167.8 
Internet users (per 100 inhab.): 74.2% of all persons aged 10 and over had used the internet during the 
previous 12 months in a survey period from January to April 2013, according to a survey carried out by the 
Census and Statistics  Department (C&SD) 
 
Broadband internet subscribers (per 100 inhab.) 
Total broadband subscription per 100 inhabitants is 198.5, of which 30.7 is fixed (wired)-broadband 
subscriptions per 100 inhabitants.d 
Main actors 
 
Number of companies providing value-added telecom services 
As of 31 December 2013, 71 companies were authorized to provide value-added telecom services. 
 
Names and market shares of the leading companies for fixed telecom services 
As of 31 December 2013, 21 carrier licensees were authorized to provide local-fixed telecommunications 
services and 41 carrier licensees authorized to pr ovide external fixed-tele communications services: 
 
- Hong Kong Cable Television Limited; SmarTone Communications Limited; Towngas Telecommunications 
Fixed Network Limited; Sinosat (HKC) Limited; PCCW Global (HKC) Limited; GlobeCast Hong Kong Limited; 
TVB Network Vision Limited; APT Telecom Services Limited; China Unicom (HKC) Operations Limited; FLAG 
Telecom Asia Limited; ComNet Telecom (HKC) Limited; AT&T Global Network Services Hong Kong Limited; 
TraxComm Limited; CITIC Telecom Inte rnational CPC Limited; PLDT (HKC ) Limited; HKC Network Limited; 
Asia Satellite Telecommunications Company Limited; Hong Kong Broadband Network Limited; China Tietong 
Group (HKC) Company Limited; China Mobile Hong Ko ng Company Limited; STT Limited; T-Systems China 
Limited; Hong Kong Telecommunications (HKT) Limited;  Orange Business Services Hong Kong Limited; KDDI 
Hong Kong Limited; Donghwa Telecom Co., Limited; Bharti Airtel (HKC) Limited; Reach Networks Hong Kong 
Limited and Reach Cable Netw orks Limited; Telekom Malaysia (HKC) Limited; China Telecom Global Limited; 
StarHub (HKC) Limited; GB21 (HKC) Limited; Vodafone Enterprise Global Network HK Limited; New World 
Telecommunications Limited; Hutchison Global Communications Limited; PCCW-HKT Telephone Limited and 
Hong Kong Telecommunications (HKT ) Limited; Telstra International HK Limited and Telstra International 
Limited; Pacnet Global (HKC) Limited; Wharf T&T Limited; Pacnet Cable (HKC) Limited; BT Hong Kong 
Limited; Verizon Hong Kong Limited; Telekomunikasi Indonesia International (HKC) Limited; NTT Com Asia 
Limited; China Mobile Hong Kong Co mpany Limited; China Mobile Internat ional Limited; CTM (HKC) Limited; 
21 ViaNet Group Limited; Tata Communications (HKC) Limited; Equinix Hong Kong Limited. 
 
- Three of these companies, Hutchison Global Teleco mmunications, PCCW HKT, and CSL control 60% of the 
fixed-telecom market. 
 
Name and market shares of the leading companies for mobile telephone services 
The following companies are providing mobile telephony services in HKC with their own networks: 
1) China Mobile Hong Kong Company Limited (market shar e not available); 
2) Hong Kong Telecommunications (HKT) Limited (which acquired CSL on May 2014, 39.1%); 
3) Hutchison Telephone Co mpany Limited (29.8%); and 
4) SmarTone Mobile Communications Limited (market share not available). 
 
Broadband internet service providers 
As of 31 December 2013, 197 facility-based and service-based telecommunications service providers were 
authorized to provide internet service (including narrowband an d broadband internet services).e 
 
Foreign ownership participation in telecom companies 
Not available. HKC authorities do not maintain a list or an overall statistics regarding foreign ownership in 
telecommunications licence and are not in a position to give information on individual firms. 
 
State ownership 
There is no direct government ownership. 
Establishment of new companies, mergers or closures since the last Review 
 
HKT Limited, the parent company of Hong Kong Tele communications (HKT) Limited, an existing mobile 
network operator, applied in October 2013 for a prior consent to acquire CSL New World Mobility Limited, the 
parent company of CSL Limited, another mobile networ k operator, pursuant to the merger and acquisition 
provision (section 7P) under the Telecommunications Ordinance.  
 
Consent was granted by the Communications Authority, the regulator of the telecommunications and 
broadcasting sectors in HKC with the authority to appl y section 7P to the proposed acquisition in April 2014, 
with five conditions imposed on the licensees concerned, namely Hong Kong Telecommunications (HKT) 
Limited and CSL Limited: (i) to divest 29.6 MHz of spectrum in the 1.9 – 2.1 GHz frequency band when the 
existing assignment of these bands expires in October 2016; (ii) not to participate in the spectrum auction in WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  the 1.9 – 2.1 GHz frequency band for 5 years; (iii) to give notification of the closure of their base transceiver 
station sites to the other mobile network operators for 5 years; (iv) to continue to provide wholesale network 
access services to mobile virtual network operators based on the existing agreements for three years; 
(v) Hong Kong Telecommunications (H KT) Limited is to continue to provide 3G network capacity sharing 
service to China Mobile Hong Kong Company Limited based on  their commercial agreement.f 
 
The acquisition transaction was completed on 14 May 2014. 
a Or 2012, if 2013 is not available. 
b Refers to the sum of post-paid and pre-paid SIM cards. c Refers to the sum of exchange lines and non-exchange lines. d "Fixed (wired)-broadband subscriptions" refers to  the sum of cable modem, digital subscriber line 
(DSL) and fibre-to-the-home/building broadband in ternet subscriptions to the public internet, 
"wireless-broadband subscriptions" refers to the sum of terrestrial fixed wireless-broadband and 
active mobile-broadband subscrip tions to the public internet. 
e A list of internet service providers can be viewed at:   http://www.ofca.gov.hk/en/media_focus/data_statist ics/internet/list_of_internet_service_providers/i
ndex.html.  
f For the text of the Decision of the Communication Authority, see  
 http://www.coms-auth.hk/filemanager/statement/en/upload/270/decision_20140502_e.pdf . 
Source: Information provided  by the HKC authorities; South China Morning Post ; ITU ICT eye database, and 
WTO-UNCTAD trade in services database. 
4.43.  Table 4.2 below indicates the average telecommunication prices in HKC, which are among 
the world's lowest taking into account purchasing power parity factors. 
Table 4.2 Average telecom prices in Hong Kong, China, 2012 
Type of telecom service % of gross 
national income 
per capita US$ US$ 
corrected 
by 
Purchasing 
Power Parity 
(PPP) World 
ranking 
Mobile broadband prepaid handset–based prices 
(500 MB) 1.4 42.1 61.1 33 
Mobile broadband post-pai d handset-based prices 
(500MB) 0.3 8.1 11.7 7 
Mobile broadband pre-paid computer–based 
prices (1GB) 1.4 42.1 61.1 22 
Mobile broadband post-paid computer based 
prices (1GB) 0.9 27.2 39.5 20 
Fixed-broadband prices  0.7 21.6 31.3 10 
Fixed-telephony prices 0.5 14.1 20.5 18 
Source: ITU,  Measuring the Information Society Report , 2013 edition. 
4.5.1.2  Trade regulatory regimes 
4.44.  The trade regulatory regime of telecommunication services, including its full liberalization in 
2003, has been described in detail in all previous TPR reports31 and has only slightly changed since 
the previous TPR Review. The main changes interv ened since then concern the following areas: 
two new free-trade agreements containing exte nsive telecommunication services commitments, 
the establishment of a new regulator having competence in both telecommunications and 
broadcasting, the withdrawal of regulatory guid ance on the charging principles for narrowband 
interconnection between fixed carriers, number portab ility, the increase in transparency in various 
areas including interconnection arrangements, mobile services information, mobile- and fixed-broadband services information, the contracting process and pricing information related to mobile 
content services (MCS) and consumer protection.  
4.45.  The HKC authorities have confirmed that the applied measures contained in the WTO I-TIP 
services database or telecommunication services remained valid (for a complete list of these 
                                               
31 See WTO documents WT/TPR/S/52, 13 November 1998, pages 80-84; WTPR/S/109, 
18 November 2002, pages 60-63; WT/TPR/S/173/Rev.1, 13 March 2007, pages 89-92; and WT/TPR/S/241/Rev.1, 25 January 2011, pages 70-73. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 75 - 
 
  measures see Table A4.1, which provides all entries in the I-TIP services database for the 
telecommunications sector in Hong Kong, China) and that the regime defined by the 2012 HKC-EFTA states Free Trade Agreement is applied on an erga omnes  basis. Box 4.1 below 
recapitulates the GATS and the FTA commitments of HKC, while Box 4.2 describes the applied 
regulatory regime for regulatory supervision, competition and interconnection issues and Box 4.3 
the applied regulatory regime for other regulatory aspects of telecommunication services. 
Box 4.1 Bound trade regimes of  the telecommunications sector  
GATS commitments 
 
- HKC subscribes to the regulatory disciplines of th e Telecommunication Reference Paper through additional 
commitments. 
 
- For local services in (a) voice services; (b) packet-swi tched data transmission services; (c) circuit-switched 
data transmission services; (f) facsimile services; (g) private leased circuit services; and part of (o) others, 
i.e. mobile services (defined as mobile radio telephone services including Cellular and Personal 
Communication Services (PCS)); mobile da ta services and radio paging services: 
 
Market access: modes 1 and 2 none; mode 3 none, exce pt the exclusive right for providing a fire alarm 
transmission system for relaying fire alarm signals between Fire Services Departments and public buildings 
and four licences for local fixed network services that were issued in 1995 to possibly be extended in 1998; 
mode 4: unbound, except intra-corporate transfer of general managers, senior managers and specialists; 
national treatment: modes 1, 2 and 3: none; mode 4: unbound. 
 
- For international services in (a) voice services (resale based only); (b) packet-switched data transmission 
services (resale based only); (c) circuit-switched data tr ansmission services (resale based only); (f) facsimile 
services (resale based only); and part of (o) others, i.e. call back services and alternative calling procedures 
(resale based only); self-provision of external satellit e circuit; virtual private network (resale based only) and 
mobile satellite services: 
 
Market access: mode 1: none except public external services not allowed; for self-provision of satellite 
services circuits and virtual private network services connection to the Public Switched Telephone Network 
(PSTN) at HKC end may be restricted; for mobile satellite services gateway station for mobile satellite traffic 
is not allowed; mode 2: none; mode 3: same restri ctions as mode 1; mode 4: unbound except intra-
corporate-transferee for managers an d specialists; national treatment: modes 1, 2 and 3: none; mode 4: 
unbound. 
 
- For value-added services (limited to public services accessed by its subscribers and offered over circuits 
provided by public telecommunicat ions transport network services): 
 
Market access: mode 1: unbound; mode 2: none; mode 3: none other than commercial presence must take 
the form of a company; mode 4: intra-corporate tr ansfer of general managers, senior managers and 
specialists; national treatment: modes 1 and 2: unbound; mode 3: none; mode 4: unbound.  
Free-trade agreements commitments  
 
HKC-EFTA States FTA (entered into force on 1 October 2012 for the part between HKC, Iceland, 
Liechtenstein and Switzerland; on 1 November 2012 for the part between HKC and Norway). 
 
Full liberalization except for the following reservations: 
- no reservation listed for existing non-conforming measures regarding telecomm unication services; this 
regime is applied erga omnes . 
- HKC reserves the right to adopt or maintain any measures inconsistent with national treatment and market 
access obligations with respect to certain aspects of the following telecommunications services: (a) voice 
services; (b) packet-switched data transmission services; (c) circuit-switched data transmission services; 
(d) telex services; (e) telegraph services; (f) facsimile services for international services; (g) private-leased 
circuit services; and (o) other telecommunication services. HKC's commitments on telecommunications 
services essentially reflect HKC's revised Doha Development Agenda (D DA) offers under GATS with some 
Doha-plus liberalization commitments in respect of certain international services under mode 1. 
 
However, to date, no such measures exist (II-HKC-11). 
 
HKC–New Zealand Closer Economic Partnership Agreement (entered into force on 1 January 2011) 
 
Full liberalization except for the following reservations: 
- no reservation for existing non-conforming measures  on telecommunications services; this regime is 
applied erga omnes . 
- HKC reserves the right to adopt or maintain any non-conforming measures to the obligations of market WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 76 - 
 
  access, national treatment, local presence and most-fav oured-nation treatment for cross-border services and 
investment with respect to the following telecommunications services: (a) voice telephone services; 
(b) packet-switched data transmission services; (c) circuit-switched data transmission services; (d) telex 
services; (e) telegraph services; (f) facsimile services; (g) private-leased circuit services; and (o) others so 
long as they are not inconsistent with HKC's obligati ons under Articles XVI, XVII and XVIII of GATS or with 
its revised DDA offer (TN/S/O/HK/Rev.1, 16 June 2005) (r eservation II-HKC 10). However, to date no such 
measures exist. 
 
CEPA with Mainland China (entered into force on 29 June 2003) 
 
- Paragraph 5 of Annex 4 to the CEPA with Mainland China stipulates that as from 1 January 2004, HKC will 
not impose any new discriminatory measures on Mainland's services and service suppliers in the areas where 
the Mainland has undertaken specific commitments on liber alization of trade in services for HKC. The initial 
scope of this standstill has been enlarged by successive supplementary commitments of Mainland China in 
the area of telecommunication services contained in CEPA's supplements IV, VI, IX and X. This standstill is 
applied to Mainland China only. 
Source: HKC GATS Schedule and WTO RTA-IS database. 
Box 4.2 Applied regulatory regime for re gulatory supervision, competition and 
interconnection 
Regulatory supervision 
 
The Communications Authority (CA), the independent regulator stricto sensu , and the Office of the 
Communications Authority (OFCA), the administrative de partment providing support to the regulator, were 
established in April 2012.a They oversee both the broadcasting sect or and the telecommunications sector 
with the aim of meeting the regulatory challe nges arising from the new era of convergence. 
 
From 1 April 2012 to 31 March 2013, the CA considered five complaints under sections 7K, 7L and 7N of the 
Telecommunication Ordinance (TO), which prohibit anti-competitive conduct by telecommunication licensees. 
After due consideration the cases were closed with no investigation opened. Similarly the CA considered four 
cases under section 7P of the TO which regulates merger and acquisition activities involving carriers' 
licensees and concluded that no issue was raised that required commencement of investigation. 
 
The Competition Ordinance (Ordinance) prohibits three types of anti-competitive conduct in the market: 
(i) anti-competitive agreements, concerted practices an d decisions of an association of undertakings (known 
as the First Conduct Rule); (ii) abuse of market power (Second Conduct Rule); and (iii) mergers that are 
likely to substantially lessen competition, which is applicable only to the telecommunications sector 
(the Merger Rule) (section 3.4.2.1). 
 
The Ordinance provides that the CA will have concur rent jurisdiction with the Competition Commission 
(Commission) in respect of the investigation and bringing of enforcement proceedings of competition cases 
in the broadcasting and telecommunications sectors. On the handling of complaints against anti-competitive 
practices, the Commission and the CA  will conduct enforcement actions in accordance with the requirements 
on concurrent jurisdiction in the Ordinance upon th e full commencement of the Competition Ordinance. 
 
The Commission and the CA are required to prepare an d sign a Memorandum of Understanding (MoU) under 
the Ordinance. The MoU seeks to coordinate the performance of functions of the Commission and the CA 
under the Ordinance, and set out the detailed arrangements for the two bodies in respect of dispute 
resolution, provision of assistance, allocation of responsibility, supply of information, authorship of 
educational materials or guidelines, etc. 
 
The Trade Descriptions (Unfair Trade Practices) (Amendment) Ordinance 2012 came into effect on 
19 July 2013 and criminalises unfair trade practices in  the consumer transactions of goods and services, 
including "false trade descriptions ", "misleading omissions", "aggressive commercial practices", "bait 
advertising", "bait-and-switch" and "w rongly accepting payment". Jurisdic tion is conferred on the CA to 
enforce the relevant sections in relation to commercial practices of licensees under TO and the Broadcasting 
Ordinance that are directly connected with the provision of a telecommunications service or broadcasting 
service. 
Interconnection and competition issues  
 
Fixed-interconnection regime  
Regulatory guidance on the charging principles for narrowband interconnection between fixed carriers was 
first promulgated in 1995, when the local fixed telecommunications market was liberalized. Taking into 
account the significant changes and developments in  the market and technologies over the past two 
decades, regulatory guidance which applies to na rrowband interconnection be tween fixed carriers is 
increasingly out of place when broadband interconnectio n is not subject to similar regulatory guidance. After WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 77 - 
 
  public consultation, the CA decided in April 2013 to withdraw the regulatory guidance on the charging 
principles for narrowband interconnection between fixe d carriers subject to a transitional period of 
18 months.b  
Beginning October 2014, all types of carrier-to-carrier lo cal interconnection charges, including those between 
fixed carriers, between fixed and mobile carriers, and be tween mobile carriers, are no longer subject to any 
regulatory guidance by the CA.  
 
All carriers are encouraged to conduct negotiations an d reach agreements with each  other on interconnection 
matters on a commercial basis.  If the interconnecting carriers cannot reach agreement on the terms and 
conditions of interconnection, either party may seek determination of the CA under section 36A of the 
Telecommunications Ordinance. 
 
Number of complaints filed or resolutions issued of interconnection disputes among operators: nil in 2013. 
a For more elements on these two regulatory institutions, see their first annual report at: 
http://www.ofca.gov.hk/trade_fund_report/1213/pdf/en/2.pdf. 
b For more details, see Review of Regulatory Guidan ce on the Charging Principles of Interconnection 
between Fixed Carriers (16 April 2013) at:  
 http://www.coms-auth.hk/filemanager/statement/en/upload/170/ca_statements20130416.pdf . 
Source: Information provided  by the HKC authorities. 
Box 4.3 Other regulatory aspects 
Other regulatory aspects 
 
No regulatory changes since the last TPR report in the following areas: facility-sharing, local loop 
unbundling; mobile interconnection (not subject to any regulation); mobile roaming rates; accounting rates; 
licensing, price caps and regulations; universal service and autonomous liberalization. 
 
Number portability 
 
Following the implementation of Unified Carrier License (UCL) regime in 2008, the then Telecommunications 
Authority (now the Communications Authority/CA) decided that all prior determinations concerning the 
responsibilities of charges in relation to fixed number portability (ONP) and mobile number portability (MNP) 
activities were to be sunset on 29 June 2010.a 
 
Transparency 
 
- To enhance the transparency of interconnection a rrangements among carriers and service providers, the 
then Telecommunications Authority (now the Communi cations Authority/CA) has promulgated the updated 
arrangement for the publication of interconnection agreements in 2012.b 
- To address the rising number of complaints related to "mobile bill shock", OFCA promulgated in May 2010 a 
series of preventive measures for the industry to ad opt. These measures include allowing customers to opt 
out of individual services; setting a charge ceiling; se tting a usage cap for all ki nds of usage-based mobile 
services; and alerting customers through short messages when their predetermined usage threshold is 
reached, or whenever their roaming data usage is trigge red. With a view to increasing the transparency of 
the relevant service information, OFCA published the measures implemented by in dividual operators on its 
website and provided updates on a regular basis.c 
 
- To better protect consumer interests and enhance the transparency of service information, the CA issued a 
set of mandatory guidelines entitled "Guidelines for the Implementation of Fair Usage Policy for the Provision 
of Mobile and Fixed Broadband Servic es" governing how service providers should implement their Fair Usage 
Policy. The mandatory guidelines have been in effect since February 2012.d 
 
- In December 2010, in order to provide guidelines for the industry on drawing up communications service 
contracts so as to improve transpar ency in the contracting process and increase customer satisfaction, the 
Communications Association of HKC (C AHK) promulgated the self-regulator y Industry Code of Practice for 
Telecommunications Service Contracts. Since July 2011, all major fixed and mobile network operators and 
one major external telecommunications services oper ator have implemented the measures necessary to 
comply with the Industry Code to provide personal and residential users of telecommunications services with 
better protection upon signing or renewal of service contracts.e 
 
- To safeguard consumer interests and increase transp arency of the pricing information related to mobile 
content services (MCS), OFCA has been working closely with the industry to draw up the voluntary "Code for 
the Provision of Chargeable Mobile Content Services". The Code governs the practices of third-party Content 
Service Providers (CSPs) in providing MCS and the establishment of an industry self-regulatory scheme. This 
was promulgated and put into effect by the Communicat ions Association of HKC in January 2010. The Code 
requires all third-party CSPs, before in itiating delivery of MCS to customers, to indicate to them clearly the 
chargeable nature of the services, provide them with clear information on all charges, obtain clear consent WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 78 - 
 
  from them for the provision of MCS, and also set out clearly the unsubscribing mechanisms, which should be 
simple and convenient.f 
Spectrum management 
 
4G auctions  
Following the auction of 90 MHz of radio spectrum in the 2.5/2.6 GHz band in January 2009, the OFCA 
auctioned 90 MHz of spectrum in the 2.3 GHz band in February 2012 and an additional 50 MHz of radio 
spectrum in the 2.5/2.6 GHz band in March 2013 for the further development of 4G mobile services in Hong 
Kong, China. The February 2012 auction fetched total Spectrum Utilization Fees (SUF) of HK$0.47 billion 
with the spectrum assigned to two incumbent operators and one new entrant. The March 2013 auction 
fetched HK$1.54 billion in SUF with the spectrum assigned to four incumbent operators. The assignments 
were made by auctions conducted in a simultaneous multiple-round ascending format whereby the radio 
spectrum as divided into a number of frequency bands were auctioned simultaneously over multiple rounds 
with the price increasing on each frequency band independently. The frequency bands were assigned to 
bidders who submitted the highest bid.  The auctions were opened to incumbent operators and new entrants. 
There was no foreign-ownership restriction on applican ts. All applicants were formed and registered under 
the Companies Ordinance in Hong Kong, China.  
 
Reassignment of the 3G spectrum 
The existing assignment of radio spectrum in the 1.9 - 2.2 GHz band in 2001 will expire in October 2016. 
After two rounds of public consultation in March and December 2012, it was concluded in November 2013 
that each of the four incumbent 3G operators would be offered a right of first refusal (RFR) to be re-assigned 
two-thirds of the 118.4 MHz of paired spectrum they cu rrently hold in the 1.9 - 2.2 GHz band. The remaining 
one-third of the paired spectrum, together with any spectrum in respect of which the incumbent 3G 
operators do not exercise the RFR, woul d be re-assigned by way of auction. 
 
In May 2014, the Communications Authority announced its decision to give consent, with conditions 
imposed, to the acquisition of an incumbent 3G oper ator by another 3G operator. One of the conditions 
imposed was that the merged entity sh all divest an additional 10 MHz of radio spectrum in the 1.9 - 2.2 GHz 
band for assignment through auction. The auction is expected to be held near the end of 2014. 
a For more elements, see statement of the Telecommunications Authority (10 July 2009), at: 
http://tel_archives.ofca.gov.hk/en/tas/numbering/tas20090710.pdf . 
b See update of the existing arrangements for the Filing and Publication of Interconnection 
Agreements (2 March 2012). Viewed at: 
http://tel_archives.ofca.gov.hk/en/tas/interconnect/ta20120302.pdf .  
c See measures implemented by mobile operator s to prevent mobile bill shock. Viewed at: 
 http://www.ofca.gov.hk/en/consumer_focus/educati on_corner/guide/advice_mps/billshock/index.ht
ml. 
d See Guidelines for the Implementation of Fair Us age Policy for the Provision of Mobile and Fixed 
Broadband Services. Viewed at: 
 http://www.coms-auth.hk/filemanager/statement/en/upload/38/gn_201124e.pdf  
e See Code of Practice for Telecommunic ations Service Contracts. Viewed at:  
 http://www.coms-auth.hk/filemanager/statement/en/upload/36/Industry_CoP_Telecom_Service 
_Contract _e.pdf. 
f See Code for the Provision of Chargeable  Mobile Content Services. Viewed at:  
 http://www.coms-auth.hk/filemanager/ statement/en/uploa d/34/Code_MCSe.pdf. 
Source: Information provided by the HK C authorities and WTO-ITIP database. 
4.5.2  Financial services 
4.5.2.1  Statistical overview 
4.46.  Financial services are a key sector of HKC economy as they contribute to approximately 
16% of its GDP and provide over 6% of employment . This sector is an enabler for the economy of 
the whole territory and also for a wider array of regional and global customers since HKC is a 
regional financial services hub. For instance, banking institutions operating in HKC come from 
34 different countries and include 70 of the 100 largest banks. The HKC insurance market has the third highest penetration rate in Asia after Chinese Taipei and Rep. of Korea. According to a study conducted in 2013 by the Bank for International Settlements, HKC was the world's fifth largest 
foreign exchange market in terms of turnover. Likewise, the Hong Kong, China stock market was 
the sixth largest in the world and the second largest in Asia in terms of market capitalization at end May 2014, and the most active market globally for initial public offerings (IPO) funds raised in 
2009, 2010 and 2011. In 2013, US$22 billion were raised. At end May 2014, 1,673 companies 
w e r e  l i s t e d  o n  t h e  S t o c k  E x c h a n g e  o f  H o n g  K o n g  ( S E H K )  w i t h  a  m a r k e t  c a p i t a l i z a t i o n  o f  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 79 - 
 
  HK$23,622.7 billion. Among them, 822 were Mainland enterprises, which together raised around 
HK$3,833.4 billion bewteen 1993 to May 2014. 
4.47.  Table 4.3 describes the main economic indicato rs of the financial services sector in general, 
while Tables 4.4 to 4.7 describe in more detail th e economic indicators of the banking subsector 
(Table 4.4), of the insurance subsector (Table  4.5), of the stock exchanges and securities' 
subsectors (Table 4.6) and of the mandatory provident fund schemes' subsector (Table 4.7). 
Table 4.3 Main economic indicators of the financial sector 
General 
 
Share of financial services in the GDP 
 
2010: (of which insurance) 16.3% (3.1%) 
2012: (of which insurance) 15.9% (2.9%) [C&SD]  
Share of financial services in total employment 
 
2010: (of which insurance) 7.7% (2.8%) 
2012: (of which insurance) 7.8% (2.9%)  
Net financial services export 
 
2010: HK$74,113 million (net financial services expo rts exclude insurance and pension services)  
HK$2,598 million (net insurance and pension services exports) 
2013: HK$95,704 million (net financial services expo rts exclude insurance and pension services)  
HK$1,447 million (net insurance and pension services exports) 
Capital stock of HKC financia l services providers abroad 
 
- Insurance service providers: 2011: HK$155.6 bil lion (2.0% of the total outward DI stock); 
2012: HK$201.7 billion (2.2% of the total outward DI stock)a 
- Banking and securities servic es providers: not available 
Significance of the financial services arm of the Post  
 
The only financial services provided by Hong Kong Post are remittance services. The total remittance amount 
in 2013/14 is HK$156 million (comprising inbound HK$89 million (i.e. e-remittance HK$87 million and postal 
remittance $2 million) and outbound HK$67 million (i .e. e-remittance HK$64 million and postal remittance 
HK$3 million). The market share should be insignificant. 
a Caution should however be exercised on the interpretation of the outward DI statistics. The stock of 
outward DI (i) includes ONLY claims of HKC reside nts who have a significant degree of influence (for 
statistical purposes, equivalent to a holding of 10% or more of the voting po wer) in the non-resident 
enterprises and (ii) comprises BOTH equity and inve stment fund shares (including equity, shares and 
reinvestment of earning an d debt instruments (inter-company debt ). Thus, the definition of outward 
DI statistics does NOT exactly match with th e definition of "Capital Stock Abroad". 
Source: Information provided by the HKC authorit ies, WTO-UNCTAD trade in services database.  
Table 4.4 Banking subsector 
Banking services 
 
Number of banks and recent consolidation 
 
2010a: 193 banksb (of which, foreign-controlled banksc: 44; branches of foreign banksd: 132) 
2013e: 201 banksf (of which, foreign-controlled banksg: 42; branches of foreign banksh: 143)  
Number of banks by type (end May 2014): 159 licensed banks; 20 restricted licensed banks; 23 deposit- 
taking companies; 61 local representative offices of overseas banking institutions. These institutions (except 
for the latter) operate a network of 1,393 local branches.  
Top 3 banks' assets as a share of assets of all commercial banks 
 
2009: 73%; 2010: 73.63%; 2011: 72.15% 
 
Authorized institutions' (AIs) total assets at the end of 2010 and 2013 
 
2010: HK$12,291 billion (of which, foreign-controlled bank s: HK$3,454 billion, branches of foreign banks: WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 80 - 
 
  HK$5,305 billion) 
2013: HK$16,942 billion (of which, foreign-controlled banks: HK$4,749 billion; branches of foreign banks: 
HK$7,446 billion) 
Lending activities (AIs' loans outstanding at the end of 2010 and 2013) 
 
2010: HK$4,228 billion (of which domestic lending: 77%; foreign lending: 23%) 
2013: HK$6,457 billion (of which domestic lending: 70%; foreign lending: 30%) 
AIs' investment in listed and unlisted shares at the end of 2010 and 2013 
 
2010: HK$131 billion 
2013: HK$199 billion 
a Figures as at 31 December 2010. 
b HKC maintains a three-tier system of deposit-taking institutions, namely, licensed banks (LB), 
restricted-licence banks (RLB) and deposit-taking companies (DTC). They are collectively known as authorized institutions. The figure includes LB, RLB and DTC. Only licensed banks may operate current and savings accounts, and accept deposits of any size and maturity from the public and pay 
or collect cheques drawn by or paid in by customers. Restricted licence banks are principally 
engaged in merchant banking and ca pital markets activities and may take deposits of any maturity 
of HK$500,000 and above. Deposit-taking companies are mostly owned by, or otherwise associated with, licensed banks and engaged in a range of activities, in particular consumer finance. These companies are restricted to taking deposits of HK$100,000 or above with an original term to maturity of at least three months. 
c Foreign-controlled banks refer to banks, includin g LB, RLB and DTC, incorporated in HKC with non-
Hong Kong-beneficial ownership. 
d Branches of foreign banks refer to banks, incl uding LB, RLB and DTC, incorporated outside HKC. 
e Figures as at 31 December 2013. f Foreign-controlled banks refer to banks, includin g LB, RLB and DTC, incorporated in HKC with non-
Hong Kong-beneficial ownership. 
g Branches of foreign banks refer to banks, incl uding LB, RLB and DTC, incorporated outside HKC. 
h Figures as at 31 December 2013. 
Source: Information provided by the HKC authorities, WTO-UNCTAD trade in  services database and Financial 
Development and Structure Dataset, The World bank, November 2013. Viewed at http://econ.worldbank.org/WBSITE/EXTERNAL/E XTDEC/EXTRESEARCH/0,,contentMDK:20696167~p
agePK:64214825~piPK:64214943~theSitePK:469382,00.html . 
Table 4.5 Insurance subsector 
Insurance 
 
Number of insurance companies and recent consolidations 
2010: 168 companies of which life: 46 (31 of which were  incorporated outside HKC); non-life: 103 (40 of 
which were incorporated outside HKC); composite: 19 (9  of which were incorporat ed outside HKC), including 
19 reinsurers and 1 captive insurer. 
2012a: 155 companies of which life: 44 (29 of which were incorporated outside HKC); non-life: 92 (34 of 
which were incorporated outside HKC); composite: 19 (9 were incorporated outside HKC), including 19 
reinsurers and 1 captive insurer. 
Life insurance premium volume to GDP 
2009: 9.6%; 2010: 10.3%; 2012: 11% 
Non-life insurance premium volume to GDP  
2009: 1.8%; 2010: 1.8%; 2011: 1.8%; 2012: 1.9% 
Insurance density (US$/inhab.)  
2010: 3,636; 2011: 4,046; 2012: 4,559 
Insurance penetration (% of GDP)  
2010: 11.4%; 2011: 11.9%; 2012: 11.4%  
Concentration  
Cumulative market share of the top five co mpanies: life insurance 56.5%; non-life 24.6%; 
health insurance: not available;  reinsurance: not available. 
a Insurance statistics for 2013 are not yet available. 
Source: Information provided by the HKC authorities, WTO-UNCTAD trade in  services database and Financial 
Development and Structure Dataset, The World Bank, November 2013. Viewed at: http://econ.worldbank.org/WBSITE/EXTERNAL/E XTDEC/EXTRESEARCH/0,,c ontentMDK:20696167~p
agePK:64214825~piPK:64214943~theSitePK:469382,00.html . WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Table 4.6 Stock exchange and securities subsector 
Stock exchange and securities 
 
Capitalization of the companies listed  
 
2010: Total market cap. HK$20,942.2 billion (i.e.11.8 times of the GDP the same year) 
2012: Total market cap. HK$21,871.7 billion (i.e. 10.7 times of the GDP the same year) 
2013: Total market cap. HK$24,042.8 billion (i.e. 11.3 times of the GDP the same year) 
 
Stock market total turnover to GDP (%) 
 
2010: 968.9; 2011: 886.8; 2012: 653.0; 2013: 718.2 
 
Private bond market capitalization to GDP (%)  
 
2010: 14.3; 2011: 15.3 
 
Public bond market capitalization to GDP (%) 
 
2010: 34.6; 2011: 36.0 
 
Securities turnover on the Stock Exchange (secondary market, 2013) 
 
73.5% of equities; 11.7% of derivative warrants; 8.3%  of Callable Bull/Bear Contracts (CBBCs) and 6.5% of 
Unit Trusts (include ETFs) 
Source: Information provided  by the HKC authorities. 
Table 4.7 Mandatory provident fund schemes subsector 
Constituent funds of mandat ory provident fund schemes 
Number of funds: December 2010: 421; March 2014: 477  
 
Total assets: December 2010: HK$365,442 million; March 2014: HK$516,192 million  
Source: Information provided  by the HKC authorities. 
4.5.2.2  Trade and regulatory regimes for financial services 
4.5.2.2.1  Trade and regulatory regimes for insurance services 
4.48.  The trade and regulatory regimes of insurance services in HKC has been described in detail 
in all previous TPR reports32 and have only marginally changes since the previous TPR report in 
2010. The main changes included the following ar eas: two new free-trade agreements containing 
extensive insurance services commitments, the pla nned creation of a newly-established statutory 
body, an independent Insurance Authority in  charge of supervision and licensing, the 
establishment of a Policyholders Protection Fund, consumer protection measures for the purchase 
of Investment Linked Assurance Schemes (ILAS), and group and cross-sector supervision as well 
as a resolution regime for financial institutions. 
4.49.  The HKC authorities have confirmed that the applied measures contained in the I-TIP 
services database for insurance services remained  valid and that the regime defined by the 2012 
HKC-EFTA States Free Trade Agreement is applied on an erga omnes  basis. Box 4.4 recapitulates 
the GATS and the FTA commitments of HKC, while Box 4.5 describes the applied regulatory regime 
and the main recent regulatory evolutions for the sector. 
                                               
32 See WTO documents WT/TPR/S/52, 13 November 1998, pages 77-80; WTPR/S/109, 
18 November 2002, pages 58-60; WT/TPR/S/173/Rev.1, 13 March 2007, pages 87-89; and WT/TPR/S/241/Rev.1, 25 January 2011, pages 67-69.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 82 - 
 
  Box 4.4 Bound trade regimes for insurance services 
GATS commitments 
 
- General horizontal reservation for all financial services  
 
The commitments made with respect to mode 1 (cro ss-border supply) and mode 2 (consumption abroad) 
supply of financial services inscribed in this section of the Schedule do not signify a commitment to allow a 
service supplier from the territory of  another Member to solicit business or to conduct marketing in HKC. 
 
- Life, accident and health insurance se rvices and non-life insurance services 
 
Market access: mode 1: unbound; mode 2: none ot her than that statutory insurances which include 
third-party liability in respect of vehicles and vessels and employer's liability insurance in respect of 
employees must be purchased from an insurer authorized in HKC; mode 3: none other than that only a 
company or an association of underwriters is permitted to carry out insurance business. In the case of the 
former, commercial presence must take  the form of a subsidiary, branch or representative office, although 
insurance business may not be carried out through a representative office; mode 4: intra-corporate 
transferee for managers and specialists. 
 
National treatment: modes 1 and 2: unbound; mode 3: none other than that the chief executive appointed 
by the authorized insurer should normal ly reside in HKC; mode 4: unbound. 
 
- Reinsurance and retrocession 
 
Market access: mode 1: none, provided that the in surance company is a company incorporated outside 
HKC and has no agent nor place of business in HKC; mode 2: none; mode 3: none other than that only a 
company or an association of underwriters is permitted to carry out insurance business. In the case of the 
former, commercial presence must take  the form of a subsidiary, branch or representative office, although 
insurance business may not be carried out through a representative office; mode 4: intra-corporate 
transferee for managers and specialists. 
 
National treatment: modes 1 and 2: unbound; mode 3: none other than that the chief executive appointed 
by the authorized insurer should normal ly reside in HKC; mode 4: unbound. 
 
- Services auxiliary to insurance (inc luding broking and agency services) 
 
Market access: mode 1: none other than claims settlement services, except for settlement of claims under 
contracts of goods in transit insurance entered into wholly outside HKC in respect of goods consigned to 
HKC; modes 2 and 3: none; mode 4: intra-corpor ate transferee for mana gers and specialists. 
 
National treatment: modes 1 and 2: unbound; mode 3: none; mode 4: unbound. 
Free-trade agreements commitments 
 
HKC-EFTA-States FTA (entered into force on 1 October 2012 for the part between Hong Kong, China, 
Iceland, Liechtenstein and Switzerland; 1 November  2012 for the part between Hong Kong, China and 
Norway)  
 
Full liberalization except for the following reservations:  
- Appendix 1 to Annex X of the agreement contains th ree reservations to cover existing non-conforming 
measures relating to insurance services namely: 
 
I-HKC-11: for life and non-life insurance (market access and national treatment): for mode 1 and 2, 
non-resident insurance companies cannot supply insu rance services (including maritime, aviation and 
transport (MAT) insurance) through an intermediary authorized in HKC if the supply of the service involves 
solicitation of business or marketing by the service su pplier. It is only in circumstances where, if an 
insurance broker is requested by his client or as a result of the absence of suitable insurance products 
available locally, then the insurance broker can refer or arrange a contract of insurance with an insurer 
authorized in other jurisdictions but not authorized in Hong Kong, China. In that case, the insurance broker 
shall advise his client of the unauthorized status of  the insurer and obtain a written acknowledgement of 
the fact from the client. This exception to the prohibitio n of the activity by non-resident firms is GATS plus 
since mode 1 is unbound under GATS. For mode 3, same regime as GATS. 
 
I-HKC-12: for reinsurance and retroc ession (market access and national treatment: for modes 1 and 2 
(i) the insurance company must be a company incorpor ated outside Hong Kong, China, and have no agent 
nor place of business in Hong Kong, China; or (ii) for service suppliers which do not meet the foregoing 
conditions, if the supply of the service involves solici tation of business or marketing by the service supplier, 
only an incorporated company, which maintains an offi ce in Hong Kong, China as its place of business and 
authorized by the Insurance Authority, or an association of underwriters, which maintains an office in WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Hong Kong, China as its place of business approved by  the Insurance Authority is permitted to carry on 
insurance business in or from Hong Kong, China. In the case of the former, the company must take the 
form of a subsidiary, branch or representative offi ce, although insurance business may not be carried out 
through a representative office. The chief executive appointed by the authorized insurer shall normally 
reside in Hong Kong, China. The business opportunity  allowed by (II) is GATS  plus. For mode 3, same 
regime as GATS. 
 
I-HKC-13: for Insurance intermediation (such as brokerage and agency) and services auxiliary to insurance 
(such as consultancy, actuarial, risk assessment and claim settlement services): (market access and 
national treatment: for modes 1 and 2); similar restriction as in GATS commitments if the supply of the 
service involves solicitation of business or marketing with respect to modes 1 and 2. This regime is GATS 
plus as the mode 1 GATS restrictio n for market access excluding claim settlement from the scope of the 
commitments is lifted. 
 
- The HKC-EFTA States FTA also contains in its second list of reservations a rese rvation (II-HK-18) limiting 
HKC's commitments to (a) direct insurance (including co-insurance): life and non-life (other than mode 1 
and mode 2 with respect to statutory insurances, whic h require such insurances to be purchased from an 
insurer authorized in HKC); (b) reinsurance and retrocession; (c) insurance intermediation, such as 
brokerage and agency; (d) services aux iliary to insurance, such as consultancy, actuarial, risk assessment 
and claim settlement services and ensuring that they are subject to the reservations in I-HKC-11, I-
HKC-12, I-HKC-13, I-HKC-14, I- HKC-15, I-HKC-15 and I-HKC-18. 
 
HKC–New Zealand Closer Economic Partnership Agreement (entered into force on 1 January 2011) 
 
- This Agreement in its Annex II to Chapter 13, contains a clause (II-HKC-14) reserving the right to adopt 
or maintain any non-conforming measures to the mark et access, national treatment, local presence and 
most-favoured-nation treatment obligations for cross- border services and inve stment with respect to 
financial services that are not inconsistent with HKC's obligations under Articles XVI, XVII and XVIII of 
G A T S  o r  w i t h  i t s  R e v i s e d  O f f e r s  o n  S e r v i c e s  c o n t a i n e d  i n  t h e  W T O  d o c u m e n t  T N / S / O / H K G / R e v . 1 ,  
16 June 2005. 
 
CEPA with Mainland China (entered into force on 29 June 2003) 
 
- Paragraph 5 of Annex 4 to the CEPA with Mainland China stipulates that as from 1 January 2004, HKC will 
not impose any new discriminatory measures on Mainland's services and service suppliers in the areas 
where the Mainland has undertaken specific commitments on liberalization of trade in services for HKC. The 
initial scope of this standstill has been enlarged by successive supplementary commitments of Mainland 
China in the area of insurance services contained in CEPA's supplements IV and VIII. This standstill is 
applied to Mainland China only. 
Source: HKC GATS Schedule and WTO RTA-IS database. 
Box 4.5 Applied trade regime and general re gulatory framework for insurance services 
Applied trade regime 
 
In line with the commitments under the HKC-EFTA States FTA, which are applied erga omnes . 
General regulatory framework 
 
No changes in the following areas 
 
Preferential arrangements, bilateral agreements an d MOUs, licensing criteria and procedures and the 
following aspects of prudential regu lations: differences of treatment between domestical ly owned firms, 
foreign-owned branches, and foreig n-owned subsidiaries, recognition of home country supervision of 
foreign insurance companies, minimum capital requiremen ts to obtain a licence, administrative allocation 
of insurance services and approval process for life and non-life premiums and products. 
 
Supervisory authorities 
The agency responsible for the supervision of the insura nce sector will be changed from the Office of the 
Commissioner of Insurance, a go vernment department, to a newly- established statutory body, an 
Independent Insurance Authority, tentatively in 2015.  
Prudential regulations 
 
Policyholders Protection Fund 
 
Following up on the 2010 initiative for establishing a Policyholders Protection Fund (PPF) to serve as a 
safety net to policyholders in the event of an insurer becoming insolvent, HKC authorities conducted a WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  three-month public consultation on the establishment of the PPF, its coverage, level of compensation, 
funding mechanism and governance arrangements. The final proposals were announced in January 2012. 
The PPF proposal comprises two independently operated schemes (i.e. the Life Scheme and the Non-Life 
Scheme) and covers individual policyholders and SMEs . The compensation limit for the PPF will be 100% 
for the first HK$100,000 of any claim, plus 80% of the balance up to a total of HK$1 million. For life 
insurance, the compensation limit will be on a per-policy basis while on a per-claim basis for non-life 
insurance. It will be funded by levy. The initial le vy rate for both the Life Sc heme and Non-Life Scheme 
would be 0.07% of the applicable premiums collecte d from insurers. The PPF will be administered by a 
statutory body, with the oversight of an indepe ndent governing body, i.e.  PPF Board comprising 
professionals experienced in insurance, financ e, accounting, law and consumer affairs, and ex-officio  
representatives from the Government . The Government is preparing the enabling legislation for its 
establishment. 
 
Consumer protection measures for the purchase of Investment Linked A ssurance Schemes (ILAS) 
 
These measures have been reinforced to ensure th at policy-holders are awar e of the risks and that 
products are appropriately aligned with the risk pr ofile of the investors. These include extending the 
cooling-off period to 21 days, prohibit ing the insurers from offering gifts,  requiring customers to complete a 
consolidated important fact stat ement and applicant's declaratio n and extending the post-sales 
confirmation calls to all customers. 
 
Group and cross-sector supervision  
 
In order to work closely with regulators in other ju risdictions in regulating major insurance groups, the 
Insurance Authority (IA) both particip ates in and convenes supervisory colleges. In April 2012, the IA held 
a supervisory college in Hong Kong for an insurance gr oup based in Hong Kong, China with operations in a 
number of jurisdictions. 
 
Development of a risk-based capital framework  
 
To align with international regulatory practices, the IA is reviewing the solvency and capital regime with a 
view to developing an appropriate ri sk-based capital framework for HKC, taking into account experiences in 
other jurisdictions and the latest international regulatory requirements. 
 
Resolution regime 
 
To secure an effective resolution regime that meets the FSB's standards set out in the "Key Attributes of 
Effective Resolution Regimes for Financial Institutions ", HKC conducted a consultation on establishing "An 
Effective Resolution Regime for Financial Institut ions in Hong Kong" in January 2014. The proposed 
resolution regime, if established, will provide authorities (including IA) with powers to bring about the 
orderly resolution to systemically-important financial institutions in critical circumstances. 
 
Independent Insurance Authority (IIA) 
 
To modernize the insurance industry regulatory infrastructure to facilitate the stable development of the 
industry, provide better protection for policyholders, and align with inte rnational practice that financial 
regulators should be financially and operationally independent of the Government, HKC is establishing an 
IIA. The legislation for this purpose was introduced into the Legislative Council in April 2014.  
Source: Information provided by the HKC authorities.  
4.5.2.3  Trade and regulatory regimes fo r banking and other financial services  
4.50.  The trade and regulatory regimes of ba nking and other financial services (excluding 
insurance) in HKC have been described in detail in all previous TPR reports33 and have only 
changed marginally since the previous TPR report in 2010. The main changes for banking services 
since then concern the following areas: two new free trade agreements containing extensive banking services commitments, the proposed exte nsion of the supervision of the Hong Kong 
Monetary Authority to Stored Value Facilities  (SVF) and Retail Payment Systems (RPS), the 
abolition of the minimum deposit requirement for establishing banking activities and the relaxation 
of licensing criteria for fully licensed foreign banks in terms of preliminary presence, prudential measures taken for the implementation of the co re principle of the Basel Committee, development 
of proposals for legislative reform for establishing a cross-sectoral resolution regime for financial 
                                               
33 See WTO documents WT/TPR/S/52, November 1998, pages 71-75; WTPR/S/109, 18 November 2002, 
pages 55-58; WT/TPR/S/173/Rev.1, 13 March 2007, pages 82-87; and WT/TPR/S/241/rev.1, 25 January 2011, pages 63-67.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 85 - 
 
  institutions in Hong Kong, China (jointly with other authorities), reinforcement of the bank deposit 
insurance scheme and enactment of legi slation on anti-money-laundering. 
4.51.  Regarding "other financial services" (mainly securities, Mandatory Provident Fund Scheme, 
mutual funds) the main changes since the last TPR report concern provisions on shareholders' 
rights and disclosure for securities, the Securities and Futures Commission (SFC) Handbook for 
Unit Trusts and Mutual Fund, the securities and futures short position reporting rules, the Regulatory Regime for Credit Rating Agencies, the amendment of the trust law and the launch of a 
three-month public consultation on introducing a new Open-Ended Fund Companies structure 
(OFC) for mutual funds and assets management. 
4.52.  The HKC authorities have confirmed that the applied measures contained in the I-TIP 
services database for banking services remained valid (except for one, see below) and that the 
regime defined by the 2012 HKC-EFTA States FTA is applied on an erga omnes  basis. On 
12 July 2012, one of the restrictions contained in this regime and relative to a requirement of three continuous years of presence in Hong Kong, China under various legal forms for overseas 
banks seeking to establish a locally incorporated full licensed bank, was removed. This 
autonomous liberalization has been applied erga omnes
. Box 4.6 recapitulates the GATS and the 
FTA commitments of HKC, while Boxes 4.7 to 4.9 describe the regulatory regime and the recent 
regulatory evolutions for banking services (Box 4.7), securities (Box 4.8) and mutual funds and 
asset management (Box 4.9) respectively. 
Box 4.6 Trade regimes for banking serv ices and other financial services 
GATS commitments 
 
- General horizontal reservatio n for all financial services 
 
The commitments made with respect to mode 1 and mode 2 supply of financial services in this section of the 
Schedule do not signify a commitment to allow a service supplier from the territory of another Member to 
solicit business or to conduct ma rketing in Hong Kong, China.  
 
Acceptance of deposits and othe r repayable funds from the public 
 
Market access: mode 1: unbound; mode 2: none; mode 3: none other than that commercial presence must 
take the following forms:  
(a) Banks incorporated overseas may apply for a licence to  operate a full-license bank or a restricted-licence 
bank in the form of a branch subject to the followin g conditions: such banks may maintain (i) offices to 
which customers have access (physical or otherwise) for the purpose of banking business (or deposit-taking 
business in the case of a restricted-licence bank) and/or for the arranging or entering into of any other 
financial transactions in only one building ("Office" includes automated teller machines or similar terminal 
devices); and (ii) no more than two additional offices (other than an au tomated teller machines or similar 
devices) to which customers and others have access for the purpose of any other types of business in a 
separate building or buildings. Such additional offices may consist of not more than  one regional office and 
one back office. This condition does  not apply to banks incorporated ou tside HKC licensed before May 1978 
in respect of full-licensed banks and before April 1990 in respect of restricted-licence banks;  
(b) Limited companies incorporated by overseas bank s in HKC may apply for a licence to operate as a 
full-licensed bank, restricted licence bank or deposi t-taking company in the form of a subsidiary with 
branching rights. In the case of an application for a full banking licence, the institution must have been an 
authorized institution for at least ten years and be closely associated and identified with HKC. Overseas 
banks may also acquire an existing locally-incorporated bank with branching rights subject to consent of the 
Monetary Authority; 
(c) Banks incorporated overseas may also set up representative offices in HKC, but such offices are 
prohibited from taking deposits and undertaking bank ing business in general, mode 4: intra-corporate 
transferee for managers and specialists. 
 
Financial leasing/guarantees and co mmitments/advisory and other auxili ary financial services in all the 
activities listed in subparagraph 5( a)(v) to (xv) of the Annex on Financial Services (except commodity 
trading and investment advisory services)/provision and transfer of financial inform ation, and financial data 
processing and related software by pr oviders of other financial services 
 
Market access: modes 1, 2 and 3: none; mode 4: intr a-corporate transferee for managers and specialists; 
national treatment: modes 1 and 2: unbound; mode 3: none; mode 4: unbound. 
 
Trading for own account or for account of customers,  whether on an exchange, in an over-the-counter 
market or otherwise the following: money-market instruments (cheques, bills, certificate of deposits, etc.) WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  foreign-exchange derivative produc ts including futures and options ex change rate and interest rate 
instruments, including products such  as swaps, forward rate agreemen ts, etc., transferable securities 
 
Market access: mode 1: unbound; mode 2: none; mode 3:  none other than only corporations incorporated in 
HKC or natural persons born in HKC or  resident in HKC for five of the pr eceding seven years, or partnerships 
composed of such persons, may become members of the Stock Exchange of Hong Kong Limited; only 
corporations incorporated in HKC may become memb ers of the Hong Kong Futures Exchange; mode 4: 
intra-corporate transferee for managers and specialists. 
 
 
Lending of all types/all payments and money-transm ission services/asset management/participation in 
issues of all kinds of securities 
 
Market access: mode 1: unbound; modes 2 and 3: none ; mode 4: intra-corporate transferee for managers 
and specialists; national treatment: modes 1 and 2: unb ound; mode 3: none (partici pation in issues of all 
kinds of securities: none other than that if registration as a dealer is required, as it is in the case of public 
issues, the limitations shall apply as for dealers; mode 4: unbound. 
 
No GATS commitments for the following subsectors 
 
Trading of other negotiable instruments and financial assets including bullion (x.F), money broking (xii), 
settlement and clearing for financial assets including securities, derivative prod ucts and other negotiable 
instruments (xiv). 
Free-trade agreements commitments 
 
HKC-EFTA States FTA (entered into force on 1 Oc tober 2012 for the part between Hong Kong, China, 
Iceland, Liechtenstein and Switzerland; 1 November 2012 for the part between Hong Kong, China and 
Norway). 
 
- Appendix 1 of Annex X to the Agreement contains one reservation (I-HKC-14)  to cover existing non-
conforming measures to market access and national treatment obligations relating to parts of banking 
services (acceptance of deposits and other repayable funds from the public) by which all authorized 
institutions (i.e. licensed banks, restricted-licence banks and deposit-taking companies) shall maintain a 
physical presence in HKC. They must appoint a chief executive, and not less than one alternative chief 
executive, each of whom shall be an indi vidual and ordinarily resident in HKC. 
 
- The HKC authorities have indicated that on 12 Ju ly 2012, the second requirement contained in this 
reservation, requesting three continuous years of pr esence in HKC under variou s legal forms for overseas 
banks seeking to establish a loca lly-incorporated full-licensed bank , was removed. This autonomous 
liberalization has been applied erga omnes . 
 
- HKC's commitments on securities an d related services under the HKC-EFTA States FTA essentially reflect its 
GATS-commitments as defined in II-HKC-18, I-HKC-15 and I-HKC-16. 
 
HKC–New Zealand Closer Economic Partnership Agreement (entered into force on 1 January 2011) 
 
Annex 2 reservation for the right to adopt or maintain non-conforming measures to market access, national 
treatment, local presence and most-favoured-nation treatment obligations for cross-border services and 
investment for all financial services that are not inconsistent with HKC's obligations under Articles XVI, XVII 
and XVIII of GATS or with its Revised Offers on Services contained in the WTO document 
TN/S/O/HKG/Rev.1, 16 June 2005. 
 
CEPA with Mainland China (entered into force on 29 June 2003) 
 
- Paragraph 5 of Annex 4 to the CEPA with Mainland China stipulates that as from 1 January 2004, HKC will 
not impose any new discriminatory measures on Mainland's services and service suppliers in the areas where 
the Mainland has undertaken specific commitments on liber alization of trade in services for HKC. The initial 
scope of this standstill has been enlarged by successi ve supplementary commitments of China in the area of 
banking services contained in CEPA's supplements I, II,  IV, V, VI, VII, VIII, IX and X. This standstill is 
applied to Mainland China only.  
Applied trade regime 
 
In line with the commitments under the HKC-EFTA States FTA, which are applied erga omnes . 
Source: Information provided by the HKC authorities.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Box 4.7 Regulatory framework for banking services 
Regulatory framework for banking services  
 
No changes since the last TPR report in the following areas 
Preferential arrangements affecting banking services, recognition of prudential measures of other countries 
through international agreements or unilaterally, the following aspects of licensing: licensing organ, limitation 
of number of licences, statutory maximum delay to pr ocess licence applications, validity of a licence, 
restrictions on banks selling or disposing of licences, minimum capital requirements to obtain a licence. 
 
Supervisory authorities 
 
Proposed extension of the supervision of the Hong Kong Monetary Authority to Stored Value Facilities (SVF) 
and Retail Payment Systems (RPS) 
 
In light of the growing acceptance of innovative retail payment products and services, the Government 
considers it necessary to expand the current regulato ry regime to cover SVF wh ich are non-device-based 
(e.g. including mobile network-based accounts and co mputer network-based acco unts) and important RPS. 
The Government intends to amend the Clearing and Settlement Systems Ordina nce to cater for the new 
regulatory regime. The proposed legislative amendm ents seek to empower th e Hong Kong Monetary 
Authority (HKMA) to implement a lice nsing regime for SVF and a designatio n regime for RPS, and to perform 
the relevant supervisory and enforcement functions with a view to ensuring adequate user protection and the 
safety and soundness of such facilities and systems in Hong Kong, China. The HKMA is working closely with 
the relevant government agencies on  new legislation for the proposed ne w regulatory regime for SVF and RPS 
taking into account comments from in dustry participants and members of the public. The amendment bill is 
expected to be introduced to the Legislative Council in the second half of 2014. 
Licensing 
 
General criteria 
 
The authorization criterion in relation to the minimum deposit requirement has been removed since 
12 July 2012. A company seeking authorization to carry out banking business in HKC is no longer required to 
have total customer deposits of not less than HK$3 billion and total assets of not less than HK$4 billion.  
 
Additional criteria for foreign banks 
 
The following restrictions on foreign banks seeking to es tablish a locally-incorporated subsidiary to carry out 
banking business in Hong Kong, China have been removed since 12 July 2012: 
- the requirement of such foreign banks to have been a deposit-taking company or a restricted-licence bank 
(or any combination thereof) for not le ss than three continuous years; and 
- the requirement of such foreign bank to have been authorized to carry out banking business in Hong Kong, 
China (e.g. through a branch in HK C) for not less than three conti nuous years and make any necessary 
transfer of deposits and assets.  
Prudential regulations 
 
Measures to ensure compliance with the Basel Committee' s Core Principles for Effective Banking Supervision:  
Basel III 
 
In order to provide the legal framework necessary for the implementation of the Basel Committee's Basel III 
reform package, the Banking (Amendment) Ordinance 2012 was enacted in 2012 to empower the HKMA to 
make rules prescribing the capital, liquidity and disclosure requirements for authorized institutions and to 
approve and issue codes of practice to provide guidance for such rules. Further to the implementation of the 
first phase of Basel III capital standards (i.e. three re vised minimum capital ratios computed with stricter 
definitions of regulatory capital and broadened counte rparty credit risk coverage) and their associated 
disclosure requirements respectively from 1 January and 30 June 2014, the HKMA is preparing amendments 
to the Banking (Capital) Rules to implement capital buffer requirements, and amendments to the Banking 
(Disclosure) Rules to implement the leverage ratio disc losure requirements. The legislative process will begin 
in 2014. 
 
In December 2010, the Basel Committee introduced two in ternational liquidity standards, i.e. the Liquidity 
Coverage Ratio (LCR, which was further revised by the Committee in January 2013) and the Net Stable 
Funding Ratio (NSFR). The LCR is set for implementati on in phases starting from 1 January 2015 (until full 
implementation by 1 January 2019) and the NSFR, 1 January 2018. The HKMA intends to follow the Basel 
Committee's timetable to implement these two liquidity standards in HKC. Consultations on liquidity policy 
proposals associated with the LCR were conducted in 2012 and 2013. The HKMA is developing Banking 
(Liquidity) Rules taking into account industry comments  received from the consultations. The objective is to 
ensure that the local LCR rules will be in line with the Basel standard and suitable to the local banking 
environment. The legislation process will commence in 2014. Regarding the NSFR, the Basel Committee has WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  conducted a public consultation on some proposed modifica tions to this ratio, which will be finalized later in 
2014. Subject to the final decisions of the Committee on this standard, the HKMA will begin the relevant 
policy development process in due course, for implementation of the NSFR on 1 January 2018. 
 
Financial Sector Assessment Programme (FSAP) 
 
In May 2014, the IMF has concluded its examination of  HKC under the FSAP and concluded that banks in 
Hong Kong, China were well positioned to absorb a significant realization of risks.a 
 
Resolution regime 
 
The Financial Stability Board's Key Attributes of Effective Resolution Regimes for Financial Institutions (Key 
Attributes) set new international standards designed to ensure that critical or systemic banks, and other 
types of critical or systemic financial institutions, can be allowed to fail safely in future without posing a threat 
to financial stability or public funds. All major financial centres, including HKC, are required to undertake the 
necessary legislative reform (by end-2015) to provide for a resolution regime that meets these standards. 
The relevant authorities in Hong Kong, China, namely Financial Services and the Treasury Bureau (FSTB), as 
well as Hong Kong Monetary Authority (HKMA), Securi ties and Futures Commission (SFC) and Office of the 
Commissioner of Insurance (OCI), have jointly conducte d a first stage of public consultation from January to 
April 2014. The authorities are developing proposals for th e second stage of public consultation on legislative 
reform to fill gaps identified in the authorities' existing toolkits against the Key Attributes.  
Specific provisions against money-laundering 
 
Since the last TPR of Hong Kong, China in 2010, the regulatory reform measures for specific provisions 
against money-laundering in the banking sector are as follows: 
- the Anti-Money-Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (AMLO) and 
its guideline (the AML Guideline) on the new legislative and regulatory requirements came into effect on 
1 April 2012. The AMLO provides (a) statutory backing for requirements relating to customer due diligence 
and record-keeping in relation to specified financial institutions, including authorized institutions; and (b) for 
the powers of relevant authorities (including the Hong Kong Monetary Authority) to supervise compliance with 
those requirements and other requirements under the AMLO. 
- the AML Guideline provides (a) a general background on the subjects  of money-laundering and terrorist- 
financing, including a summary of the main provisions of the applicable anti-money-laundering and counter-
financing of terrorism (AML/CFT) legislation in HKC; and (b) practical guidance to assist financial institutions 
and their senior management in desi gning and implementing their own poli cies, procedures and controls in 
the relevant operational areas, taking into consider ation their special circumstances so as to meet the 
relevant AML/CFT statutory an d regulatory requirements. 
 
Bank deposit insurance scheme 
 
The Deposit Protection Scheme (DPS) was enhanced to provide a higher protection limit of HK$500,000 and 
to extend coverage to deposits pledged as security for banking services since 1 January 2011 to dovetail with 
the expiry of the full-deposit guarantee at the end of 2010. After raising the protection limit from HK$100,000 
to HK$500,000, 90% of depositors in HKC are fully covered by the DPS. In light of the recent international 
trend in reforming speed of payout, enhancements for faster payout have been identified and are being 
implemented.  
a For further elements, see the IMF report at: 
http://www.imf.org/external/pubs/ft/scr/2014/cr14130.pdf . 
Source: Information provided  by the HKC authorities. 
Box 4.8 Regulatory framework for securities 
Regulatory framework for securities  
No changes regard ing licensing. 
 
Provisions on shareholders' rights in companies listed  on the stock exchanges and on companies' obligations 
to disclose information 
 
- the new statutory disclosure regime became effective 1 January 2013, under which all HKC-listed 
companies have a statutory duty to disclose inside information to the public in a timely manner. The SFC has 
been working closely with SEHK in monitoring the co mpliance of listed companies with the new statutory 
regime. 
- the SEHK Corporate Governance Code was updated in January 2012 with, inter alia , new recommended 
best practices on Board evaluation of its performance an d upgrading of best practices, to rules regarding the 
proportion of independent non-executive directors on the Board.a 
- the new Companies Ordinance (Cap. 622) came into e ffect on 3 March 2014. A company is a separate legal 
entity, that is, it is a legal person in its own right and separate from its owners. The benefit of limited liability WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  through operating as a limited comp any also brings with it obligations insomuch as the company must 
comply with the various provisions of the Companies Ordinance (Chapter 622 of the Laws of Hong Kong, 
China). These obligations include the timely disclosure and reporting of specified information about the 
company, its officers and shareholders, etc., and any changes in such information to the Registrar of 
Companies so that members of the public have ready a ccess to the latest information of the company kept 
by the Registrar of Companies.b 
 
Securities and Futures Commission(SFC) Han dbook for Unit Trusts and Mutual Funds 
 
The SFC Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted 
Structured Investment Products (Handbook) came into effect in June 2010. It was introduced by SFC after 
the global financial crisis with a vi ew to strengthening the regulatory re gime of publicly-offered investment 
products in HKC and enhancing the transparency of va rious types of products so as to promote investor 
protection, including a requirement to provide product key facts statements. Issuers of unlisted structured 
investment products must also offer a post-sale "c ooling-off" period and arrange for market-making in 
accordance with the requirements, so that there will be  an opportunity for investor s to exit the investment. 
The Handbook includes revised product codes for unit tr usts and mutual funds and for ILAS as well as a new 
product code for unlisted structured investment products.c 
Securities and Futures Short Position Reporting Rules   
 
While the HKC regulatory regime for short-selling activities has been robust, the Securities and Futures 
(Short Position Reporting) Rules came into effect in June 2012. Rules stipulate a new short position reporting 
regime, under which those who hold short positions in specific shares are required to report to the SFC. The 
Amendment Regulation sets out the offences and penalties under the new regime. The reporting regime will 
assist the SFC in collecting further market information, with a view to strengthening its ability to monitor 
short-selling activities in the market . This is conducive to maintaining HKC's financial stability and effectively 
reduces the risks that short-selling activities may bring to the market. 
Regulatory regime for credit rating agencies 
 
A regulatory regime for credit rating agencies oper ating in Hong Kong, China was implemented on 1 June 
2011. Under the new regime, both corporate CRAs and thei r individual rating analysts must be licensed by 
the Securities and Futures Commission (SFC) and be subj ect to a CRA Code of Conduct. With the regime in 
place, credit ratings prepared by CR As based in HKC continue to be serv iceable in the European Union (EU). 
On 15 March 2012, the European Securities and Markets Authority (ESMA) announced that it considered the 
regulatory framework for CRAs in HKC to be in line wi th their regulation in the European Union (EU). Hence, 
European financial institutions may continue using cr edit ratings that have been prepared in HKC after 
30 April 2012, for regulatory purposes.d 
a For further el ements, see:  
 http://www.hkex.com.hk/eng/newsconsul/newsltr/2012/Documents/2012-01-12-E.pdf. b For further el ements, see: http://www.cr.gov.hk/en/compliance/obligations.htm . 
c For further elements, see: http ://www.sfc.hk/web/doc/EN/speeche s/consult/q3c_consultation.pdf. 
d For further elements, see: http://www.legco.gov.hk/yr10-11/english/subleg/brief/28_29_brf.pdf. 
Source: Information provided  by the HKC authorities. 
Box 4.9 Regulatory framework for mutual funds and asset management 
Regulatory framework for mutual  funds and asset management 
 
The only significant change since the last TPR report is  the Trust Law (Amendment) Ordinance 2013, which 
seeks to bolster the competitiveness of HKC's trust services industry and attract settlors to set up trusts in 
HKC, in turn enhancing HKC 's status as an international asse t-management centre in July 2013.a 
It was followed, on 20 March 2014, by the launch of a three-month public consultation on introducing a new 
Open-ended Fund Companies structure (OFC). Currently, an open-ended investment fund may be established 
under the laws of HKC in the form of a unit trust but not in corporate form due to various restrictions on capital 
reduction under the Companies Ordinance (CO). In view of the international trend whereby the corporate fund 
structure has become more popular, it is proposed to  enhance HKC's legal infrastru cture for investment fund 
vehicles by introducing a new OFC structure to complement the existing unit trust structure.  
a For further elements, see: http://www.legco.gov.hk/yr12-13/english/bills/brief/b04_brf.pdf. 
Source: Information provided  by the HKC authorities. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  4.5.3  Transport services 
4.5.3.1  Air transport 4.5.3.1.1  Statistical overview 4.53.  Hong Kong, China is a regional and a global aviation hub both in terms of airport traffic 
(cargo and passenger) and the number of local airlines based there. HKC is the number one cargo 
airport in the world, and in 2012, the contribution of aviation services to GDP was 2.4%. Table 4.8 provides main economic indicators for aviation services in Hong Kong, China. 
Table 4.8 Main economic indicators for avia tion services in Hong Kong, China, 2008-13 
Number of jobs supported (2008) 
Direct: 62,000 and indirect/induced: 124,000 
Contribution to GDP (2008): 1.7% in 2008 and 2.4% in 2012  
Scheduled airlines 
 
- Over 100 scheduled airlines operate 7,000 flights a week serving 180 destinations including 44 in 
Mainland China. 
- There are five designated Hong Kong airlinesa totalling 218 aircraft providing scheduled passenger and/or 
all-cargo services. 
- Cathay Pacific Airways Limi ted (owned respectively by Swire Pacifi c Ltd: 45%, CITIC Pacific: 1.98 %, Air 
China Ltd: 29.99%, public shareholders: 23.03%) operat es scheduled services to 72 destinations worldwide 
with a fleet of 137 aircraft and a turnover of HK$ 100,484 million. 
- Dragon Airlines Limited (owned 100% by Cathay Pa cific Airways Ltd) operates scheduled services to 
41 destinations in Asia (including 20 cities on the Mainland) with a fleet of 42 aircraft. 
- Hong Kong Airlines Limited (owned 100% by HKA Gr oup Company Ltd) operates scheduled services to 
37 destinations, mainly Asian citi es, with a fleet of 23 aircraft. 
- Hong Kong Express Airways Limited (owned 100% by HKA Group Company Ltd) became a low-cost carrier 
from October 2013 and operated scheduled services to 15 destinations in Asia with a fleet of 5 aircraft. 
- AHK, Air Hong Kong Limited (owned respectively by Mapleback Ltd-itself at 100% subsidiary of 
Cathay Pacific: 60%, and Deutsche Po st International B.V: 40%) operates dedicated freight scheduled services 
to 11 Asian destinations with a fleet of 11 aircraft. 
Number of passengers (departures and arrivals) handled by the airport system (2013) 
 
59.9 million (+6.1%) 
Total tonnage of cargo handled by the airport system (2013) 
 
4.13 million tonnes (+2.5%), Hong Kong International Airport (HKIA) currently has four cargo terminals, 
operated by Asia Airfreight Terminal Limited (AAT) an d Hong Kong Air Cargo Terminals Limited (HACTL), in 
addition to a dedicated express cargo terminal operated by DHL Central As ia Hub. The newest cargo terminal 
operated by Cathay Pacific Services Limited, which started full operation in October 2013, further boosts 
HKIA's annual total handling capaci ty to around 7.4 million tonnes. 
Business aviation services 
 
Hong Kong Business Aviation Centre (BAC) has a total site area of 16,000 m2 and is equipped with an 
executive terminal and three hangars to provide cust omers with one-stop services, including passenger 
handling, flight planning and administ ration, ramp handling, customs, immigration and quarantine facilitation, 
into-plane fuelling, line-maintenance, catering and security. 
Maintenance and repair 
 
30 approved facilities, of which 21 a pproved by the Federal Aviation Administration and 19 approved by the 
European Aviation Safety Agency. 
Computer reservation systems present: 
 
Amadeus, Abacus, Galileo, Worldspan. 
a All designated airlines have met the designation criteria of "being incorporated and having its 
principal place of business in Hong Kong, China." 
Source: Information provided  by the HKC authorities. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  4.5.3.1.2  Regulatory framework for aviation services 
4.54.  The FTA with the EFTA States contains a clause (Article 3.1.2 of Chapter 3), whereby the 
agreement will not be applicable to measures in  respect of air transport services affecting air 
traffic rights, however granted, or measures affecting services directly related to the exercise of air 
traffic rights, except as provided for in paragraph 3 of the Annex on Air Transport Services to the 
GATS. The HKC-New Zealand Closer Economic Partnership Agreement (Article 2.3 of Chapter 13) does not apply to measures affecting air transport services or related services in support of air 
services, with the exception of the three auxiliary services set out in paragraph 3 of the Annex on 
Air Transport Services to the GATS. For the three au xiliary services explicitly covered by the GATS 
and the FTAs with the EFTA States and New Ze aland, HKC has no GATS commitments; a broad 
reservation for future measures in the agreement with EFTA States and a more limited one (for 
aircraft repair and maintenance only) in the ag reement with New Zealand. The regime applied 
varies according to the subsectors. While computer reservation services, selling and marketing services are not specifically regulated and do not face any restrictions in the GATS sense, aircraft 
repair and maintenance services are regulated specifically as the number of operators is limited for 
spatial constraints and qualifications reasons through franchise agreements. Box 4.10 describes in more detail the regulatory regime for these three subsectors.  
Box 4.10 Regulatory framework for air transport services covered by the GATS 
GATS commitments  
No commitments.  
 
Free-trade agreements commitments 
 
HKC-EFTA States FTA (entered into force on 1 October 2012 for the part between HKC, Iceland, Liechtenstein 
and Switzerland; on 1 November 2012 for the part between HKC and Norway). 
 
- no reservation for existing  non-conforming measures. 
 
- Reservation (II-HKC-24) for future measures non-conforming to the mark et access and national treatment 
obligations for "air transport services or re lated services in support of air services". 
- Reservation (II-HKC-6) for future measures non-conf orming to the market access and national treatment 
obligations for "rental/leasing services with out operators relating to air transport". 
 
HKC- New Zealand CEP Agreement (entered into force on 1 January 2011) 
 
- Reservation for existing non-conforming measures. 
- Reservation (II-HKC-23) for future measures non-conforming to the mark et access, local presence and most- 
favoured-nation treatment obligations for "air transport se rvices or related services in support of air services" 
concerning aircraft repair and maintenance services  for both cross-border service and investment.  
- Reservation (II-HKC-5) for future measures non-confor ming to the market access, national treatment, local 
presence and most-favoured-nation treatment obligations for "rental/leasing services without operators 
relating to aircraft" for both cross-border service and in vestment provided they are not inconsistent with HKC's 
obligations under Articles XVI, XVII and XVIII of GATS. 
 
CEPA with Mainland China (entered into force on 29 June 2003) 
 
- Paragraph 5 of Annex 4 to the CEPA with Mainland Ch ina stipulates that as from 1 January 2004, HKC will not 
impose any new discriminatory measures on Mainland's services and service suppliers in the areas where the 
Mainland has undertaken specific commitments on liberali zation of trade in Services for HKC. The initial scope 
of this standstill, which covers aviation-related se rvices, has been enlarged by successive supplementary 
commitments of Mainland China in the area of air transp ort services contained in CEPA's supplements I, II, III, 
IV, V, VI, VII, X. This standstill is applied to Mainland China only.  
Applied regime 
 
Aircraft repair and maintenance 
This sector is subject to the reservation of Airport Authority Hong Kong's autonomy to set a ceiling on the total 
number of operators at the Hong Kong International Airport (HKIA), taking into account the physical 
constraints of the capacity of HKIA. Some franchise ag reements signed by Airport Authority Hong Kong have 
set out the maximum number of operators to be allowed at HKIA during the franchise period. 
 
Aircraft base maintenance and repair services are provided by Hong Kong Aircraft Engineering Co. Ltd 
(HAECO), China Aircraft Services Ltd (CASL), and Pan Asia Pacific Aviation Services Ltd (PAPAS). Self-handling 
by airlines on technical line maintenance and passenger handling services are allowed.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Computer reservation services 
This activity is not subject to any sector specific regulation. There is no regulation or code of conduct on CRS 
screen displays.  
Selling and marketing 
This activity is not subject to any sector-specific regulation.  
Source: Information provided  by the HKC authorities. 
4.55.  For air transport services not covered by the GATS, the degree of openness varies, notably 
depending of the subsector. While self-handling,  mutual handling and third-party handling are 
allowed for passenger services, cargo handling is limited to three franchises plus one express integrator allowed to self-handle. Certain ground-h andling services cannot be provided by majority 
foreign-government-owned companies. The airpor t is 100% government-owned and managed by a 
statutory corporation required by law to conduct its business according to prudent commercial 
principles. Slot allocation follows standard IATA rules and is managed by a dedicated office. Local airlines have to meet the criteria of "being inco rporated and having a principal place of business" 
in HKC. The charter policy subjects flying author i z a t i o n s  t o  a n  e c o n o m i c  n e e d s  t e s t ta k i n g  i n t o 
consideration existing scheduled services, and to a degree of reciprocity for foreign carriers. Charter flights cannot be advertised. The aero-policy is neutral between low-cost and full-services 
carriers and between start-up and incumbents. Traffic rights, when constrained, are allocated 
taking into account existing services. There is no specific all-cargo policy. Box 4.11 describes in more detail the regulatory regime for these aviation services. 
Box 4.11 Regulatory regime for other aviation services 
Ground-handling services 
 
- For passenger services: self-handling, mutual handling and third party handling are allowed subject to the 
granting of a permit. 
- For cargo services: self-handling and mutual handling are not allo wed and third-party handling is 
franchised to three cargo terminal operators namely HACTL, AAT and CPSL (the latter being a subsidiary of 
Cathay Pacific) while DHL is allowed to provide self -handling express cargo services for the express cargo 
terminal it operates. 
- Governments other than th e Government of HKC may not hold majori ty shares or contro l franchisees that 
provide certain categories of ground-handling services  at HKIA (namely air cargo, operation of the fuel 
system, operation of permanent aviation fuel facility , into plane fuelling services, and operation of the 
business aviation centre). 
Airport services 
 
- Hong Kong International Airport (H KIA) is operated by the Airport Au thority Hong Kong (AAHK) under an 
aerodrome licence issued by the Civil Aviation Director ate. The AAHK is a statutory corporation wholly owned 
by the Government and is required under the Airport Authority Ordinance (Cap. 483) to conduct its business 
according to prudent co mmercial principles. 
- The AAHK is authorized to conduct airport-related activities on the airport island, while outside activities 
are subject to restrictions in the Airport Authority (Permitted Airport-Related Activities) Order (Cap. 483).a 
Airport support services, such as ground handling, main tenance and repair of aircraft, or air cargo at the 
HKIA, are provided by third parties granted franchi ses by the AAHK through a competitive open bidding 
process. The AAHK periodically assess es the demand for services, and allows entry of additional operators if 
necessary. 
- Self-handling by airlines is limited to passenger hand ling services and technical line maintenance. However, 
airlines are allowed to set up their own companies, incl uding subsidiaries and joint- ventures, for participation 
in the tender exercise of the ai rport support services franchises. 
Slots 
Standard IATA rules apply. Hong Kong Civil Aviati on Department, as the aeronautical authority, is 
responsible for schedule co-ordination and slot alloca tion. A dedicated office, the Hong Kong Schedule 
Coordination Office (HKSCO), is set up for the purpose. 
Commercial aviation 
National establishment rules 
Carriers designated by Hong Kong, China have to meet  the criteria of "being incorporated and having a 
principal place of business" in HKC.  No policy change  is anticipated.  
 
Charter policy  
- In conformity with Article 5 of the Chicago Conv ention applications for non-scheduled air servicesb for the 
carriage of passengers or cargo will normally be approved if the Director-General of Civil Aviation is satisfied WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  that the applicant has reasonably demonstrated that  corresponding scheduled services cannot satisfy a 
genuine demand by providing the serv ice or capacity required and, in the case of applications made by 
airlines based outside HKC, that the government of the country in which th e airline is based, would accord no 
less favourable treatment to a Hong Kong-based airline making a similar application. 
- Permits for non-scheduled services are granted on condition that the holder does not advertise such 
services for sale direct  to the general public. 
 
All cargo policy 
No specific all-cargo policy. In general, HKC is prepared to consider removing restrictions on third and fourth 
freedom rights and exchanging fifth freedom rights fo r operation of both passenger and all-cargo services 
with aviation partners when it se rves the overall interests of HKC. 
 
Start-up and low-cost policies 
With respect to the facilitation to new entrants, HKC provides a level-playing field for all carriers to operate 
services to and from Hong Kong, be they local or foreig n, or full-service (FSC) or low-cost (LCC). Hong Kong 
Express became a low-cost airline in 2013 and 16 foreign low-cost airlines serve HKC. 
 
- Where there is competition for limited traffic rights between a designated Hong Kong airline newly applying 
for designation to serve a route (the new entrant) and the incumbent design ated Hong Kong airline(s) on the 
same route, the Government will examine the requests  made by the new entrant in light of whether the 
route/market concerned is sufficiently mature, and whet her the operation by the new entrant will add overall 
benefits to HKC. To assist new entrants to the market to foster healthy competition and allow wider choices 
to the HKC community, the Government may consider favorably requests made by the new entrants who 
wish to serve existing routes if th e considerations are met on balance. 
a Permitted activities incl ude alliance or cooperation with other airports; acquisition of interests in 
other airports in Mainland China; provision of advi sory or consultancy services to another airport; 
and operation of carriage and logistics services. 
b Non-scheduled air services are some times regarded as charter services. 
Source: Information provided  by the HKC authorities. 
4.56.  With regard to bilateral air services agreements, the HKC Government follows a progressive 
liberalization policy. Such policy emphasizes more liberal market access and promotes competition in the public and HKC's aviation industry interest. Generally speaking, HKC is prepared to consider 
removing restrictions on third and fourth freedom rights and exchanging fifth freedom rights with 
aviation partners when it serves the overall interests of Hong Kong, China .  
4.57.  Hong Kong, China has bilateral air transport agreements in force with 59 partner-countries. 
The main features of these 59 agreements are described in Table 4.9 below. 
Table 4.9 Air services agreements 
Partner Date Entry into 
force 
5tha 
7thb 
Cabotagec 
Coopd 
Designatione 
Withholdingf 
Pricingg 
Capacityh 
Stati 
ALI 2011 
ALI 2005 
"Template 1" 
agreement  (for the name of the 35 bilateral partners 
concerned and the 
dates of signature and entry into force of the relevant 
agreements, see 
footnote j)   
 Y N N Y M PPoB DA PD Y 21  21 
"Template 2" (for 
the name of the 10 
bilateral partners 
concerned and the 
dates of signature 
and entry into force 
of the relevant 
agreements, see 
footnote k)   N N N Y M PPoB DA PD Y 15 15 
Israel 19.03.1998 08.09.1998  Y N N Y S PPoB DA PD Y 17  17 
Japan 28.02.1997 18.06.1997  Y N N Y M PPoB ZP FD Y 34 18 WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Partner Date Entry into 
force 
5tha 
7thb 
Cabotagec 
Coopd 
Designatione 
Withholdingf 
Pricingg 
Capacityh 
Stati 
ALI 2011 
ALI 2005 
Kuwait, the State of 07.04.2004 01.03.2013  Y N N N M PPoB DA PD Y 18  .. 
Mauritius 03.07.1998 03.07.1998  N N N N M PPoB DA PD Y 12 12 
Myanma r 04.03.1997 11.06.1997  N N N N M PPoB DA PD Y 12  12 
Netherlands 17.09.1986 26.06.1987  Y N N Y M PPoB DA other Y 23 23 
Oman 08.12.1998 26.3.1999  N N N N M PPoB DA B1 Y 16  16 
Pakistan 17.02.1998 17.02.1998  Y N N N M PPoB DA PD Y 18 18 
Papua New Guinea 15.10.1998 29.01.2014  N N N N M PPoB DA PD Y 12  .. 
Philippines 26.05.1997 26.06.1997  N N N N M PPoB DA PD Y 12 12 
Saudi Arabia, 
Kingdom of 22.11.2005 28.06.2010  Y N N Y S PPoB DA PD Y 17  .. 
United Arab 
Emirates 29.04.1998 29.04.1998  Y N N Y M PPoB DA B1 Y 25 25 
United Kingdom 25.07.1997 25.07.1997  Y N N Y M PPoB ZP PD Y 25  25 
United States 07.04.1997 07.04.1997  Y N N Y M PPoB DA B1 N 26 26 
.. Not available. 
a A yes indicates that fifth freedom ri ghts, even limited ones, are granted. 
b A yes indicates that seventh freedom rights, even limited ones, are granted. c A yes indicates that cabotage righ ts, even limited ones, are granted. 
d A yes indicates that there are clauses allowing cooperation between airlines, such as code share. e "S" indicates that designation is single, "M" that it is multiple. f Type of withholding clause: Substantial Ownershi p and Effective Control "S OE", Principal Place of 
Business "PPoB" or Community of Interest "COI". 
g Type of pricing clause: Double Approval "DA", Double Disapproval "DD", Country of Origin (CoO), 
Zone Pricing "ZP", Free Pricing "FP". 
h Type of capacity clause: Pre Determination "PD", Bermuda I "BI", Free determination "FD", 
other "O". 
i A yes indicates that an exchange of st atistics is foreseen by the agreement. 
j Australia date of signature (s): 15.09.93, date of entry into force (eif ): 15.09.93; Austria (s): 
02.10.98, (eif): 01.12.98; Bangladesh (s): 24.10.00, (eif): 24.10.00; Belgium (s): 06.04.98, (eif): 01.07.03; Brazil (s): 06.09.91, (eif): 16.03.94; Brunei Darussalam (s): 09.01.89, (eif): 09.01.89; Cambodia (s): 17.01.00, (eif): 17.01.00; Canada (s): 24.06.88, (eif): 24.06.88; Denmark (s): 14.03.00, (eif): 14.03.00; Ethiopia (s): 24.10.06, (eif): 14.07.09; Finland (s): 14.01.00, (eif): 01.04.00; France (s): 20.08.90, (eif): 10.05.91; Germany (s): 05.05.95, (eif): 23.06.97; Hungary (s): 26.04.01, (eif): 19.11.01; Iceland (s): 09.08.04, (eif): 29.10.04; India (s): 10.10.96, (eif): 10.10.96; Indonesia (s): 06.06.97, (eif): 27.06.97; Italy (s): 09.10.96, (eif): 19.01.98; Jordan (s): 28.04.04, (eif): 28.08.04; Kenya (s): 21.05.04, (eif): 21.05.04; Korea, Rep. of (s): 29.03.96, (eif): 09.07.96; Lao PDR (s): 09.09.09, (eif): 09.09.09; Luxemburg (s): 03.06.98, (eif): 06.06.03; Malaysia (s): 04.03.91, (eif): 04.03.91; New Zealand (s): 22.02.91, (eif): 22.02.91; Norway (s): 02.06.00, (eif): 02.06.00; Qatar (s): 05.02.99, (eif): 16.12.13; Russian Federation (s): 22.01.99, (eif): 01.06.10; Seychelles (s): 24.06.13, (eif): 24.06.13; Singapore (s): 30.04.96, (eif): 30.04.96; South Africa (s): 18.03.00, (eif): 18.03.00; Sri Lanka (s): 24.02.93, (eif): 24.02.93; Sweden (s): 14.03.00, (eif): 14.03.00; Switzerland (s): 26.01.88, (eif): 01.02.93 and Thailand (s): 24.03.97, (eif): 12.06.97. 
k Bahrain, Kingdom of (s): 03.03.98, (eif): 03.03.98; Croatia (s): 07.06.02, (eif): 30.01.03; 
Czech Rep. (s): 22.02.02, (eif): 26.04.02; Fiji (s): 03.12.09, (eif): 03.12.09; Maldives (s): 11.06.09, (eif): 11.06.09; Mexico (s): 20.11.06, (eif): 01.05.08; Mongolia (s) 24.05.00, (eif): 
24.05.00; Nepal (s): 29.10.98, (eif): 29.10.98; Turkey (s): 02.04.98, (eif): 20.04.01; and Viet Nam 
(s): 10.09.99, (eif): 10.09.99. 
Source: WTO QUASAR Database updated by the authorities. 
4.58.  None of these agreements grants seventh freedom (including for all cargo flights). They 
contain the most liberal ownership/withholding clause, i.e. of "principal place of business" as opposed to the standard restrictive clause of "substantial ownership and effective control." The 
remaining clauses (fifth freedom rights, cooperatio n, designation, capacity, pricing and exchange 
of statistics) feature variations. Cabotage rights are not applicable in HKC since it has only one airport. 
4.59.  With 35 of its partners, Hong Kong, China has used a template agreement, containing the 
liberal clauses of fifth freedom rights, multi-designation and cooperation and the restrictive clause 
of double approval of tariffs, pre-determination of capacity and exchange of statistics. The Air WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Liberalization Index (ALI) score of that combinatio n of clauses is 21 (out of a total of 50 possible 
points) corresponding to a semi-liberal agreement, quasi–open sky. The limitations of the Quasar methodology exaggerate the restrictiveness of the agreements concerned as the tariff clause and the exchange of statistics clause are often, in practice; pro forma  and as the real restrictiveness of 
capacity depends not only on the procedure applicab le but also on the levels of capacity granted, 
that are not factored into the methodology. 
4.60.  The second most frequent combination of cl auses, used this time with ten partners, scores 
an ALI of 15 and associates two liberal clauses (cooperation and multi-designation) and four 
restrictive clauses (absence of fifth freedom rights, double approval of tariffs, predetermination of capacity and exchange of statistics). Seven agreements feature scores close to this combination, three below at 12 (with the Philippines, Myanmar and Mauritius) and four above (with Oman -16-, 
Israel and the Kingdom of Saudi Arabia -17- and Kuwait -18-). 
4.61.  Five agreements are significantly more liberal than the two standard combinations of 
clauses - those with Japan, Netherlands, the United Arab Emirates, the United Kingdom and the 
United States - scoring respectively 34, 24, 25, 25 and 26. The four latter countries have 
traditionally followed an open-skies policy, while Ja pan, the first country on this list and the higher 
score, has recently embraced this policy.
34 The clauses generating these high scores vary: laxer 
capacity clauses for the Netherlands, United Arab Emirates and the United States, laxer pricing 
clauses for the United Kingdom, and a combination of both for Japan.  
4.62.  Agreements entered into force since 2005 (2005 being the preceding date at which an 
assessment of the aero-policy of all WTO Members was conducted35) do not exhibit any significant 
variations compared to this general pattern; four (with respectively the Seychelles, Ethiopia, Lao 
PDR and Qatar) adopted the 21 points combination, three (with respectively Fiji, Maldives and Mexico) the 15 points combination, while three exhibit show similar scores: the State of Kuwait 18, 
the Kingdom of Saudi Arabia 17, and Papua New Guinea 12.  
4.5.3.2  Maritime transport 4.5.3.2.1  Statistical overview 
4.63.  Hong Kong, China is a major global maritime hub, with its port ranking number four in 
terms of container throughput after Shanghai, Singapore and Shenzhen in 2013. During that year, the Hong Kong Port (HKP) handled 22 million twenty-foot equivalent units (TEUs), of which 14 million TEUs were transhipped.  HKP is a vital economic infrastructure of Hong Kong, China. 
It handles 90% of the freight in tonnage terms. In 2012, the port and related sectors directly 
contributed 1.3% (HK$26 billion) to Hong Kong, China's GDP and 2.4% (88,000 jobs) to total employment . 
4.64.  HKP is also vital in supporting the operation of the trading and logistics sector, which is one 
of HKC's four key economic pillars and accounts for approximately 25% (HK$495 billion) of its GDP and 21% (765,000 jobs) of total employment. 
4.65.  Hong Kong, China's has the fourth largest registry in the world in terms of tonnage, after 
Panama, Liberia and the Marshall Islands, with 2,065 merchant vessels of over 1,000 Gross Registered Tonnes (GRT), representing 138.13 mi llion Dead Weight Tonnes (DWT) or 8.24% of the 
world fleet at 1
 January 2014. It has maintained its rank since the last TPR Review. Favourable 
operating conditions and the cluster of maritime-related services offered by HKC, including 
specialized legal, insurance, ship brokerage and ship-management services, have attracted investment from global shipowners, which explains why a very large share of the tonnage of the 
registry (86.51%) is beneficially -owned by foreign interests.  
4.66.  In addition, HKC shipowners beneficially own a sizable fleet under flags other than the Hong 
Kong, China flag. This beneficially-owned fleet of 304 vessels over 1,000 GRT represented, 
7.966 million DWT at 1 January 2014. In total, the fleet owned by HKC shipowners (under the HKC 
flag or under foreign flags) comprises 610 ships, representing 26.6 million DWT, i.e. 1.58% of 
                                               
34 See WTO document TPR/S/276/Rev.1, pages 101-103. 
35 See the Quasar profile of Hong Kong, China in WTO document S/C/W/270/Add.1, 30 November 2006, 
pages I.587 to I.594.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 96 - 
 
  world tonnage, making it the eighth fleet in the world (after Greece, Japan, Mainland China, the 
United States, the United Kingdom, Chinese Taip ei and Denmark). Hong Kong, China shipowners 
are mainly active in the bulk transport sector.  
4.67.  Table 4.10 describes in more detail HKC's maritime freight trade, while Table 4.11 describes 
the legal framework and the activities of its cont ainer terminals. Finally, Table 4.12 describes in 
more detail the HKC registry fleet and the fleet beneficially-owned by Hong Kong, China shipowners under flags other than the HKC flag. 
Table 4.10 Hong Kong, China internationa l maritime freight trade, 2012 and 2013 
Merchandise 
trade Volume (tonnes, 2013)  Value  
(2012 and 2013) % of international 
trade (all modes of 
transport 
2012 and 2013) 
 Imports Exports  Imports c.i.f.  
HK$ million Exports 
f.o.b. 
HK$ 
million Imports 
% Exports  
% 
International 
maritime 
freight trade 
of which 162,275,000 tonnes 
(including imports 
stricto sensu  and 
inward transhipment) 113,780,000 tonnes  
(including exports 
stricto sensu and 
outward transhipment) 2012  
893,136 
2013  
882,449 2012 
913,724 
2013 
878,294  2012 
22.8 
2013 
21.7 2012 
26.6 
2013 
24.7 
 Imports 
(tonnes except for 
containers TEUs, 
2013)a Inward 
transhipment 
(tonnes except for 
containers TEUs, 
2013)a Exports  
(tonnes except for 
containers TEUs, 2013)a Outward transhipment  
(tonnes except for 
containers TEUs, 2013)a 
Containers  4,486,000 TEUs 6,988,000 TEUs 4,124,000TEUs  6,755,000 TEUs 
Dry bulkb 40,112,000 1,196,000  15,740,000  1,458,000  
Liquid bul k 14,713,000 86,000  638,000  27,000  
a Figures may not add up to the respective totals due to rounding.  
b Dry bulk included bulk cargo and unpacked solid bulk cargo. 
Source: Census and Statistics  Department publication. 
Table 4.11 Hong Kong, China container terminals, 2013 
Privately-managed 
terminals Managing company(ies) Volume (2013) Date & duration of the 
contract 
Kwai Tsing Container 
Terminals 1 to 9 of which    17,118,000 TEUs 
i.e. 77% of the total HKP container throughput  The Container Terminals 
1-9 were granted by the Government of HKC for term under the existing leases up to year 2047 
Terminals 4, 6, 7, 9 
(North)  
 Hong Kong International Terminals 
Ltd (HIT) No individual 
breakdown by 
operator or 
container terminal 
available  
Terminals 1, 2, 5, 9 (South)  Modern Terminals Ltd (MTL)   Modern Terminals Ltd (MTL)  
 No individual 
breakdown by operator or container terminal available  
Terminal 8 (East)  
 COSCO-Hong Kong International 
Terminals Ltd (COSCO-HIT) No individual 
breakdown by 
operator or 
container terminal 
available  
Terminal 3  
 Goodman DP World Hong Kong 
Limited No individual 
breakdown by operator or container terminal available  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Public terminals  Volume (2013)  
Anchorages and buoys 
managed by the Marine 
Department (MD) of HKC  N/A 1.8 million TEU N/A 
Berths and wharfs 
(including public cargo 
working areas managed by the MD of HKC)  3.4 million TEUs
a  
Future projects    
 A study is expected to be 
completed in next few months. 
Upon completion of the study, HKC 
will take into consideration the 
study results, the global and local 
economic situation, the 
performance of the port sector, and 
the views of stakeholders when 
deciding the need, (if there is a 
need) the timetable and the scale 
for CT10  N/A N/A 
a This also includes traffic at private berths and wharves, other than Kwai Tsing Container Terminals, 
however, breakdowns are made available. 
Source: Information provided  by the HKC authorities. 
Table 4.12 Hong Kong, China registry and fleet, 2014 
 Vessels Tonnage 
 Number % of world 
fleet Million dead 
weight tonnes % of world 
fleet 
Hong Kong, China registry  
-  of which beneficially-foreign-owned 
-  Locally-owned 2065 
1759 
306 4.33 
3.69 
0.64 138.13 
119.49 
18.63 8.24 
7.12 
1.12 
Fleet beneficially-owned by HKC shipowners 
under foreign flags 304 0.64 7.96 0.47 
Total HKC-owned fleet (locally-owned under 
HKC flag + beneficially-owned under foreign 
flag )  610 1.28 26.59 1.58 
Source: UNCTAD, Review of Maritime Transport , 2014, forthcoming. 
4.5.3.2.2  Maritime transport regulatory framework  
4.68.  The trade regulatory regime of maritime transport services has been described in detail in 
all previous TPR reports36 and has remained largely unchanged since the previous TPR report in 
2010. The main changes since then concern the fo llowing areas: two new free-trade agreements 
containing maritime transport commitments, the competition regime with a new generic, non-
sector-specific, legislation and the supply chain secu rity initiative with the launch of an Authorized 
Economic Operator Scheme.  
4.69.  The HKC authorities have confirmed that the measures applied contained in the I-TIP 
services database for maritime transport services37 remained valid and that the regime defined by 
the 2012 HKC-EFTA States FTA is applied on an erga omnes  basis. Box 4.12 recapitulates the 
GATS and the FTA commitments of HKC, while Box 4.13 describes the applied regime as well as the recent main regulatory evolutions for the sector.  
                                               
36 WTO documents WT/TPR/S/52, 13 November 1998, pages 80-84; WTPR/S/109, 18 November 2002, 
pages 60-63; WT/TPR/S/173/Rev.1, 13 March 2007, pages 89-92; and WT/TPR/S/241/Rev.1, 25 January 
2011, pages 70-73. 
37 WTO and World Bank joint online databases. Viewed at: http://i-tip.wto.org/services/. 
 WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Box 4.12 Bound trade regimes for maritime transport services 
GATS commitments 
- International maritime transport (excluding  passenger transport and cabotage transport)   
 
Market access: none for modes 1, 2 and 3; intra- corporate transferee for managers; executives and 
specialists for mode 4; national treatment: unbound fo r modes 1 and 2; none except exemption from income 
tax for international operations for HKC vesse ls for mode 3 and unbound for mode 4.  
 
-  F u l l  a c c e s s  t o / u s e  o f  t h e  n i n e  p o r t  s e r v i c e s  d e f i ned by the maritime model schedule, namely pilotage; 
anchorage; berth and berthing serv ices; towing and tug assistance; pr ovisioning, fuelling and watering; 
garbage-collecting and ballast waste disposal; port  captain's services; navigation aids; shore-based 
operational services essential to ships' operation including communications, water and electrical supplies and 
emergency repair  facilities. 
- Rental and leasing of vesse ls (limited to hiring a vessel with cr ew under charter-party terms for a voyage 
or a period of time).   
 
Market access: unbound for mode 1;  none for modes 2 and 3; intra-co rporate transferee for managers; 
executives and specialists for mode 4; national tr eatment: unbound for modes 1 and 2; none except 
exemption from income tax for international operations for HKC vessels for mode 3 and unbound for mode 4.  
 
- Maritime auxiliary services commitments (with specific  definitions) on maritime cargo-handling services; 
storage and warehousing services; customs clearance services; container statio ns and depot services; 
maritime agency services; and maintenance and repair of vessels with the same entries namely: market 
access: unbound for mode 1; none for modes 2 and 3; unbound for mode 4; national treatment unbound for 
modes 1 and 2; none for mode 3; unbound for mode 4.  
Free-trade agreements commitments 
 
HKC-EFTA States FTA (entered into force on 1 October 2012 for the part between HKC, Iceland, 
Liechtenstein, and Switzerland; on 1 November 2012 for the part between HKC and Norway). 
 
Full liberalization except for the following reservations: 
- one reservation to cover an existi ng non-conforming measure to the national treatment obligation: the 
exemption from profits tax of income derived from international operation of ships registered in HKC. This 
reservation covers the sectors of passenger and freight transportation, rental/leasing services without 
o p e r a t o r s  r e l a t i n g  t o  s h i p s  a s  w e l l  a s  r e n t a l  o f  v e s s e l s  w i t h  c r e w ;  t h i s  r e g i m e  i s  a p p l i e d  erga omnes 
(I-HKC.5). 
- HKC reserves the right to adopt or maintain any measures inconsistent with national treatment and market 
access obligations with respect to cabotage transport se rvices and to the provisio n of certain port servicesa it 
being understood that such measures shall not deny in ternational maritime transport suppliers reasonable 
and non-discriminatory access to these port services (so–called "GATS floor"). However, to-date no such 
measures exist (II-HKC.22).  
 
HKC–New Zealand Closer Economic Partnership Agreement (entered into force on 1 January 2011) 
 
Full liberalization except for the following reservations: 
- one reservation to cover an existing non-conforming measure to the national treatment obligation: income 
derived from international operation of ships registered  in the Hong Kong Shipping Register is exempted 
from HKC's profits tax. This reservatio n covers the sectors of passengers and freight transportation; rental of 
vessels with crew and rental/leasing services without operators relating to ships. 
- HKC reserves the right to adopt or maintain any measures inconsistent with national treatment, market 
access, local presence and most-favoured-nation treatm ent for cross-border servic es and investment with 
respect to cabotage services, and to the provision of certain port servicesa where no measures shall be 
applied, which deny international maritime transport service suppliers reasonable and non-discriminatory 
access to these port services (so–called "GATS fl oor"). However, to-date no such measures exist 
(II-HKC.21). 
 
CEPA with Mainland China (entered into force on 29 June 2003) 
- Paragraph 5 of Annex 4 to the CEPA with Mainland China stipulates that as from 1 January 2004, HKC will 
not impose any new discriminatory measures on Mainland's services and service suppliers in the areas where 
Mainland China has undertaken specific commitments on liberalization of trade in services for HKC. The initial 
scope of this standstill has been enlarged by successive supplementary commitments of Mainland China in 
the area of maritime transport contained in CEPA's supple ments I, II, IV, V,VI, X. Th is standstill is applied to 
Mainland China only.  
a The list of those port services is the same as  those on which HKC has undertaken access to/use of 
commitments in the context of the GATS, see above. 
Source: HKC GATS Schedule of commi tments and WTO-RTA-IS database. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 99 - 
 
  Box 4.13 Applied regulatory regime for maritime transport 
Applied regime 
 
Cabotage  
Vessels used solely within HKC waters are required to be licensed by the Marine Department under the 
Merchant Shipping (Local Vessels) Ordinance. This does  not entail a flag obligation but HKC labour legislation 
must be abided by aboard those ships.  
 
Registration policy  
- No changes since the previous TPR: to fly the Hong Kong, China flag, the conditions are that "a majority 
interest in the ship is owned by a HKC citizen, or  a HKC incorporated company, or a non-HKC company 
registered in HKC, or the ship is on charter to such a company"; a representative person, either the owner or a 
locally-incorporated ship management company, is appointed in relation to the ship. 
 
- The total number of shipowners of HKC registered ships (Ocean Going Vessels) was 2,299 (including joint 
owners and disponent owners) as at 19 June 2014, of which: (i) HKC individual - 0.087%; (ii) HKC 
incorporation (1,284) - 55.85%; (iii) non-Hong Kong registered company (884) - 38.45%; (iv) overseas 
incorporation without non-Hong Kong company registrationa (129) - 5.61%". 
 
- There are no restrictions on the na tionality of seafarers working on boar d HKC-registered ships provided their 
competency complies with the requirements of STCW Convention; 
- The HKC flag does not give access to any specific su bsidies nor to any specific cargoes (e.g. government 
cargo, ex/im bank-financed projects, food aid,  or specific import or export cargo).  
 
Access to port policy  
HKC applies a full non-discriminatory po licy regarding access to berths, po rts dues, compulsory pilotage and 
pilotage fees. 
 
Bilateral and plurilateral agreements 
HKC has no bilateral or plurilateral agreement entailing cargo-sharing or preferential  establishment onshore.  
 
Onshore activities policy 
HKC does not apply any specific restrictions to market access or national treatment (e.g. on the number of 
suppliers, volume and value of transactions, as sets, number of persons employed, legal forms, 
foreign-ownership participation, land ownership or usage,  discriminatory subsidies, residency, registration) on 
the exercise by foreigners of mari time activities onshore. In addition, there are no market-access and 
national-treatment restrictions for multimodal transport operators, general and bulk shipping lines, shippers, 
and intermediaries, to rent or leas e trucks, railway carriages, or barges and related equipment for inland 
forwarding of cargo.  
Competition policy  
- Unlike in many other jurisdictions, there is no specif ic competition regime for mari time transport, which falls 
under the Generic June 2012 Competition Ordinance.  
Support policy 
HKC does not provide any support me asures (such as subsidies, tonnage tax or second register) to the 
maritime transport sector. Income derived from the international operation of Hong Kong, China registered 
ships is exempted from profit tax.  
Supply Chain Security initiative  
HKC formally launched the Authorized Economic Op erator (AEO) programme in 2012. The AEO programme 
represents a Customs-to-Business part nership to enhance international supply-chain security and facilitate 
movement of legitimate goods. It is a voluntary partnership initiative open to all stakeholders engaging in 
business principally related to the international supply chain.  
a This category is for "Owner is not HKC company but demise charter is HKC company". 
Source: Information provided by the authorities and ITIP services database. 
4.5.3.2.3  Inland waterways transport 
4.70.  Inland waterways transport plays an importan t role for the feedering of high seas container 
vessels with cargoes originating from the Pearl River Delta in Mainland China. About 90% of the 
barges that ship cargo from Mainland China to HKC are registered in Mainland China. As at 
31 December 2013, there was a total of 30 HKC-registered river trade cargo vessels with a tonnage of 21,328 GRT.  
4.71.  Table 4.13 compares and describes the traffic of ocean vessels, river cargo vessels and 
passenger ferry vessels for recent years.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 100 - 
 
  Table 4.13 Port traffic, 2009-13  
 2009  2010  2011 2012 2013  
Arrival of vessels (number )       
Ocean vessels 33,157 32,645 32,490 30,703 29,915 
River cargo vessels 89,750 91,039 84,695 78,094 77,374 
River passenger ferry 82,598 88,129 87,485 82,062 80,251 
Arrival of vessels (annual % change)       
Ocean vessels -7.5 -1.5 -0.5 -5.5 -2.6 
River cargo vessels -10.8 1.4 -7.0 -7.8 -0.9 
River passenger ferry 2.1 6.7 -0.7 -6.2 -2.2 
Total freight movement ('000 tonnes) 242,967 267,815 277,444 269,282 276,055 
of which:       
Seaborne (%) 66.5 68.0 70.3 70.1 66.7 
River (%) 33.5 32.0 29.7 29.9 33.3 
Total freight movement (annual % change) -6.3 10.2 3.6 -2.9 2.5 
Seaborne -10.2 12.6 7.1 -3.1 -2.4 
River 2.5 5.5 -3.8 -2.5 14.2 
Total container throughput ('000 TEUs) 21,040 23,699 24,384 23,117 22,352 
(annual % change) -14.1 12.6 2.9 -5.2 -3.3 
%age of containerization for seaborne cargo 76.9  79.7 80.4 80.4 80.5 
Direct shipment 23.2  22.6  20.9  19.4  18.8  
Transhipment 53.7  57.0  59.5  61.0  61.7  
Source: Information provided  by the HKC authorities. 
4.5.4  Construction, architecture and real estate services  
4.5.4.1  Statistical overview 
4.72.  In a territory where the land available for construction is extremely limited, where most of 
the construction is vertical and where building land per square metre fetched record prices records by global standards, the cluster composed by arch itecture services, construction services and real 
estate services is a key component of the local economy. For instance, construction alone accounts 
for 3.6% of GDP and 8.3% of employment, i.e. mo re than employment in financial services and 
proportionally more than in the construction sector in many developed economies.  
4.73.  Table 4.14 provides the main economic indicators available for these three sectors. 
Table 4.14 Main economic indicators for co nstruction, architecture and real estate 
services, 2009-13 
Architecture 
 
Practitioners 
Number of architects: 3,074  
Architects/inhabitant ratio: 0.04%  
Number of architecture students: 946 
Student architects ratio: 23.5% 
Surveyors: 2,847 
Engineers: 6,925 
 
Foreign trade for architectural, engineering, scientific and other technical services 
Exports (US$ mill.): 2009: 464; 2010: 482; 2011: 479; 2012: 509 
Imports (US$ mill.): 2009: 178; 2010: 254; 2011: 319; 2012: 328 
Construction  
 
Share in GDP (%): 3.6% in 2012 
Share in total employment: 8.3% in 2013 
Spending on public construction projects (2013): HK$78 billion 
Number of licenced foreign affiliates (m ore than 50% foreign owned): not available 
 
Exports (US$ mill.): 2011: 143; 2012: 331 
Imports (US$ mill.): 2011: 78; 2012: 322 WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 101 - 
 
  Value-added of the building and cons truction sector (HK$ billion):  
2009: 40.2; 2010: 53.5; 2011: 63.6 
Business receipts and other inco me of the building and construc tion sector (HK$ billion):  
2009: 10.4; 2010: 14.1; 2011: 16.5 
Newly-completed private buildings (usable floor area in 1,000 sq. m.) (yearly total):  
- Residential buildings: 2010: 611.6; 2011: 469.6; 2012: 557.2; 2013: 347.3 
- Non-residential buildings : 2010: 527.6; 2011: 521.7; 2012: 837.3; 2013: 484.0  
Real Estate 
 
Turnover of the activity: not available 
Employment in the activity: 128,000 i.e. 3.4% in 2013 
Value-added (US$ mill.): 2009: 11,205; 2010: 11,445; 2011: 13,622; 2012: 15,070 
Number of licensed real estate agents/agencies: 19,197; salesperson's licence: 16,769; estate agent's 
licence (individual): 3,017; estate agent's licence (company) (as at 31 December 2013) 
Number of foreign license d real estate agents/a gencies: not available  
Source: Information provided by the HKC authorit ies and UNCTAD-WTO trade in services database. 
4.5.4.2  Trade and regulatory regimes for ar chitecture, construction and real estate 
services  
4.74.  HKC has no GATS commitments for architecture services and limited commitments, sector-
wise, for construction and real estate services . However the level of commitments made by HKC 
under the HKC-EFTA States FTA for these three sectors is completely open (no sector-specific 
reservation) for real estate services, and relatively  open for architecture and construction services, 
with reservations covering relevant experience in HKC and residency requirements, and specific to construction services reservations listed in its second list to cover the right to adopt or maintain 
non-conforming measures to market access and national treatment in specific areas. The 
authorities have confirmed that there are no such measures for the time being and that the regime 
defined by this agreement was applied erga omnes . Mainland China benefits from a standstill via 
the CEPA. In addition, the authorities have confir med that the applied measures listed in the I-TIP 
services database for these three sectors remained valid and had not changed. 
4.75.   The tables and boxes below describe in more detail the trade regimes and the regulatory 
framework of architectural services (Boxes 4.14 and 4.15), construction services (Table 4.15 and 
Box 4.16) and real estate services (Table 4.16 and Box 4.17). 
Box 4.14 Trade regimes for architectural services 
GATS commitments 
 
Hong Kong, China has not undertaken any GATS commitm ents regarding architectu ral services and urban 
planning and architectural landscape services.  
Free Trade Agreements commitments 
 
HKC-EFTA States FTA: (entered into force on 1 October 2012 for the part between Hong Kong, China, Iceland, 
Liechtenstein and Switzerland; 1 November 2012 for the part between Hong Kong, China and Norway). 
 
Full liberalization except for the following reservations: 
- HKC has listed one reservation (I-HKC-2) for an existi ng non-conforming measure to the national treatment 
obligation: a one year relevant experience in HKC and residency requirement to be registered as registered 
architect. Reservation I-HKC-4 contai ns similar reservations for urban pl anning and architectural landscape 
services.  
 
HKC – New Zealand Closer Economic Partnership Ag reement (entered into force on 1 January 2011) 
 
Full liberalization except for the following reservations: 
- Reservations I-HKC-2 and I-HKC-4 are identical in substance to reservations I-HKC-2 and I-HKC-4 of the 
HKC-EFTA States FTA. The former applies to both cr oss-border services and in vestment with respect to 
national treatment and local presence obligations. 
 
CEPA with Mainland China: (entered into force on 29 June 2003) 
 
- Paragraph 5 of Annex 4 to the CEPA with Mainland China stipulates that as from 1 January 2004, HKC will not WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 102 - 
 
  impose any new discriminatory measures on Mainland's services and service suppliers in the areas where the 
Mainland has undertaken specific commitments on liberalization of trade in services for HKC. The initial scope 
of this standstill has been enlarged by successive suppl ementary commitments of Mainland China in the area of 
architectural services contai ned in CEPA's supplements II,  V, VII, VIII, IX and X and in the area of urban 
planning and architectural landscape services in supplements II, V, VII, VIII and IX. This standstill is applied to 
Mainland China only.  
Applied trade regime  
In line with the commitments under the HKC-EFTA States FTA which are applied erga omnes.  
Source: HKC GATS Schedule and WTO RTA-IS database. 
Box 4.15 Regulatory framework for architectural services 
Main regulation 
Laws of HKC, Chapter 408 "Architects Registration Ordinance"(ARO).a 
Professional title 
 
Section 30 of ARO stipulates that: 
(1) a person whose name does not appear on the register shall not be entitled to describe himself as 
"architect" or "registered architect" or to use the initials "R.A." after his name. 
(2) subject to subsection (3), the Board may apply to a judge for an order restrain ing any person whose name 
is not on the register from describing himself as "architect " or "registered architect" or using the initials "R.A.". 
(3) a person whose name is not on the regist er may describe himsel f as an architect if: 
(a) he describes himself by reference to an architectural discipline not related to the design, construction or 
fitting out of buildings; or 
(b) he describes himself by reference to a membership of a body or institute of architects formed outside HKC 
which description does not imply that he has the right to  practise architecture in HKC under the description of 
architect. 
(4) subject to subsection (3), a person, including a firm or company shall not use the description of 
"architects" or "registered architects" or the initials "R.A." unless: 
(a) at each place where the person carries on the business of architecture, the business is conducted under 
the supervision of a registered architect who does not ac t at the same time in a similar capacity for any other 
person other than a firm or company that has substantially the same beneficial ownership and management as 
the person (where the person is a firm or company); 
(b) where the person carries on a multidisciplinary practice, the business, insofar as it relates to architecture, 
is under the full time control and management of a registered architect who does not act at the same time in a 
similar capacity for any other person other than a firm or company that has substantially the same beneficial 
ownership and management as the person (w here the person is a firm or company). 
The Licensing Authority is also the Architects Regist ration Board. The criteria and procedure are set by 
Sections 13 to 16 and 30 of the Ordinance.  
Inscription in the professional register 
 
Generic regime 
The inscription in the professional register is compulso ry. The registering body is the Architects Registration 
Board. The procedure and criteria are set by Sections 13 to 16 of the ordinance. They are essentially based on 
qualification requirements. 
 
Specific conditions applicable to foreign architects 
- The condition contained in Section 13.1.a.iii "has passed such examination in architecture and other subjects 
and has received such training and experience as the Boar d may accept either generally or in a particular case 
as a qualification of a standard no less than that of a member of the institute" implies that foreign architects 
have to pass the local exam for architecture (HKIA-AR B Professional Assessment or HKIA-ARB Professional 
Induction Workshop for non-local professionals) to  obtain registration and the professional title.  
Licensing of architects 
 
Generic regime 
- The granting of an architect licence is a distinct and subsequent step to the inscription in the professional 
register. It confers the right of signing and certifying . It is not granted automatically as less than 50% of 
registered architects are licensed. It is subject to additional requirements. Those requirements are applied on 
a non-discriminatory basis since the regime is not differentiated between local and foreign architects. 
 
Number of foreign architects havi ng been licensed to exercise 
- Data and statistics for categorizing "foreign archit ects" are not available. Ther e is in practice a large 
combination of origin, qualification and experience amongst the Registered Architects, such as national with 
local or foreign qualification, foreigners with local or foreign qualification, dual-residency or dual-nationality 
architects with local or foreign qualification. Furtherm ore, many of them have experience from both overseas 
and Hong Kong, China.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 103 - 
 
  Conditions of registration  for foreign architects 
If a foreign architect wishes to apply for registration as a Registered Arch itect in Hong Kong, China, he must 
fulfill the qualification as stated in Section 13 of ARO. Assuming he possesses the academic qualifications 
required, he must be "ordinarily resident in HKC" (i.e. proof of residential address) and "satisfy the Board that 
he has one year's relevant professional experience in Hong Kong, China before the date of his application for 
registration".  
Possibility for foreign architects to exercise independently 
Yes.  
Under the laws of Hong Kong Chapter 123 "Buildings Ordi nance", the governance of building plan submission 
requires the appointment of an Authorized Person (AP). Being a Registered Architect is one of the 
requirements to apply for AP qualification. If a foreign architect has attained AP qualification, he has the right 
to exercise independently.  
Preferential policies (Mutual Recognition Agreements) 
No. 
a For the text of the legislation, see:  
 http://www.legislation.gov.hk/blis_pdf .nsf/6799165D2FEE3FA94825755E0033E532/8D62C73D8515
D8B3482575EF00046EA6?OpenDocument&bt=0 . 
Source: Information provided  by the HKC authorities. 
Table 4.15 Trade regimes for construction services 
GATS commitments 
 
HKC commitments regarding construction services are limi ted to (1) interior design services: these are limited 
to specialized consulting services related to the post-construction design and fitting-out of interior living and 
working spaces (part of D "Building Completion and Fi nishing Work") and (2) project management services: 
[themselves] limited to the supervision and coordination of construction projects but do not cover engineering 
or architectural services (part of E) "Other") with the same regime: 
 
Market access: modes 1 and 4: unbound; mode 2 and 3: none 
National treatment: modes 1, 2 and 4: unbound; mode 3: none  
Free-trade agreements commitments 
 
HKC-EFTA States FTA (entered into force on 1 October 2012 for the part between Hong Kong, China, Iceland, 
Liechtenstein and Switzerland; on 1 November 2012 for the part between Hong Kong, China and Norway). 
 
Full liberalization except for the following reservations: 
 
- HKC has listed one reservation (I-HKC-10) for an exis ting non-conforming measur e to the market access and 
national treatment obligations for general construction work for civil engineering (CPC 513 - not covered by 
HKC's GATS commitments) requiring preliminary experience acquired in  Hong Kong and residency for all 
"statutory building agents" i.e. for professionals having the monopoly of carrying out non-exempted 
construction and building works in the private sectora namely Authorized Persons (AP), Registered Structural 
Engineers (RSE), Registered Geotechnical Engineers (RGE), Registered Contractors (RC), and Technically 
competent Persons (TCP), Registered Inspectors (RI) and Qualified Persons (QP). 
 
- HKC has listed a reservation (II-HKC-15) to cover an y future non-conforming me asures with the market 
access and national treatment obligations except for gene ral construction work for civil engineering (CPC 513) 
where I-HKC-10 applies, and for the subsectors covered by HKC's GATS commitments (see above). 
 
- HKC has also listed a reservation specific to railway construction services (II-HKC-25) reserving the right to 
adopt or maintain any non-conforming measures to the obligations of mark et access and national treatment.  
 
- HKC authorities have confirmed that so far no such Annex II non-conforming measures exists and that the 
regime defined by this  agreement is applied erga omnes . 
HKC–New Zealand Closer Economic Partnership Agreement (entered into force on 1 January 2011) 
 
Full liberalization except for the following reservations: 
 
- Reservation I-HKC-9 is identical in substance to reservation I-HKC-10 of the HKC-EFTA States FTA. The 
former applies to both cross-border  services and investments with respect to market access, the national 
treatment and local presence obligations. 
 
- Reservation II-HKC-12 reserves the right to maintain or adopt any non-conforming measures to the 
obligations of market access, national treatment and local presence for certain construction and related WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 104 - 
 
  engineering services for cross-border services and investments that are not inconsistent with HKC's obligations 
under Articles XVI, XVII and XVIII of GATS or with its revised DDA offer (TN/S/O/HK/Rev.1, 16 June 2005). 
 
- Reservation II-HKC-25 reserves the right to maintain or adopt any non-conforming measures to the 
obligations of market access, national treatment, local presence and most-favoured-nation treatment for 
cross-border services and inve stment for railway construction  and project implementation.  
 
CEPA with Mainland China (entered into force on 29 June 2003) 
 
- Paragraph 5 of Annex 4 to the CEPA with Mainland Ch ina stipulates that as from 1 January 2004, Hong Kong, 
China will not impose any new discriminatory measures on Mainland's services and service suppliers in the 
areas where Mainland China has undertaken specific commitments on liberalization of trade in services for 
HKC. The initial scope of this stands till has been enlarged by successive supplementary commitments of China 
in the area of construction and related engineering servic es contained in CEPA's supplements I, VI and X. This 
standstill is applied to Mainland China only.  
Applied trade regime  
In line with the commitments under the HKC-EFTA-states FTA, which are applied erga omnes . 
a The Buildings Ordinance (Cap. 123) Section 41 lists the scope of exempted buildings works for 
private building sector.  
Source: HKC GATS Schedule and WTO RTA-IS database. 
Box 4.16 Regulatory framework for construction services 
Licensing, authorization or registration requirements and procedures  (including pre-qualifications 
standards and qualification rating systems) 
 
For public works construction 
(i) Construction companies require: a Business Registra tion Certificate and a Certif icate of Registration of 
Non-HKC Company. 
 
- Licence requirements include: employment of the minimum number of full-time management and/or technical 
personnel with relevant qualifications and experience in  engineering and project management prescribed in the 
relevant category of construction works. 
 
(ii) Approval from the Secretary for Development for admi ssion to a list of 55 categories of construction works 
(5 general construction and 50 specialty construction work). Most of the categories of construction works are 
each sub-divided into group(s) with th resholds of tendering limit set for: 
 
- a construction firm on the list shall regularly provide the Secretary for Development with up-to-date company 
and financial information for reviewing its listing status; 
- a construction firm on the list shall submit a tender within a period of three years, failing which it will be 
removed from the relevant list unless other special circ umstances warrant; 
- the admission process is non-discriminatory. 
 
For private building projects 
All private buildings and building or street works in Hong Kong, China are subject to the control of the Buildings 
Ordinance, unless exempted. Any person who intends to ca rry out building works is re quired by law to appoint 
an authorized person, and where necessary, a registered structural engineer.  
If the building works at any stage involve geotechnical elements, a registered geotechnical engineer is needed 
to prepare and submit plans for the appr oval of the Building Authority under the Buildings Ordinance. He is also 
required to appoint a registered contract or to carry out the building works.  
The Buildings Ordinance therefore covered most of the li censing, authorization or re gistration requirements.  
Professional qualification requirements and procedures 
 
For public works construction 
Appointment of resident management staff who possess a minimum period of local experience in managing a 
construction firm and technical staff who have acquired the relevant academic qualifications and local working 
experience as prescribed in the releva nt category of construction works. 
 
For private building projects 
Building professionals are required to be registered und er the Buildings Ordinance before they are qualified to 
perform duties and functions under the Buildings Ordinance so as to ensure compliance with the statutory 
safety, health and environmental st andards for private building works and street works. They comprise 
authorized persons, registered structural engineers, registered geotechnical engineers and registered 
inspectors, who must be registered architects, registered professional engineers in the relevant 
disciplines/divisions and registered professional surv eyors under the respective Professional Registration WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 105 - 
 
  Boards. They must possess relevant local experience.  
Except for exempted works, contractors are also required  to be registered under th e Buildings Ordinance before 
they are qualified to perform the duties of a register ed general building contractor /a registered specialist 
contractor/a registered minor works contractor to carry out any private building work s or street works. They 
must have the appropriate experience, qualificatio ns and general knowledge of the basic statutory 
requirements. They must also possess relevant local experience. 
Specific standards and restrictio ns on the cross-border use of equipment and material: none 
Competition policy 
The Competition Ordinance seeks to pr ohibit anti-competitive conduct that prevents, restricts or distorts 
competition in all sectors in HKC, including the construction sector. Serious anti-competitive conduct such as 
bid-rigging is regulated under the Ordinance. 
"Green" public procurement rules  
The government policy requires du e environmental consideration to be given when procuring goods and 
services, including construction services. Electronic dissemination of invitation documents and submission of 
tender documents are permitte d. Emphasis is also given to the avoidance of single-use disposable items and 
promote environmentally-friendly construction products. 
Source: Information provided  by the HKC authorities. 
Table 4.16 Trade regimes for real estate services 
GATS commitments 
 
HKC commitments on real estate services are limited to  "the provision, on a fee or contract basis, of 
management services for resi dential or commercial buildings which in  turn consist of cleaning, maintenance 
and guarding of such buildings". 
Market access: modes 1 and 4: unbound; modes 2 and 3: none 
National treatment: modes 1, 2 and 4: unbound; mode 3: none  
Free-trade agreements commitments 
 
HKC-EFTA-States FTA (entered into force on 1 October 2012 for the part between Hong Kong, Iceland, 
Liechtenstein and Switzerland; 1 November 2012 for the part between Hong Kong and Norway)  
 
Full liberalization as this Agreement contains no sector-s pecific reservations regarding real estate services:  
 
- HKC-New Zealand–Closer Economic Partnership Agreement (entered into force on January 2011) 
 
Full liberalization as this Agreement contains no sector -specific reservations regarding real estate services: 
 
CEPA with Mainland China (entered into force on 29 June 2003) 
 
- Paragraph 5 of Annex 4 to the CEPA with Mainland China stipulates that as from 1 January 2004, Hong Kong, 
China will not impose any new discriminatory measures on Mainland's services and service suppliers in the 
areas where Mainland China has undertaken specific commitments on liberalization of trade in services for HKC. 
The initial scope of this standstill has been enlarged by successive supplementary commitments of China in the 
area of real estate services contained in CEPA's suppleme nts IV, VI and X. This stands till is applied to Mainland 
China only.  
Applied trade regime  
In line with the commitments under th e HK-EFTA-States FTA which are applied erga omnes.  
Source: HK GATS Schedule and WTO RTA-IS database. 
Box 4.17 Regulatory framework for real estate services 
Licensing regime  
 
- The activity is subject to a licensing regime and governed by the Laws of HKC, Chapter 511, Estate Agents 
Ordinance.a  
The licence is granted by the Estate Agents Authority ( http://www.eaa.org.hk ), a statutory Body established 
under the Estate Agents Ordinance. 
 
- The criteria used are the following: 
(i) to be at least 18 years old (ii) to possess a Hong Kong Form 5 of se condary education or its equivalent; 
(iii) to have passed the qualifying examination, and (iv)  to be considered a "fit and proper" person by the 
Estate Agents Authority. 
The average length of the process is 10 working days for new applications and 20 working days for renewal WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 106 - 
 
  applications. 
- There is an appeal procedure before the Appeal Panel. 
- Applicants may choose to apply for a 12- month licence or a 24-month licence. 
 
Recognition of foreign qualifications 
Subject to one exception, no exemption to the requirements listed in "criteri a" above; in other words, a foreign 
licensing qualification is not recognized and cannot be used to satisfy or fulfil the requirements listed in the 
"criteria". The only exception is for qualified estate agents of the China Institute of Real Estate Appraisers and 
Agents under the Mutual Recognition Scheme.a 
Financial guarantees required  
None. 
a For more elements on this mu tual recognition scheme, see: 
http://www.eaa.org.hk/Licensing/Mutualrecognition/tabid/98/language/en-US/Default.aspx . 
Source: Information provided  by the HKC authorities. 
4.5.5  Distribution services 
4.5.5.1  Statistical overview  4.76.  Distribution is a major and vibrant sector in the economy of Hong Kong, China representing 
approximately 10% of total employment and nearly 5% of GDP in 2012. Numerous foreign 
distributors are present but the supermarket segm ent is largely dominated by local interests. 
Traditional open-air fresh food markets ("wet markets") remain an important component of Hong Kong, China distribution system. 
4.77.  Table 4.17 provides the main economic indi cators for distribution services in Hong Kong, 
China. 
Table 4.17 Main economic indicators of the distribution sector, 2009-12 
Number of employees 
Wholesale: 64,000 in 2010; 64,400 in 2011; 64,000 in 2012 
Retail: 297,400 in 2010; 304,300 in 2011; 317,600 in 2012  
Number of companies 
Wholesale: 14,900 in 2010; 15,100 in 2011; 14,900 in 2012 
Retail: 60,600 in 2010; 63,300 in 2011; 63,900 in 2012 
Share in total GDP of wholesale and retail tr ades: 2009: 3.8%; 2010: 4.1%; 2011: 4.8%; 2012: 5.0% 
 
Share in total GDP of wholesale trade: 2009: 0.8%; 2010: 0.9%; 2011: 0.9%; 2012: 0.9% 
 
Share in total GDP of retail trade: 2009:  3.0%; 2010: 3.2%; 2011: 4.0%; 2012: 4.1% 
Share of total employment 
Wholesale: 1.8% in 2010-12 
Retail: 8.5% in 2010-11; 8.7% in 2012 
Value-added of wholesale and retail trades, and acco mmodation and food services sectors (HK$ billion): 
2009: 174.6; 2010: 197.9; 2011: 232.9 
 
Business receipts and other income  of wholesale and retail trades, an d accommodation and food services 
sectors  
(HK$ billion): 2009: 1,458.7; 2010: 1,605.6; 2011: 2,005.0 
Total number of retail establishments: 53,094  
 
Grocery sales (2011): HK$79.3 billion 
 
Number of grocery outlets and convenience stores (2011): 2,100 
 
Top four large grocery stores (i.e. from 150 to 5,000 square metres) chains:  
The Group; Dairy Farm Group; China Re source Group; and Jusco/AEON Group 
 WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 107 - 
 
  Number of operators of mid-size (i.e. from 40 to 1,000 square metres) grocery stores single operators: 69  
 
Number of supermarkets stricto sensu  (2011): 77  
 
Market share of these supermarkets (2011): 
In terms of retail sales, supermarkets (with a value of retail sales of HK$49,131 million) accounted for 9.9% of 
the total retail sales from all retail outlets (HK$494,451mil lion). This figure includes both supermarkets and 
convenience stores.  
 
Top four operators of larg e supermarket chains and mi d-sized grocery stores:  
Wellcome (280+ outlets); A.S. Watson-owned supermarke ts under the brands of ParknShop, International, 
Taste, Fusion, Gourmet, Great and SU-PA-DE-PA (260 stores in Hong Kong, China and Macau, China); 
CR Vanguard (95 outlets); Market  Place by Jasons (26 outlets). 
 
Top four discounters (2013):  
Kai Bo Food Supermarket (86 outlets); Dah Chong Hong (90+ outlets); PrizeMart (23 outlets) and Kai Hing 
Supermarket (estimated at 9 outlets). 
 
Number of convenience stores: 1,300 
 
Top convenience store-chains (2013):  
7-Eleven (900+ outlets); Circle K (328 outlets); Van Go (80)  
 
"Wet" markets: 197 outlets (link REITa: 102; FEHD: 95b)  
 
Other major retailers: 
AEON Stores (HKC) Co. Limited (forei gn-owned); YATA (part of Sun Hung Kai properties); Sogo, (owned and 
operation by Lifestyle International Holdings Limited, a listed company in Hong Kong, China); Uniqlo (foreign-
owned); Citysuper (part of Fenix grou p, a HKC registered company); Muji (foreign-owned); Ikea (operated in 
franchise by Dairy Farm);  H&M; C&A; Inditex. 
a The Link Real Estate Investment Trust (Link REIT) owns and manages 11 million square feet of retail 
space in purpose-built shopping malls. Link REIT emerged as a dominant op erator at the beginning 
of the century with the privatization of the retail portfolio of the Housing Authority (HA).  
b The Food and Environmental Hygiene Department (FEHD) manages in conjunction with the Housing 
Authority (HA) HKC public markets. 
Source: UNSD, ILO, WTO estimates based on nation al sources and information provided by the HKC 
authorities, March 2014. 
4.5.5.2  Trade regulatory regimes  
4.78.  While Hong Kong, China has undertaken GATS commitments only on part of retail services, 
its trade-regulatory regimes for distribution appear very liberal and the sector is largely unregulated. For instance, there is no specific regu lation establishing economic needs tests for the 
creation of supermarkets or any legislation regulating market access for franchising.  
4.79.  The liberal regime defined in the HKC-EFTA Free Trade Agreement is applied erga omnes,  
and while this Agreement, which adopts a negative list approach for services commitments, 
contains a reservation for future non-conforming measures for "other distribution services", no 
such measures exist for the time being. Mainland China benefits for its part from a standstill on HKC's measures on distribution, where boundaries are defined by the scope of the concessions granted in this sector by Mainland China to HKC service suppliers in the CEPA and in its successive 
supplements. HKC market access and domestic regulation regimes for distribution have not 
significantly changed since the last TPR report in 2010 and are described in more detail in Table 4.18.  
Table 4.18 Regulatory regime s of distribution services  
GATS commitments 
 
Hong Kong, China has undertaken GATS commitments only for retailing services (item 4.C of the 
MTN/GNS/W/120 standard GATS Nome nclature), defined narrowly and sui generis  as "limited to the resale 
(sale without transformation) of certain new and used  consumer goods to the general public, which are 
normally used for final personal or household cons umption or utilization by department stores, shops, 
consumer cooperative and auction hous es with the following limitations: WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 108 - 
 
  Mode 1 market access and national  treatment unbound; mode 2 market access: none, national treatment: 
unbound; mode 3 market access and national treatm ent: none; mode 4 market access and national 
treatment: unbound. 
Free-trade agreements commitments 
 
HKC-EFTA States FTA (entered into force on 1 Oc tober 2012 for the part between Hong Kong, China, 
Iceland, Liechtenstein and Switzerland; on 1 Nove mber 2012 for the part between Hong Kong, China and 
Norway). 
 
Full liberalization except for the following reservations: 
 
- no reservation for existing non-conforming measure on distribution services; this regime is applied erga 
omnes ; 
- Hong Kong, China reserves the right to adopt or maintain any measures with respect to the "other 
distribution services" as defined by document MTN/GNS/W/120; however, to date no such measures exist 
(II-HKC-16); 
- Except in respect of specified services, Hong Kong re serves the right to adopt or maintain any measures 
with respect to energy services including the impo rtation, generation or ma nufacture, transmission, 
distribution, storage, supply, sale and use of  energy (II-HKC-8). 
 
Hong Kong, China–New Zealand Closer Economic Partnership Agreement (entered into force on 
1 January 2011) 
 
Full liberalization except for the following reservations: 
 
- no reservation for existing non-conforming measure on distribution services; this regime is applied erga 
omnes ; 
- Hong Kong, China reserves the right to adopt or maintain any measures with respect to energy services 
including the importation, generation or manufacture, transmission, distribution, storage, supply, sale and 
use of energy.  
 
CEPA with Mainland China (entered into force on 29 June 2003) 
 
- Paragraph 5 of Annex 4 to the CEPA with Mainla nd China stipulates that as from 1 January 2004, 
Hong Kong, China will not impose any new discriminat ory measures on Mainland's services and service 
suppliers in the areas where the Mainland has undertake n specific commitments on liberalization of trade in 
services for Hong Kong, China. The initial scope of  this standstill, which covers franchising servicesa, has 
been enlarged by successive supplementary commitments of China in the area of distribution contained in 
the CEPA supplements I, II, III, IV, V, VI, VII, VIII, IX, Xb This standstill is applie d to Mainland China only. 
Applied regime 
 
Legislation on exclusive rights or on  limitations of number of suppliers 
None. 
Establishment legislation (including large-scale stores and supermarkets) 
 
Investments in retail business are business decisions. There are no economic needs test and/or any square 
feet/metres limitations. But, apart from safety requirements and busine ss incorporation requirements which 
also apply to other retail businesses, supermarket operators do have to abide by some requirements such as 
the following:  
- an Outline Zoning Plan sets out the land-use zones and may stipulate restrictions on development intensity 
in terms of plot ratio or gross floor area on the development(s) falling within a land-use zone. A supermarket 
falling within such a land-use zone may be subject to those restrictions; 
 
- in addition, supermarkets selling items of restricted food specified in Schedule 2 of Cap.132 are required to 
apply for the relevant food business licence(s) and/or restri cted food permit(s) from the FEHD. The operators 
must comply with the relevant licensing requirements in relation to food and premises hygiene before a 
licence/permit is granted. 
Legislation on franchising 
None.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 109 - 
 
  Zoning/urbanism legislation  
Town Planning Ordinance, Cap 131 (link to Cap 131 attached below). 
 
The areas covered by an Outline Zoning  Plan are in general zoned for uses  such as residential, commercial, 
industrial, green-belt, government/ins titution/community uses or other specified uses an d a Schedule of 
Notes is attached showing the uses that are always pe rmitted in a particular zo ne and uses that may be 
permitted with or without conditions on application to  the Town Planning Board.  So-called Column 1 uses 
refer to those uses that are always  permitted while so-called Column 2 uses refer to uses where planning 
permission from the Town Planning Bo ard is required. When considering a planning application, the Town 
Planning Board would take into acco unt the planning intention for the zone and other relevant planning 
considerations such as land use compatibility and the impacts in terms of traffic, environment, landscape, 
urban design, etc., generated by the proposal. The Town Planning Board will also take into account the views 
of the relevant government departme nts and have regard to public comments on the application during the 
public inspection period.  
a The detailed initial CEPA commitments for distribution were viewed at: 
http://www.tid.gov.hk/english/cepa/tradeservices/fra_liberalization.html. 
b Listed and viewed at: http:// www.tid.gov.hk/english/cepa/trades ervices/dis_libe ralization.html. 
Source: Based on information provided by the authorities. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 110 - 
 
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 WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  5  APPENDIX TABLES 
Table A1. 1 Merchandise re-exports by HS sections and major HS chapters, 2010-13 
HS 
Section HS Chapter 2010  2011 2012 2013  
Total (US$ billion) 381.2  420.3 435.2 451.9  
  (% of total) 
01 Live animals and products 0.7 0.6 0.5 0.6 
02 Vegetable products 0.4 0.5 0.5 0.5 
03 Fats and oils 0.0 0.0 0.0 0.0 
04 Prepared food, beverages and tobacco 0.5 0.5 0.5 0.5 
05 Mineral products 0.1 0.2 0.2 0.2 
06 Chemicals and products thereof 1.8 1.9 1.8 1.5 
07 Plastics and rubber 3.6 3.4 3.3 3.2 
39 Plastics and ar ticles thereof 3.4 3.2 3.2 3.1 
08 Raw hides and skins; leather, furskins and articles thereof 2.5 2.6 2.5 2.4 
09 Wood, cork, straw 0.1 0.1 0.1 0.1 
10 Pulp of wood; paper and paperboard 0.9 0.8 0.7 0.7 
11 Textiles and textile articles 8.8 8.1 7.2 6.9 
61 Clothing, knitted or crocheted 3.2 2.9 2.6 2.4 
62 Clothing, not knitted or crocheted 2.7 2.5 2.3 2.1 
12 Footwear, headgear, etc. 1.7 1.5 1.4 1.2 
13 Articles of stone, plaster, cement 0.3 0.5 0.5 0.7 
14 Precious stones and metals, pearls 5.2 6.5 6.0 6.1 
15 Base metals and articles thereof 2.5 2.3 2.0 1.8 
16 Machinery, electrical equipment 61.2 60.9 62.9 64.4 
84 Machinery and mechanical appliances 14.4 14.8 15.7 14.9 
85 Electrical machinery 46.8 46.1 47.2 49.5 
17 Transport equipment 0.5 0.5 0.4 0.4 
18 Precision instruments 5.6 5.7 6.0 5.9 
90 Optical, measuring, and other precision instruments 3.6 3.6 3.8 3.7 
91 Clocks, watches and parts thereof 1.9 2.1 2.2 2.2 
19 Arms and ammunition 0.0 0.0 0.0 0.0 
20 Miscellaneous manufactured articles 3.5 3.3 3.2 2.7 
95 Toys, games and sp orts requisites 2.9 2.8 2.6 2.1 
21 Works of art, collectors' pieces and antiques 0.1 0.1 0.1 0.1 
Not classified 0.1 0.1 0.1 0.1 
Source: WTO calculations, based on da ta provided by the HKC authorities.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Table A1. 2 Merchandise domestic exports by HS sections and major HS chapters, 
2010-13  
HS 
Section HS Chapter/heading 2010  2011 2012 2013  
Total (US$ billion) 8.9  8.4 7.6 7.0  
  (% of total) 
01 Live animals and products 0.1 0.2 0.2 0.3 
02 Vegetable products 0.0 0.0 0.0 0.0 
03 Fats and oils 0.1 0.1 0.3 0.4 
04 Prepared food, beverages and tobacco 6.5 7.9 9.8 11.2 
24 Tobacco and manufactured tobacco substitutes 3.2 3.8 5.0 5.7 
05 Mineral products 3.3 4.2 3.3 3.3 
27 Mineral fuels and oils 3.3 4.1 3.2 3.1 
06 Chemicals and products thereof 6.9 8.1 9.3 9.6 
30 Pharmaceutical products 3.3 3.8 5.0 5.0 
07 Plastics and rubber 12.6 12.6 12.1 12.5 
39 Plastics and articles thereof 12.5 12.5 12.0 12.4 
08 Raw hides and skins; leather, furskins and articles thereof 0.1 0.3 0.4 0.6 
09 Wood, cork, straw 0.0 0.0 0.0 0.0 
10 Pulp of wood; paper and paperboard 5.7 6.5 6.3 6.0 
11 Textiles and textile articles 7.3 6.4 5.7 5.2 
12 Footwear, headgear, etc. 0.0 0.0 0.0 0.0 
13 Articles of stone, plaster, cement 0.2 0.2 0.2 0.3 
14 Precious stones and metals, pearls 13.1 18.1 19.5 18.2 
7113 Jewelleries of precious metals 10.3 12.7 14.5 15.0 
15 Base metals and articles thereof 7.8 9.3 9.7 9.6 
72 Iron and steel 3.2 4.5 4.6 4.5 
16 Machinery, electrical equipment 31.8 21.8 18.0 15.6 
84 Machinery and mechanical appliances 3.5 10.5 10.7 9.2 
85 Electrical machinery 28.3 11.3 7.3 6.5 
17 Transport equipment 0.0 0.0 0.0 0.0 
18 Precision instruments 2.2 1.9 2.5 4.6 
90 Optical, measuring, and other precision instruments 1.7 1.5 2.0 3.2 
19 Arms and ammunition 0.0 0.0 0.0 0.0 
20 Miscellaneous manufactured articles 1.2 1.2 1.2 1.4 
21 Works of art, collectors' pieces and antiques 0.0 0.1 0.1 0.3 
Not classified 1.0 0.9 1.2 1.0 
Source: WTO calculations, based on data  provided by the HKC authorities. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Table A1. 3 Merchandise imports by HS se ctions and major HS chapters, 2010-13  
HS 
Section HS Chapter 2010  2011 2012 2013  
Total (US$ billion) 433.1  483.6 504.4 523.6  
  (% of total) 
01 Live animals and products 2.1 2.1 2.0 2.2 
02 Vegetable products 0.9 0.9 1.0 1.0 
03 Fats and oils 0.1 0.1 0.1 0.1 
04 Prepared food, beverages and tobacco 1.3 1.4 1.4 1.5 
05 Mineral products 3.6 3.9 3.7 3.5 
27 Mineral fuels and oils, products thereof 3.5 3.9 3.6 3.4 
06 Chemicals and products thereof 2.5 2.6 2.4 2.2 
07 Plastics and rubber 3.7 3.3 3.0 2.9 
39 Plastics and articles thereof 3.5 3.1 2.8 2.7 
08 Raw hides and skins; leather, furskins and articles thereof 2.4 2.5 2.4 2.5 
09 Wood, cork, straw 0.1 0.1 0.1 0.1 
10 Pulp of wood; paper and paperboard 0.8 0.8 0.7 0.7 
11 Textiles and textile articles 6.3 5.6 5.1 5.0 
61 Clothing, knitted or crocheted 2.0 1.8 1.6 1.6 
12 Footwear, headgear, etc. 1.3 1.2 1.1 1.0 
13 Articles of stone, plaster, cement 0.5 0.5 0.6 0.6 
14 Precious stones and metals, pearls 5.8 7.3 7.2 7.4 
15 Base metals and articles thereof 2.6 2.4 2.1 1.9 
16 Machinery, electrical equipment 57.0 55.7 57.5 58.4 
84 Machinery and mechanical appliances 13.3 13.2 13.9 13.2 
85 Electrical machinery 43.7 42.5 43.6 45.2 
17 Transport equipment 1.1 1.4 1.4 1.4 
18 Precision instruments 4.9 5.2 5.5 5.4 
90 Optical, measuring, and other precision instruments 3.2 3.2 3.4 3.4 
91 Clocks, watches and parts thereof 1.7 2.0 2.1 2.0 
19 Arms and ammunition 0.0 0.0 0.0 0.0 
20 Miscellaneous manufactured articles 2.8 2.6 2.5 2.1 
95 Toys, games and sp orts requisites 2.3 2.0 1.9 1.6 
21 Works of art, collectors' pieces and antiques 0.2 0.3 0.2 0.3 
Not classified 0.0 0.0 0.0 0.0 
Source: WTO calculations, based on data  provided by the HKC authorities. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Table A1. 4 Merchandise re-exports by destination, 2010-13  
  2010  2011  2012 2013  
Total re-exports (US$ billion) 381.2  420.3  435.2  451.9  
 (% of total) 
  America 13.3         12.4         12.2         11.8  
    United States        10.9           9.9           9.8           9.3  
    Other America          2.3           2.5           2.4           2.5  
      Canada          0.8           0.7           0.7           0.6  
      Mexico          0.5           0.5           0.5           0.6  
  Europe        12.1         11.8         10.7         10.5  
    EU (28)        11.2         10.8           9.8           9.5  
      Germany          2.7           2.7           2.3           2.1  
      United Kingdom          2.0           1.7           1.6           1.5  
      Netherlands          1.4           1.3           1.2           1.2  
      France          1.2           1.2           1.1           1.2  
      Italy          0.9           0.9           0.7           0.7  
      Belgium          0.5           0.7           0.7           0.6  
    EFTA          0.7           0.8           0.8           0.8  
      Switzerland          0.6           0.7           0.7           0.7  
    Other Europe          0.2           0.2           0.2           0.2  
  Commonwealth of Independent States (CIS)          0.5           0.5           0.6           0.7  
  Africa          0.6           0.6           0.6           0.7  
  Middle East          1.3           1.5           1.7           1.9  
      United Arab Emirates          0.7           0.8           1.0           1.1  
  Asia        72.3         73.1         74.1         74.6  
    China        52.9         52.5         54.3         54.9  
    Japan          4.2           4.1           4.2           3.8  
    Six East Asian Traders          7.6           8.1           7.6           7.5  
      Chinese Taipei          2.2           2.5           2.3           2.1  
      Korea, Rep. of          1.8           1.8           1.7           1.8  
      Singapore          1.6           1.6           1.6           1.6  
      Thailand          1.1           1.3           1.2           1.2  
      Malaysia          0.8           0.8           0.8           0.7  
    Other Asia          7.5           8.5           8.0           8.4  
      India          2.5           2.8           2.3           2.4  
      Viet Nam          1.1           1.4           1.5           1.6  
      Macao, China          0.7           0.9           1.0           1.3  
      Australia          1.2           1.2           1.1           1.0  
      Philippines          0.5           0.6           0.6           0.6  
Source: WTO calculations, based on data  provided by the HKC authorities. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Table A1. 5 Merchandise domestic exports by destination, 2010-13  
  2010  2011  2012 2013  
Total domestic exports (US$ billion) 8.9  8.4  7.6  7.0  
 (% of total) 
  America 14.4 13.2 13.4 11.6 
    United States 12.0 10.9 11.5 9.9 
    Other America 2.4 2.2 1.8 1.6 
      Canada 1.1 0.7 0.6 0.6 
  Europe 12.2 11.5 10.4 8.3 
    EU (28) 9.5 7.0 5.0 5.4 
      United Kingdom 2.2 2.3 2.0 1.9 
      France 0.7 0.9 0.7 1.1 
      Italy 0.6 0.6 0.5 0.7 
      Germany 1.2 0.9 0.6 0.5 
    EFTA 2.5 4.4 5.2 2.8 
      Switzerland 2.4 4.3 5.2 2.7 
    Other Europe 0.2 0.2 0.2 0.2 
  Commonwealth of Independent States (CIS) 0.1 0.1 0.1 0.1 
  Africa 0.7 0.7 0.7 0.7 
  Middle East 1.2 1.6 1.8 2.3 
      United Arab Emirates 0.8 1.1 1.4 1.6 
  Asia 70.7 72.3 72.6 76.3 
    China 44.9 46.8 44.2 45.6 
    Japan 2.9 2.3 2.0 2.3 
    Six East Asian Traders 14.1 14.5 15.4 15.3 
      Singapore 4.1 4.0 4.6 4.7 
      Chinese Taipei 4.0 4.6 4.6 4.5 
      Malaysia 1.9 1.9 2.2 2.1 
      Thailand 1.9 1.8 1.8 2.1 
      Korea, Rep. of 2.2 2.2 2.2 1.9 
    Other Asia 8.8 8.7 10.9 13.1 
      Macao, China 1.7 2.2 2.8 3.4 
      Viet Nam 1.4 1.7 2.4 3.3 
      Australia 1.7 1.2 1.4 2.4 
      Philippines 1.1 1.0 1.1 1.2 
      Indonesia 0.4 0.5 0.6 0.8 
      India 1.4 0.9 1.5 0.6 
      Bangladesh 0.4 0.4 0.4 0.5 
  Other 0.7 0.6 0.9 0.7 
Source: WTO calculations, based on da ta provided by the HKC authorities.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Table A1. 6 Merchandise imports by supplier, 2010-13  
  2010  2011  2012 2013  
Total imports (US$ billion) 433.1  483.6  504.4  523.6  
 (% of total) 
  America 6.8 7.1 6.7 7.0 
    United States 5.3 5.6 5.2 5.4 
    Other America 1.4 1.5 1.5 1.6 
      Brazil 0.4 0.4 0.4 0.5 
  Europe 9.0 10.3 9.9 9.8 
    EU (28) 7.3 8.1 7.8 7.8 
      Germany 1.7 1.7 1.5 1.4 
      United Kingdom 1.2 1.3 1.4 1.3 
      Italy 1.0 1.2 1.2 1.2 
      France 0.9 1.1 1.2 1.2 
      Belgium 0.7 0.7 0.7 0.7 
      Netherlands 0.5 0.6 0.6 0.7 
    EFTA 1.6 2.1 2.1 1.9 
      Switzerland 1.6 2.1 2.0 1.9 
    Other Europe 0.1 0.1 0.1 0.1 
  Commonwealth of Independent States (CIS) 0.2 0.2 0.2 0.2 
  Africa 0.3 0.3 0.4 0.3 
  Middle East 1.2 1.6 1.7 1.7 
      United Arab Emirates 0.5 0.7 0.9 0.8 
      Israel 0.5 0.6 0.5 0.6 
  Asia 82.4 80.6 81.1 81.0 
    China 45.5 45.1 47.1 47.8 
    Japan 9.2 8.5 8.0 7.1 
    Six East Asian Traders 22.5 21.5 20.5 20.5 
      Chinese Taipei 6.7 6.4 6.3 6.4 
      Singapore 7.1 6.8 6.3 6.1 
      Korea, Rep. of 4.0 4.0 3.9 3.9 
      Malaysia 2.5 2.4 2.1 2.2 
      Thailand 2.3 2.0 1.9 1.9 
    Other Asia 5.3 5.5 5.6 5.6 
      India 2.1 2.3 2.1 2.2 
      Philippines 1.2 1.1 1.0 1.0 
      Viet Nam 0.5 0.5 0.9 1.0 
      Indonesia 0.6 0.6 0.5 0.5 
      Australia 0.5 0.5 0.5 0.4 
Source: WTO calculations, based on data  provided by the HKC authorities. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Table A1. 7 Stock of foreign direct in vestment by country/territory, 2009-13  
  2009  2010  2011  2012 2013  
Inward stock (HK$ billion) 7,013.3  8,299.4  8,377.0  9,646.6   ..  
% of GDP 422.7  467.2  433.0  473.6   ..  
 (% of total) 
Mainland China 37.1  37.7  36.3  37.0  .. 
British Virgin Islands 32.6  32.3  31.1  32.7  .. 
Netherlands 6.9  7.1  7.0  7.0  .. 
Bermuda 6.0  6.5  7.1  6.4  .. 
United States 4.3  3.6  4.3  3.1  .. 
Singapore 1.5  1.4  2.2  2.1  .. 
Japan 2.4  2.2  2.3  1.8  .. 
Cayman Islands 1.9  1.5  1.3  1.4  .. 
United Kingdom 1.7  1.4  1.3  1.3  .. 
Cook Islands 1.0  0.8  0.9  1.2  .. 
Other countrie s/territories 4.6  5.5  6.2  6.0  .. 
      
Outward stock (HK$ billion) 6,508.6  7,338.6  7,946.4  9,010.2   ..  
% of GDP 392.3  413.1  410.8  442.3   ..  
 (% of total) 
Mainland China 41.2  41.1  42.1  40.7  .. 
British Virgin Islands 42.4  41.7  41.8  43.4  .. 
Bermuda 3.0  3.4  2.8  2.9  .. 
United Kingdom 2.7  2.6  2.7  2.4  .. 
Cayman Islands 0.9  0.7  1.4  2.0  .. 
Australia 1.3  1.3  1.2  1.2  .. 
Luxembourg 0.0  1.1  1.1  0.9  .. 
Canada 1.2  1.0  1.0  0.8  .. 
United States  1.4  1.3  0.9  0.7  .. 
Singapore 0.6  0.7  0.7  0.7  .. 
Other countries/ territories 5.2  5.1  4.5  4.2  .. 
.. Not available. 
Source: Government of Hong Kong, China, Census and St atistics Department online  information. Viewed at: 
http://www.censtatd.gov.hk/hkstat/sub/sp260.jsp  (Tables 48 and 50) [14 March 2014]. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Table A1. 8 Stock of foreign direct inve stment by economic activity, 2009-13  
  2009  2010  2011 2012 2013  
 Inward stock (HK$ billion) 7,013.3  8,299.4  8,377.0  9,646.6   ..  
% of GDP 422.7  467.2  433.0  473.6  ..  
 (% of total) 
Investment and holding, real  estate, professional and 
business services 67.4  67.6  66.9  68.7  .. 
Banking 11.3  12.3  11.3  11.6  .. 
Import/export, wholesale and retail trades 8.8  8.4  9.5  9.2  .. 
Financing (except banking, investment and holding 
companies) 3.1  3.1  3.5  3.0  .. 
Transport, storage, post al and courier services 2.9  2.2  2.0  2.0  .. 
Construction 1.3  1.3  1.3  1.7  .. 
Insurance 2.4  2.4  2.5  1.3  .. 
Manufacturing 1.0  1.0  1.0  0.8  .. 
Information and communications 0.6  0.6  0.6  0.6  .. 
Accommodation and food services 0.4  0.3  0.3  0.4  .. 
Other activities 0.8  0.9  1.0  0.7  .. 
      
Outward stock (HK$ billion) 6,508.6  7,338.6  7,946.4  9,010.2   ..  
% of GDP 392.3  413.1  410.8  442.3   ..  
 (% of total) 
Investment and holding, real  estate, professional and 
business services 75.9  75.6  76.3  78.0  .. 
Import/export, wholesale and retail trades 6.6  7.2 6.8  6.0  .. 
Banking 4.1 4.1 3.7 3.8  
Manufacturing 2.6 2.6 2.5 2.4  
Insurance 1.8 2.0 2.0 2.2  
Transport, storage, post al and courier services 2.5  2.1  2.4  2.0  .. 
Information and communications 0.7  0.6  0.6  0.9  .. 
Accommodation and food services 0.9  0.8  0.8  0.7  .. 
Financing (except banking, investment and holding 
companies) 0.9 0.6 0.7 0.7  
Construction 0.5 0.6 0.7 0.7  
Other activities 3.3  3.8  3.5  2.6  .. 
.. Not available. 
Source: Government of Hong Kong, China, Census and St atistics Department online  information. Viewed at: 
http://www.censtatd.gov.hk/hkstat/sub/sp260.jsp  (Tables 49 and 51) [14 March 2014]. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Table A2. 1 Selected notifications from Hong Kong, China 
Agreement Requirement/contents Document reference of most 
recent notification 
Agriculture  
Articles 10 and 18.2  Export subsidies (outlays and 
quantities) G/AG/N/HKG/35, 
15 January 2014  
Article 18.2 Domestic support G/AG/N/HKG/36, 28 April 2014 
Application of Sanitary and Phytosanitary Measures  Article 7, Annex B and Annex B, 6 Changes in sanitary and 
phytosanitary measures and information on measures applied, including emergency measures G/SPS/N/HKG/39, 16 April 2014 
Government Procurement 
Article XIX:5 Government procurement 
statistics GPA/119/Add.2, 
26 November 2013 
Annex 3  Threshold values in national 
currencies GPA/W/325, 9 December 2013 
Implementation of GATT 
Article VI of the GATT 1994 
(Anti-Dumping) 
 Article 16.4  Anti-dumping actions taken and 
competent authorities G/ADP/N/193/HKG, 14 July 2010 
Import Licencing Procedures 
Article 7.3 Questionnaire; rules and 
information concerning import licensing procedures G/LIC/N/3/HKG/17, 
30 September 2013 
Articles 1.4(a) and 8.2(b) Changes to laws and regulations 
and related information on 
procedures G/LIC/N/1/HKG/5, 
7 January 2003 
Market Access  Quantitative restrictions G/MA/QR/N/HKG/1, 
3 October 2012; G/MA/QR/N/HKG/1/Add.1, 14 May 2013 
Rules of Origin  
Article 5.2 (1) Preferential and non-preferential 
rules of origin G/RO/N/86, 1 October 2012 
State Trading GATT 1994 Art. XVII: 4(a) and 
Par. 1 of the Understanding on 
the Interpretation of Art. XVII. Activities of state-trading 
enterprises. G/STR/N/15/HKG, 24 March 2014 
Subsidies and Countervailing 
Measures  
Article 25.1-GATT 1994  
Article XVI:1 Subsidies programmes G/SCM/N/253/HKG, 16 July 2013 
Articles 25.11and 25.12 Countervailing actions taken and 
competent authorities G/SCM/N/202/HKG, 14 July 2010 
Safeguards  
Article 12.6 Safeguard legislation G/SG/N/1/HKG/1, 20 March 1995 
Technical Barriers to Trade 
Article 10.6 Technical regulations, standards, 
and conformity assessment procedures G/TBT/N/HKG/45, 21 May 2014 
Article 15.2 Administrative arrangements; 
laws/regulation G/TBT/2/Add.1, 29 January 1996 
Trade in Services  
Article III:3, paragraph 3 Changes in laws, regulations and 
administrative guidelines S/C/N/645, 9 July 2012 
TRIPS 
Article 63.2 Laws and regulations IP/N/1/HKG/23, 30 April 2014 
Article 69  IP/N/3/HKG/1, 20 December 2012 
Free trade area 
GATT 1994 Article XXIV: 7(a) Regional trade agreement WT/REG/322/N/1, 1 October 2012 
Trade Facilitation  WT/PCTF/N/HKG/1, 13 May 2014 
Source: WTO Secretariat. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Table A3. 1 Excise duties, 2010 and 13 
Commodity 2010 2013  
 (%) 
Liquora 
L i q u o r  w i t h  a n  a l c o h o l i c  s t r e n g t h  o f  m o r e  t h a n  3 0 %  b y  v o l u m e  
measured at a temperature of 20°C 100 100 
Liquor, other than wine, with an alcoholic strength of not more than 
30% by volume measured at a temperature of 20°C  0 0 
Wine  0 0 
 (HK$) 
Tobaccob 
Cigarettes (per 1,000 cigarettes) 1,206 1,706 
Cigars (per kilogram) 1,553 2,197 
Chinese prepared tobacco (per kilogram) 296 419 
All other manufactured tobacco except tobacco intended for the 
manufacture of cigarettes (per kilogram) 1,461 2,067 
Hydrocarbon oil (per litre)  
Aircraft spirit 6.51 6.51 
Light diesel oil 2.89 2.89 
Motor spirit (unleaded petrol) 6.06 6.06 
Motor spirit (leaded petrol) 6.82 6.82 
Ultra low sulphur diesel 2.89 2.89 
a Where there is no or insufficient information availa ble to determine the value of imported liquor of 
less than 12 litres, the Commissioner of Customs an d Excise (or authorized officer) may assess the 
duty payable at a rate of HK$160 per litre. For th e purpose of assessing and calculating duty, the 
transaction value of the goods will be used as the primary basis for determining value. 
b The excise duties on tobacco increased by 41.5% on 23 February 2011. 
Source: The Customs and Excise Departme nt online information. Viewed at: 
http://www.customs.gov.hk/en/trade_facilitation/dutiable/types/index.html . WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Table A3. 2 First registration tax for automobiles, 2010 and 2013  
(%) 
 2010 2013  
1. Private cars   
- on the first HK$150,000 35 40 
- on the next HK$150,000 65 75 
- on the next HK$200,000 85 100 
- on the remainder 100 115 
2. Taxis 3.7 3.7 
3. Public and private light buses 3.7 3.7 
4. Public buses, except buses which are to be  used solely in connection with operating a 
public bus service under the Public Bus Services Ordinance (Chapter 230) or under the 
Kowloon-Canton Railway Corporation Ordinance (C hapter 372) within the North-West Transit 
Service Area as defined in the Ordinance 3.7 3.7 
5. Private buses, except buses which are to be used solely in connection with the training of 
drivers for the purposes of operating a publ ic bus service under the Public Bus Service 
Ordinance (Chapter 230) or within the North-West Transit Service Area under the Kowloon-Canton Railway Corporation Ordinance (Chapter 372) 3.7 3.7 
6. Motor cycles 35 35 
7. Motor tricycles 35 35 
8. a. Goods vehicles, other than van-type light goods vehicles  15 15 
b. Van-type light goods vehicle not exceeding 1.9 tonnes permitted gross vehicle   
 weight   
- on the first HK$150,000 35 35 
- on the next HK$150,000 65 65 
- on the remainder 85 85 
c. Van-type light goods vehicle exceeding 1.9 tonnes permitted gross vehicle  weight  17 17 
9. Special purpose vehicles 3.7 3.7 
Source: Information provided  by the HKC authorities. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
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  Table A3. 3 Regime of standards and technical requirements, 2013  
Ordinance/Regulation Summary of the legislation Changes since 1 January 2010 
Environmental protection 
Air Pollution Control Ordinance 
(Cap 311) To provide for the control of air pollution 
from stationary sources and motor 
vehicles. 
Import into Hong Kong, China of any 
quantity of asbestos known as amosite 
or crocidolite or any substance or item 
made with or containing amosite or 
crocidolite is prohibited, except if the 
substances form an integral part of the 
structure of fittings of a ship brought 
into Hong Kong, China for repair or 
breaking up. Amendments were made in 2014 
to set out the new Air Quality 
Objectives (AQOs) of HKC and 
stipulate a periodic review of 
AQOs at least once in every five 
years. 
Extended the ban on import and 
sale of amosite and crocidolite 
asbestos to banning the import, 
transhipment, supply and use of 
all forms of asbestos (including 
white asbestos - chrysotile) in a 
bid to better protect public 
health, with exceptions and 
exemption to be granted under 
special circumstances on 
application. 
Air Pollution Control (Fuel 
Restriction) Regulations (Cap 311I) To prohibit the use of high sulphur 
content solid and liquid fuel (sulphur 
content shall not exceed 1% by weight for conventional solid fuels and 0.005% by weight for liquid fuels) for commercial and industrial appliances and require the use of gaseous fuel in certain areas of the territory. Nil 
Air Pollution Control (Vehicle Design 
Standards) (Emissions) Regulations 
(Cap 311J) To set out the emission standards for 
vehicles. Newly registered vehicles shall 
comply with the latest EU or the 
equivalent U.S. and Japanese emission 
standards. Nil 
Air Pollution Control (Motor Vehicle 
Fuel) Regulation (Cap 311L) To set out the specifications of motor 
vehicle fuel to be used in motor vehicles and prohibit the sale of leaded petrol. The specifications are determined in accordance with relevant ISO/EN/ASTM
 
standards or Institute of Petroleum. A new regulatory control on 
motor vehicle biodiesel (Part V of the Regulation) and new specifications of pure motor vehicle biodiesel (Schedule 3 of the Regulation) were added, which takes effect starting from 1 July 2010. 
Air Pollution Control (Emission 
Reduction Devices for Vehicles) 
Regulation (Cap 311U) To require scheduled vehicles to be 
installed with approved emission 
reduction devices 
Under the Regulation, the Director of 
Environmental Protection shall maintain 
a register of all emission reduction 
devices approved. The Director of 
Environmental Protection may include in 
the register an emission reduction 
device only if he is satisfied that the 
device can reduce the emission of air 
pollutants from a motor vehicle in a 
manner and to an extent satisfactory to 
him and it is suitable for installation on 
a motor vehicle. Nil 
Air Pollution Control (Dry-Cleaning 
Machines) (Vapour Recovery) 
Regulation (Cap 311T) To control the emission of 
perchloroethylene (PCE) from the dry-
cleaning industry through the imposition of PCE emission standard on dry-cleaning machines in use Specifically, the concentration of PCE inside the drum of dry-cleaning machines should not exceed 300 ppmv at the end of drying cycle. Nil 
Air Pollution Control (Petrol Filling 
Stations) (Vapour Recovery) 
Regulation (C hapter 311S) Petrol storage tanks and petrol 
dispensers of petrol filling stations and 
petrol delivery vehicles are required to 
be installed with vapour recovery 
systems. Nil WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 124 - 
 
  Ordinance/Regulation Summary of the legislation Changes since 1 January 2010 
Air Pollution Control (Volatile 
Organic Compounds) Regulation (Chapter 311W) Import and local manufacture of 
regulated VOC-containing products for local sale and use is allowed only if their VOC contents meet the prescribed 
standards. The types of regulated products 
were expanded from architectural paints, printing inks and consumer products to cover 
vehicle refinishing paints, vessel 
paints and pleasure craft paints, adhesives and sealants by phases. 
Air Pollution Control (Air Pollutant 
Emission) (Controlled Vehicles) 
Regulation (Cap 311X) 
 To phase out pre-Euro IV diesel 
commercial vehicles including goods 
vehicles, light buses and non-franchised 
buses by 2020 and to limit the service 
life of diesel commercial vehicles first 
registered on or after 1 February 2014 
at 15 years. Nil 
Air Pollution Control (Marine Light Diesel) Regulation (Cap 311Y) To provide for the specifications for 
marine light diesel supplied in HKC. Specifically, the sulphur content shall not exceed 0.05% by weight. Nil 
Ozone Layer Protection Ordinance 
(Chapter 403) To comply with the requirements of the 
Montreal Protocol on substances that 
deplete the ozone layer. Nil 
Ozone Layer Protection (Controlled 
Refrigerants) Regulation (Chapter 403B) To prohibit any intended release of 
controlled refrigerants from motor vehicle air-conditioners or refrigeration equipment containing more than 50 kg of refrigerant to charge into the 
atmosphere, and to conserve the 
controlled refrigerants through the use of approved recycling and recovery equipment. Nil 
Ozone Layer Protection (Products 
Containing Scheduled Substances) 
(Import Banning) Regulation 
(Chapter 403C) To prohibit the import of products 
containing ozone-depleting substances 
listed in the Schedule to the Ordinance 
from all countries. Nil 
Noise Control (Air Compressors) 
Regulations (Cap 400C) To stipulate noise emission standards 
for certain portable air compressors. Nil 
Noise Control (Hand Held Percussive 
Breakers) Regulations (Cap 400D) To stipulate prescribed noise emission 
standards for certain hand-held 
percussive breakers to comply with. Nil 
Noise Control (Motor Vehicles) 
Regulation (Cap 400I) To stipulate noise emission standards, 
as prescribed in the Schedule, for motor vehicles including motorcycles to comply with in first registration.  Nil 
Motor vehicles 
Road Traffic (Construction and 
Maintenance of Vehicles) Regulations (Cap 374-A) To set out control of vehicle construction 
and maintenance. Speed limiter required for public 
light buses; reversing video device required for new goods vehicles. 
Road Traffic (Safety Equipment) 
Regulations (Cap 374F) To permit or require the provision or use 
of specified safety equipment (including 
seat belts, anchorage point, seats with 
integral seat belt anchorage, and 
protection helmets in compliance with 
specified overseas standards/design 
rules) by persons driving, riding in or 
on, or using, any class of vehicle and 
controlling the sale, hire or possession 
of such equipment. Nil WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 125 - 
 
  Ordinance/Regulation Summary of the legislation Changes since 1 January 2010 
Construction 
Buildings Ordinance (Cap 123) and 
its subsidiary legislation To provide for the planning, design, and 
construction of buildings and associated 
works; to make provision for rendering 
safe of dangerous buildings and land; 
and to make provision for regular 
inspections of buildings and the 
associated repairs to prevent the 
buildings from becoming unsafe.  
The drafting of codes of practice and 
design manuals has made reference to 
available international requirements. Nil 
Product safety  
Toys and Children's Products Safety 
Ordinance (Cap 424) To prescribe the requirement for toys 
and children's products to comply with 
the applicable safety standards, for 
toys: European Standards EN 71 as well 
as EN 62115, ASTM F963, and 
International Standard ISO 8124 as well 
as IEC 62115, as listed in Schedule 1 to 
the Ordinance; for children's products 
listed in Schedule 2 to the Ordinance, 
they must comply with the respective 
specifications listed in the Schedule, 
including ISO, EN, BS, ASTM, AS and 
NZS. The Ordinance was amended in 
December 2013 to enable the 
new Toys and Children's Products 
Safety (Additional Safety 
Standards or Requirements) 
Regulations to be made 
thereunder to control the 
concentration of six types of 
phthalates in toys and children's 
products. 
Toys and Children's Products Safety 
(Additional Safety Standards or 
Requirements) Regulations (Chapter 424C) To stipulate the concentration limits of 
six types of phthalates in toys as well as 
children's products intended to facilitate the feeding, hygiene, relaxation, sleep, sucking or teething of a child under 4 years of age and containing any plasticized material. The six types of phthalates are BBP, DBP, DEHP, DIDP, DINP and DNOP. The Regulation was made in 
February 2014 and came into 
effect in July 2014. 
Consumer Goods Safety Ordinance 
(Cap 456) To stipulate that consumer goods shall 
comply with the general safety 
requirement. Nil 
Fire Service (Installation & 
Equipment) Regulations (Cap 95B) To regulate the local sale and supply of 
portable firefighting equipment e.g. fire 
extinguisher, fire blanket to ensure that the design and make of which conform with a set of recognized international or overseas standards by requiring testing and subsequent approval by the Fire Services Department before use in HKC. Nil 
Electricity Ordinance (Cap 406) and 
its subsidiary legislations To prescribe safety requirements of all 
electrical products designed for 
household use and issue certificates of 
safety compliance. 
Under the Electrical Products (Safety) 
Regulation (Chapter 406G) enacted in 
May 1998 to replace a previous 
regulation, all electrical products 
designed for household use and supplied 
in Hong Kong, China shall comply with 
both essential and specific safety 
requirements and shall be issued with 
certificates of safety compliance. The 
safety requirements are based on the 
relevant international or overseas 
standards relevant for the purpose of 
the regulation. 
Concerning the safety standards, IEC 
standards as well as relevant 
international/national standards that 
comply with the prescribed safety 
requirements of the EPSR are 
acceptable. Nil WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 126 - 
 
  Ordinance/Regulation Summary of the legislation Changes since 1 January 2010 
Lifts and Escalators (Safety) 
Ordinance (Cap 618) To ensure the safety of new 
brands/models of lift or escalator, written approval of the Director of Electrical and Mechanical Services is 
required before installation. The Lifts and Escalators 
Ordinance (Chapter 618) came into operation on 17 December2012, repealing the 
Lifts and Escalators (Safety) 
Ordinance (Chapter 327). 
Builders' Lifts and Tower Working 
Platforms (Safety) Ordinance 
(Chapter 470) To ensure the safety of builders' lift or 
tower working platform, the authority is 
the Director of Electrical and Mechanical 
Services. Nil 
Gas Safety Ordinance (Chapter 51) To control, in the interests of safety, the 
importation, manufacture, storage, transport, supply and use of gas, in accordance with the directive of the Gas Authority (Director of Electrical and 
Mechanical Services) for the purposes of 
the ordinance. Nil 
Telecommunications  
Telecommunications Ordinance 
(Chapter 106) and its subsidiary regulations To make better provision for the 
licensing and control of telecommunications, telecommunications services, and telecommunications apparatus and equipment. Technical telecommunications regulations in the form of Hong Kong Communications Authority (HKCA) 
specifications and 
regulations/exemption orders have been stipulated for the purpose of licensing and control of telecommunications, telecommunication services, and telecommunication apparatus and equipment. The specifications adopted are identical to or essentially in line with international standards. The Telecommunications (Control 
of Interference) Regulations (Chapter 106B) has been updated in order to align with widely recognized international standards. 
Dangerous goods 
Dangerous Goods Ordinance (Chapter 295) and its subsidiary 
legislation To prescribe rules on classification, 
labelling, packing, and storage of 
dangerous goods. Nil 
Air transport 
Air Transport (Licensing of Air 
Services) Regulations (Chapter 448 sub. leg. A) To provide for the general policy on 
application, approval, issue, revocation and suspension of: (i) licences and operating permits for scheduled journeys; and (ii) permits for journeys other than scheduled journeys, and related general provisions. Introduced measures in 2013 to 
improve the regulatory regime to align with the developments in the global liberalization of air services in recent years. 
Source: Information provided by the HKC authorities.  WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 127 - 
 
  Table A3. 4 Insured business by major markets and major products, 2012-13  
(HK$ million) 
 Insured business in 
2012-2013 % of total value in 
2012-2013 % increase in 
insured business  
from 2011-2012 
Markets  
United States 40,486 42.0 20.5 
United Kingdom 9,744 10.1 -2.8 
Mainland China 8,524 8.8 23.4 
Germany 4,074 4.2 -6.9 
Switzerland 2,751 2.9 6.0 
Top five markets 65,579 68.0 14.1 
Other markets 30,917 32.0 2.3 
Total 96,496 100.0 10.0 
Products  
Clothing 16,032 16.6 2.3 
Electrical appliances 10,711 11.1 60.2 
Toys 9,793 10.2 10.2 
Electronics 8,130 8.4 -0.7 
Metallic products 3,171 3.3 -6.7 
Top five products  47,837 49.6 11.7 
Other products 48,659 50.4 8.4 
Total 96,496 100.0 10.0 
Source: The Hong Kong Export Credit Insurance Corp oration online information, "Annual Reports", viewed 
at: http://www.hkecic.com/en/information_annual_reports.aspx ; and information provided by the 
HKC authorities. 
  
  WT/TPR/S/306 /Rev.1  • Hong Kong, China  
 
- 128 - Table A3. 5 Selected incentives and assist ances measures, Hong Kong, China, 2011-13 
Sector Objective Agency in 
charge Form of support Total amount 2011-13 
(US$ million) 
SMEs  
SME Loan Guarantee 
Scheme (SGS) To help SMEs secure loans from 
participating lending institutions 
(PLIs) for acquiring business 
installations and equipment and 
for general business use in 
meeting working capital needs Trade and 
Industry 
Department (TID)  Government provides up to 50% guarantee 
to loans granted by PLIs  to SMEs, subject to 
a maximum guarantee amount of 
HK$6 million (~US$770,000) per SME 
 Each SME is also allowed to recycle the 
guarantee once after it has fully paid up the 
loan backed up by the guarantee, subject to 
a maximum guarantee amount of another 
HK$ 6 million (~US$770,000) At end 2011: US$2,215 
At end 2012: US$2,455 
At end 2013: US$2,629 
Special Loan 
Guarantee Scheme (SpGS) (Application period closed)   To help Hong Kong enterprises 
secure loans from PLIs to tackle the liquidity problem arising from the global financial crisis TID  Government provides up to 80% (up to 
70% before 15 June 2009) guarantee for loans granted by PLIs to HKC enterprises, subject to a maximum loan amount of HK$12 million (~US$1.54 million) for each enterprise, out of which up to HK$6 million (~US$770,000) could be used as a revolving credit line  At end 2011: US$9,550 
At end 2012: US$9,495 At end 2013: US$9,492 
SME Export Marketing 
Fund (EMF) To help SMEs expand their 
businesses through participation 
in export promotion activities 
such as exhibitions, trade 
missions, and placing 
advertisements on printed trade 
publications and eligible trade 
websites targeting export 
markets TID  Government provides a maximum of 50% of 
the approved expenses, subject to a ceiling 
of HK$50,000 (~US$6,410) per application.  
 Since 10 June 2013, the cumulative grant 
ceiling for each SME und er the EMF has also 
been raised from HK$150,000 
(~US$19,230) to HK$200,000 
(~US$25,641), subject to the meeting of 
relevant additional conditions At end 2011: US$261.62 
At end 2012: US$294.89 
At end 2013: US$327.06 
SME Development 
Fund (SDF) To provide financial support to 
non-profit-distributing support organizations such as trade and industrial organizations, professional bo dies, etc. to 
carry out projects that can enhance SMEs' competitiveness TID  Government provides funding support of up 
to HK$2 million (~US$256,000), or 90% of the total project expenditure, whichever is the less, for each approved project At end 2011: US$26.00 
At end 2012: US$29.61 At end 2013: US$32.90  
  WT/TPR/S/306 /Rev.1  • Hong Kong, China  
 
- 129 - Sector Objective Agency in 
charge Form of support Total amount 2011-13 
(US$ million) 
Dedicated Fund on 
Branding, Upgrading 
and Domestic Sales 
(the BUD Fund) 
 To support HKC enterprises to 
enhance their competitiveness 
and further th eir business 
development in the Mainland 
market through developing 
brands, upgrading and 
restructuring their operations 
and promoting domestic sales in 
Mainland China's market, so as 
to capitalize on the 
opportunities arising from the 
Mainland China's National 12th 
Five-Year Plan.  Enterprise 
Support 
Programme: Hong 
Kong Productivity 
Council 
 
Organization 
Support 
Programme:  TID Enterprise Support Programme: 
 Government provides a maximum of 50% of 
the total approved project cost, subject to 
cash contribution by the applicant 
enterprise amounting to no less than 50% 
of the total approved project cost as well as 
a ceiling of three approved projects and 
cumulative funding amount of HK$500,000 
(~US$64,100) per enterprise 
 
Organization Support Programme:  
 Government provides funding support of up 
to HK$5 million (~US$641,000), or 90% of 
the total project expenditure, whichever is 
the less, for each approved project At end March 2014 (since 
June 2012): US$27.3 
 
 
R&D 
Small Entrepreneur 
Research Assistance 
Programme (SERAP) To provide funding support to 
technology entrepreneurs and 
SMEs to carry out R&D for 
starting new businesses and 
conducting market validation. 
In general, locally incorporated 
companies with less than 100 
employees are eligible to apply Innovation and 
Technology 
Commission (ITC)  For projects approved for funding, a loan of 
up to HK$6 million will be provided on a 
dollar-for-dollar matching basis  
In 2011: US$3.21 
In 2012: US$1.20 
In 2013: US$6.51 
 
Innovation and 
Technology Support 
Programme (ITSP)  To support midstream/ 
downstream research and 
development (R&D) projects 
undertaken mainly by 
universities, R&D centres, 
industry support organizations, 
professional bodies, and trade 
and industry associations ITC  Funding support is normally given as a 
grant, which may be used for meeting the 
manpower costs, the costs for the 
procurement of equipment, and other direct 
costs specifically required for the conduct of 
the project In 2011: US$51.59 
In 2012: US$64.92 
In 2013: US$66.09 
University-Industry 
Collaboration Programme To stimulate private-sector 
interest in R&D through leveraging the knowledge and resources of universities ITC  The support is given as a grant, subject to 
cash contribution by the company amounting to no less than 50% of the project cost In 2011: US$1.81 
In 2012: US$3.42 In 2013: US$3.08 
General Support 
Programme To support projects that 
contribute to fostering an 
innovation and technology 
culture in HKC, and those that 
will be beneficial to the 
upgrading and future 
development of its industries ITC  Support is given as a grant, with 
contribution by companies amounting to no 
less than 10% of the project cost In 2011: US$2.08 
In 2012: US$3.42 
In 2013: US$3.13  
  WT/TPR/S/306 /Rev.1  • Hong Kong, China  
 
- 130 - Sector Objective Agency in 
charge Form of support Total amount 2011-13 
(US$ million) 
Patent Application 
Grant To assist local companies and 
individuals to apply for patents 
of their own inventions Hong Kong 
Productivity 
Council (HKPC)  A grant of up to HK$150,000 or 90% of the 
total direct cost of the patent application, 
whichever is the lower In 2011: US$2.60 
In 2012: US$2.50 
In 2013: US$1.80 
 
New Technology 
Training Scheme To assist companies wishing to 
have their staff trained in a new 
technology that would be useful 
to their business Vocational 
Training Council 
(VTC)  Funding support up to 50% of training cost 
to employers In 2011/12: US$0.25 
In 2012/13: US$0.24 
Research and 
Development (R&D) Cash Rebate Scheme To reinforce the research 
culture among business enterprises and encourage them to establish stronger partnerships with designated local public research institutions ITC  Cash rebate equivalent to 30% of the 
expenditure in:  projects under the ITF, and projects funded entirely by the companies and conducted by th e designated local 
research institutions In 2011: US$0.80 
In 2012: US$3.40 In 2013: US$3.60 
Services  
Professional Services 
Development Assistance Scheme To provide financial support to 
non-profit-distributing support organizations such as professional, trade and industrial organizations, etc. to carry out projects to enhance the standard and external competitiveness of HKC's professional services Commerce and 
Economic Development Bureau  For each approved pr oject, Government 
provides a grant to cover (maximum) 50% 
of total project expenditure, subject to a maximum of HK$2 million (~US$0.26 million) At end 2011: US$12.49 
At end 2012: US$13.08 At end-September 2013: US$14.18 
Film Development 
Fund (FDF) To help the development of the 
film industry Create Hong Kong 
(CreateHK)  The FDF finances:  (a) film-related projects 
conducive to the long-term development of 
the film industry in Hong Kong, China, and 
(b) small-to-medium budget film 
productions up to 40% of the production 
budget In 2011: US$4.36 
In 2012: US$7.28 
In 2013: US$9.11 
 
Film Guarantee Fund 
Scheme (FGF) To assist local film production 
companies to obtain loans from participating lending institutions (PLIs) to produce films CreateHK  The FGF provides up to 50% guarantee to 
PLIs that offer loan  facilities to film 
production companies in Hong Kong, China for film productions 
 In 2011: US$0  
(no loan guarantee was issued) In 2012: US$0  (no loan guarantee was issued) In 2013: US$0  (no loan guarantee was issued)  
  WT/TPR/S/306 /Rev.1  • Hong Kong, China  
 
- 131 - Sector Objective Agency in 
charge Form of support Total amount 2011-13 
(US$ million) 
Create Smart Initiative 
(CSI) To fund initiatives which are 
conducive to the development 
of creative industries in HKC, 
with the exception of those 
which are separately funded by 
other government sources CreateHK  The CSI provides funding support by way of 
a grant, which may be used for meeting the 
manpower costs, the costs for the 
procurement of equipment, and other direct 
costs specifically required for the conduct of 
the project; or by way of a matching grant 
for the cost of design project collaborated 
between design company and small and 
medium-size enterprise In 2011: US$9.23 
In 2012: US$11.79 
In 2013: US$12.26 
 
 
Design Smart Initiative 
(DSI) To promote integration of 
design into mainstream business and industrial processes as a value-adding activity CreateHK  The DSI consisted of a Design Incubation 
Programme (DIP) and a Design Support Programme (DSP), which covered four funding schemes. Three of the four schemes under the DSP, namely the General Support Scheme (GSS), the Professional Continuing Education Scheme (PCES) and the Design  Research Scheme 
(DRS), migrated to the CSI on 1 June 2011. The last scheme, Design-Business Collaboration Scheme (DBCS), has also been placed under the CSI as from 24 May 2013 DSP 
(amount of funding approved) 
In 2011: US$3.10 In 2012: US$0.13 In 2013: US$0.09  DIP 
(number of incubates admitted) In 2011: 21 In 2012: 22 In 2013: 19   
Source: Information provided  by the HKC authorities. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 132 - 
 
 Table A3. 6 Intellectual property laws and regulations, 2014 
Title Brief description  
Patents Ordinance (Chapter 514)  Makes provisions for patents and related matters. 
Amended in 2008: to implement the compulsory 
licensing scheme under Paragraph 6 of the Doha 
Declaration on the TRIPS Agreement and Public Health 
and the Protocol amending the WTO TRIPS Agreement (WTO document IP/N/1/HKG/17, 7 April 2008). 
Amended in 2009 to extend its application to the 
3 offices set up by the Central People's Government in Hong Kong, China (WTO document IP/N/1/HKG/20, 17 March 2010). 
Amended in 2006, 2010 and 2013, to reflect the latest 
membership position of the Paris Convention for the Protection of Industrial Prop erty (Paris Convention), and 
the WTO (WTO document IP/N /1/HKG/23, 30 April 2014, 
and information from the authorities).
 
Patents (Transitional Arrangements) Rules Provides transitional arrangements for the registration 
of patents in the Register of HKC for patents registered 
under the old Registration of Patents Ordinance, which 
was repealed in 1997, and certain patents registered 
under the United Kingdom Patents Acts 1949 and 1977. 
Patents (General) Rules Prescribes provisions and procedures under the Patents 
Ordinance (Chapter 514). 
Patents (Designation of Patent Offices) Notice Makes designations under Section 8 of the Patents 
Ordinance (Chapter 514). 
Plant varieties  
Plant Varieties Protection Ordinance (Chapter 490) Provides, inter alia , a sui generis  regime for the granting 
and protection of propriet ary rights to persons who 
breed or discover and develop plant varieties 
Amended in 2009 to extend its application to the 
3 offices set up by the Central People's Government in 
Hong Kong, China (WTO document IP/N/1/HKG/20, 
17 March 2010). 
Plant Varieties Protection Regulation (Chapter 490A) Prescribes provisions and procedures under the Plant 
Varieties Protection Ordinance (Chapter 490). 
Trademarks (including trade descriptions)  
Trade Marks Ordinance (Chapter 559)  Makes provisions for the registration of trademarks 
(entry into force in 2003); with the effect of simplifying 
application and examination procedures, reducing substantially the fee for registration of a trademark; broadening the range of marks that can be registered, for example by allowing distinctive sound and smell marks to be registered; simplifying procedures for recording assignments and licences; and allowing multi-class applications.  
Amended in 2006, 2010 and 2013, to reflect the latest 
membership position of the Paris Convention, and the WTO (WTO document IP/N/1/HKG/23, 30 April 2014, and information from the authorities). 
Trade Marks Rules Prescribes provisions and procedures under the Trade 
Marks Ordinance (Chapter 559). 
Amended in 2006 to facilitate enhanced electronic 
services (WTO document IP/N/1/HKG/13, 22 May 2006, 
and information from the authorities). 
Trade Descriptions Ordinance (Chapter 362) (as amended by Intellectual Property (World Trade 
Organization Amendments) Ordinance) Contains provisions prohibiting the use of false trade 
descriptions and the forgery of trademarks in relation to goods. 
Geographical indications  
Trade Marks Ordinance (Chapter 559)  
Trade Descriptions Ordinance (Chapter 362) Enables geographical indications to be registered as 
certification or collective trademarks. In addition, the 
use of a false geographical indication applied to goods in a fashion calculated to mislead consumers may be a criminal offence under the Trade Descriptions Ordinance. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 133 - 
 
  Title Brief description  
Copyright and related rights  
Copyright Ordinance (Chapter 528) Makes prov isions in respect of copyright and related 
rights and for connected purposes. 
Amended in 2007 to (i) maintain the scope of existing 
business end-user criminal liability in relation to 
possession of infringing copies of four categories of works, i.e. software, movies, television dramas, and musical recordings (the possession offence);  
(ii) refine the copyright exemption regime (including the 
introduction of a fair dealing provision for instructional purposes); (iii) introduce new permitted acts (including 
exceptions for producing specially adapted copies of 
copyright works for persons with a print disability, and for efficient transaction of public business in urgent circumstances); (iv) relax the legal prohibitions against use of parallel imported copies of copyright works by business end-users and shorten the period during which dealing in parallel imports would cause criminal liability;  
(v) introduce measures to strengthen enforcement;  
(vi) introduce new rights and liabilities, i.e. rental rights 
for films and underlying works in sound recordings, moral and rental rights for performers, civil liabilities against persons who tamper with rights management information attached to copyright works, against persons who deal in circumvention tools or provide circumvention services, and against persons who circumvent a technological measure used for copyright 
protection; (vii) criminal liabilities against persons 
engaging in commercial dealing of circumvention tools or providing circumvention services on a commercial basis for the circumvention of technological measures, against persons who either make with a view to distributing or distribute infringing copies of newspapers, magazines, periodicals and books on a regular or frequent basis (the "copying and distribution offence" targeting business end-users); and against directors/partners/other persons responsible for the internal management of organizations that have committed the possession offence or the copying and 
distribution offence. 
Amended in 2009 to (i) prescribe the numeric limits 
within which the copying and distribution offence will not apply; and (ii) exclude Intranet distribution (except email and fax transmissions)  from the scope of the 
offence in the interim, pending formulation of the numeric limit applicable to such type of distribution in consultation with the stakeholders. 
Prevention of Copyright Piracy Ordinance  
(Chapter 544) Makes provisions for the prevention of copyright piracy 
using the medium of optical discs (including stampers). 
Sets out a statutory licensing scheme for manufacturers 
of optical discs in Hong Kong, China and makes 
provisions for optical discs manufactured in Hong Kong, 
China to be marked with an assigned manufacturer 
identification code. Also combats bootlegging of 
copyright work by stipulating that the unauthorized 
possession of video recording equipment in certain 
places of public entertainment is an offence. 
Industrial designs  
Registered Designs Ordinance 
(Chapter 522) Establishes a system for the registration of new designs. 
Amended in 2009 to extend its application to the 
3 offices set up by the Central People's Government in 
Hong Kong, China (WTO document IP/N/1/HKG/20, 
17 March 2010). 
Amended in 2006, 2010 and 2013 to reflect the latest 
membership position of the Paris Convention, and the 
WTO (WTO document IP/N/1/HKG/23, 30 April 2014, 
and information from the authorities). WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 134 - 
 
  Title Brief description  
Registered Designs Rules Prescribes provisions and procedures under the 
Registered Designs Ordinance (Chapter 522). 
Copyright Ordinance  
(Chapter 528)  Provides protection for commercially exploited artistic 
works. 
Layout-designs (topographies) of integrated circuits  
Layout-design (Topography) of Integrated Circuits 
Ordinance (Chapter 445) Provides a sui generis  intellectual property regime for 
the protection of layout-designs (topographies) of 
integrated circuits and for legal remedies against 
infringement. 
Amended in 2006, 2010 and 2013 to reflect the latest 
membership position of the Paris Convention, and the 
WTO (WTO document IP/N/1/HKG/23, 30 April 2014, 
and information from the authorities).  
Layout-design (Topography) of Integrated Circuits 
(Designation of Qualifying Countries, Territories or 
Areas) Regulation Designates countries, territories or areas as qualifying 
countries, territories or areas under Section 24 of the 
Layout-design (Topography) of Integrated Circuits 
Ordinance (Chapter 445). 
Protection of undisclosed information  
Non-statutory protection of undisclosed information Protection under the common law on confidentiality. 
Personal Data (Privacy) Ordinance  Requires data users to use information only for the 
purposes for which it was collected, to inform people of 
the purposes for which data is collected and to protect 
such information against unauthorized or accidental 
disclosure. 
Source: WTO notifications, and informat ion provided by the HKC authorities. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 135 - 
 
  Table A3. 7 Enforcement of intellectual property rights, 2010-13  
 2010  2011  2012 2013  
Prosecution and sentencing under the Copyright Ordinance and  
Prevention of Copyri ght Piracy Ordinance  
Persons given prison sentence 316 176 41 24 
% of sentences of:     
<6 months 50.6 57.4 41.5 75 
6-12 months 47.5 37.5 53.6 25 
>12 months 1.9 5.1 4.9 0 
Maximum sentence passed (months) 26 33 24 8 
% of cases with fines of:     
<HK$50,000 98.4 96.4 100 97.7 
HK$50,000-100,000 1.6 1.2 0 2.3 
>HK$100,000 0 2.4 0 0 
Maximum fine (HK$) 100,000 180,000 40,000 80,000 
Total fines (HK$) 1,052,800 1,205,500 536,400 613,700 
Prosecution and sentencing  
under the Trade Descriptions Ordinance  
Persons given prison sentence 91 93 44 28 
% of sentences of:     
<6 months 82.4 82.8 90.9 96.4 
6-12 months 17.6 16.1 9.1 3.6 
>12 months 0 1.1 0 0 
Maximum sentence passed (months) 10 18 10 6 
% of cases with fines of:     
<HK$50,000 97.8 98 98 97.5 
HK$50,000-100,000 2 2 1.2 1.8 
>HK$100,000 0.3 0 0.8 0.7 
Maximum fine (HK$) 120,000 82,000 150,000 112,000 
Total fines (HK$) 4,116,970 2,169,200 2,967,500 3,616,400 
Seizure of illegal merchandise goods     
Pirated optical discs     
Quantity ('000) 890 729 197 311 
Value (HK$ million) 18.1 16.3 4.7 6.1 
Counterfeit goods     
Quantity ('000) 1,521 2,392 3,038 1,920 
Value (HK$ million) 120 147 136 136 
Source: Data provided by  the HKC authorities. WT/TPR/S/306/Rev.1 • Hong Kong, China 
 
- 136 - 
 
  Table A4. 1 Entries of the ITIP services da tabase for the telecommunication sector in 
Hong Kong, China, 2005 and 2011 
Source  Description of the measure Date of the 
measure 
WTO, "Notification 
Pursuant to Article III: 3 of the General Agreement on Trade in Services", Council for Trade in Services  "Pursuant to the Order of the Chie f Executive in Council made on 
4 May 1999, the local FTNS
a market has been progressively liberalized as 
follows: Provisioning of telecommunications services over the existing subscription television licensee’s (i.e. Hong Kong Cable Television 
Limited) hybrid fibre coaxial network has been allowed since January 2000 onwards. Local wireless FTNS market has been liberalized with five local wireless FTNS licences granted in February 2000. FTNS market has been fully liberalized since 1 January 2003"  28/02/2005 
APEC Services 
Trade Access 
Requirements 
(STAR) Database  "Hong Kong, China's telecommunications market has been liberalized and 
there are no foreign ownership restrict ions. The regulatory regime is pro-
competition and pro-consumer"  
APEC Services 
Trade Access Requirements (STAR) Database "There are no restrictions on  foreign ownership of fixed 
telecommunications services, generally no limitations on the number of licences issued, and no requiremen ts regarding network rollout or 
investment"  
APEC Services 
Trade Access 
Requirements 
(STAR) Database  "A Hong Kong, China company vehicle is required in order to obtain some 
telecommunications licences. For example, value-added 
telecommunications services must be provided in the form of a company 
incorporated under the Hong Kong Companies Ordinance or a company 
incorporated outside Hong Kong, which establishes a place of business 
and is registered as such in Hong Kong under the Companies Ordinance"  
WTO "Trade Policy 
Review - Report by the Secretariat - Hong Kong, China" (p. 70, paras. 60, 64) "Hong Kong, China's telecommunications market has been liberalized and 
there are no foreign ownership restrictions  (...) There are no restrictions on foreign ownership of fixed 
telecommunications services, no limitations on the number of licences issued, and no requirements regard ing network rollout or investment" 25/01/2011 
APEC, "2010 
Guide to 
Investment 
Regimes of APEC 
Member 
Economies, 2nd 
Revision, (Hong 
Kong, China)", 
Singapore,  
May 2011. "HKC's telecommunications market is fully liberalized. There is no foreign 
ownership restriction on operating telecommunications services. A 
telecommunications service licence may be granted to or held by any 
company registered in HKC" 
 
 01/05/2011 
a FTNS = Local Fixed Telecommunications Network Services.  
Source: WTO ITIP-Services database. 
__________