WT/TPR/S/241 Trade Policy Review 
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III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) OVERVIEW  
1. As the HKSAR is a duty-free jurisdiction, its customs procedures are relatively simple.  
Almost all trade documents can be lodged electr onically (e-customs), with import declarations 
requiring the services of government-appointed servi ce providers.  An electronic trade facilitation 
measure has been introduced for road cargo cleara nce at the HKSAR's land boundary with China.  
Four products (liquor, tobacco, hy drocarbon oil, and methyl alcohol) remain subject to excise duties, 
while excise duties on wine were phased out in 2007- 08, which has had a significant effect in terms of 
stimulating wine trade and wine-related business in Hong Kong, China. 
2. Hong Kong, China applies import prohibitions an d licensing mainly for reasons of health, 
safety, security, environmental protection, and co mpliance with international obligations.  Import 
licensing procedures remain largely unchanged, a lthough the scope has been extended somewhat for 
public health reasons to cover, inter alia , proprietary Chinese medicines and certain Chinese herbal 
medicines.  
3. Hong Kong, China's food safety requirements have been strengthened, not least in response to 
the melamine incident in China.  A new F ood Safety Bill is under consideration, aimed, inter alia,  at 
improving the traceability of food.  New requireme nts for nutrition labelling and claims were 
introduced in July 2010 to assist consumers in making informed food choices, encourage food 
manufacturers to apply sound nutrition principles in the formulation of foods, and regulate misleading 
or deceptive labels and claims.  
4. Export procedures remain largely unchanged.  Th ere are no export taxes.  Exports restrictions 
and licences are maintained, mainly for environm ental, security, and public health reasons, in 
compliance with international obligations, and to enforce intellectual property rights.  Hong Kong, 
China maintains a control system on exports of te xtiles, to ensure compliance of textiles products 
claiming Hong Kong, China origin.  To support lo cal exporters during the global financial crisis, 
government-backed export credit insurance c over has been increased substantially. 
5. The HKSAR Government remains committed to ma intaining a low and simple tax regime.  
The proposal to introduce a goods and services tax wi th a view to broadening the narrow tax base was 
not pursued because of lack of public support.  Despite its low tax rates, Hong Kong, China has 
various tax incentives, including for intellectual-prope rty-related expenditures.  It has increased tax 
allowances for accelerated depreciation of environm ent-related expenditures.  Non-tax incentives 
have mainly taken the form of grants, loans, or government loan guarantees to support agriculture and 
fisheries, some services, small and medium-sized enterprises (SMEs), and research and development.  The HKSAR Government has pledged to provide a total loan guarantee of up to HK$100 billion, to 
help enterprises to overcome liquidity problems duri ng the global financial crisis.  The Government 
has been keen to stimulate R& D in Hong Kong, China and has launched a new R&D cash grant 
scheme.  Innovation and technology is one of th e six economic areas select ed for promotion and 
development by the HKSAR Government.   
6. The HKSAR Government has introduced a new co mpetition bill into the Legislative Council 
for scrutiny.  The bill, when enacted, will est ablish a cross-sector competition framework.  
Hong Kong, China's government procurem ent regime remains unchanged.   
7. There have been no significant changes to th e framework protecting intellectual property 
rights.  No new laws or regulations have been i ssued on the protection of IPRs, although a number of 
amendments have been made and notified to th e WTO Council for TRIPS.  The amendments are Hong Kong, China WT/TPR/S/241 
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mainly to better reflect international conventions, facilitate e-services, and implement the compulsory 
licensing scheme under Paragraph 6 of the Doha Declaration. 
(2) MEASURES DIRECTLY AFFECTING IMPORTS  
(i) Customs procedures 
8. As Hong Kong, China is a tariff-free jurisdiction,  importers are not required to make a goods 
declaration to the Customs and Excise Department  (C&ED) upon importation of cargo consignments.  
However, an import declaration must be lodged within  14 days after the consignment's arrival, except 
for exempted articles.1  Required shipping documents include a manifest, commercial invoice, bill of 
lading/airway bill, and packing list.2   
9. 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 of 
import cargoes 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 indicat ors.  Unless selected for inspection, sea cargoes may 
be discharged immediately upon arrival of the vessel .  For road cargo, there are currently four land 
boundary control points between Hong Kong, China a nd China.  In 2009, over 21,000 goods vehicles 
passed through these control points each day.  On aver age, clearance time at a customs kiosk takes 
about 30 seconds.  Preshipment inspection is  not required in Hong Kong, China. 
10. Import declarations must be made electroni cally via three government-appointed service 
providers (SPs).  The SPs provide electronic services, including collecting data from traders, authenticating their identity and, where required, tu rning paper submission into electronic form.  The 
fees are subject to price ceilings that the SPs have  committed to in their r espective service agreements 
with the Government. 
11. Import declaration charges have remained uncha nged since the last Review of Hong Kong, 
China (Table III.1).  These charges are to cover th e services of the C&ED, and those of the Census 
and Statistics Department for coll ecting trade declarations and compiling trade statistics, and to 
promote trade, including activities organized by the Hong Kong Trade Development Council.    
12. Since its last Review, Hong Kong, China has implemented a number of trade facilitation 
programmes.  In July 2007, the C&ED launched a pilot programme for the Mutual Recognition of 
Reputable Enterprises to Expedite Customs Clear ance Scheme.  Under this programme, the C&ED 
has exchanged a list with China's Customs of "reput able, self-disciplined" river trade vessel operators 
(i.e. operators that are cooperative, trustworthy, a nd have a good compliance record).  Listed operators 
benefit from faster customs clearance and thei r cargoes are exempted from inspection, unless the 
goods are subject to import/export licensing requirements.   
13. To facilitate customs clearance for road car goes, the C&ED launched the electronic Road 
Cargo System (ROCARS) in May 2010.  With this new system, Customs can receive cargo information before the goods arrive at the land bounda ry with China.  This enables the C&ED to 
perform computer-based risk profiling in advance to determine whether inspection is called for.  As a 
result, cross-boundary trucks, except those selected for inspection, can benefit from smoother customs 
                                                     
 
1 Exempted articles are stipulated in Regulation 3 of the Import and Export (Registration) Regulations.  
They include transhipped or transit goods, and goods imported or exported by the Government.  Customs online 
information.  Viewed at:  http://w ww.customs.gov.hk/en/cargo_clearance /declaration/exempted/ index.html. 
2 Customs online information.  Viewed at:  http ://www.customs.gov.hk/en/cargo_clearance/clearance/ 
index.html. WT/TPR/S/241 Trade Policy Review 
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clearance at the land boundary w ith China.  After a transitional period of 18 months, ROCARS 
submissions will become mandatory in November 20 11.  ROCARS also provides room for the C&ED 
to facilitate transhipment cargoes that involve inte r-modal transfer (e.g. from land to air/sea).  At 
present, transhipment cargoes may be subject to customs inspection at bot h the land boundary with 
China, and the airport/container terminals.  In fu ture, for traders using ROCARS and certain tracking 
devices prescribed by the C&ED, such cargoes will be subject to customs inspection only at either the 
point of exit or entry.  Subject to consultation w ith the industry, Hong Kong, China plans to introduce 
the facilitation measures in October 2010. 
Table III.1 
Import/export declaration charges, 2010 
 Charges (HK dollars) 
Imports  
Food items (per declaration ir respective of the value) 0.50 
Non-food items  
Value up to HK$46,000 0.50 
Each additional HK$1,000 0.25 
Exports/re-exports  
Value of up to HK$46,000 0.50 
Each additional HK$1,000 0.25 
Clothing industry training levy per HK$1,000a 0.30 
a For exports of clothing and footwear items manufactured in Hong  Kong, China, if they are specified in the Schedule to the 
Industrial Training (Clothing Industry) Ordi nance (Chapter 318), the clothing industry training levy is collected in addition t o the 
export declaration charge. 
Source:  Hong Kong Customs and Excise Depa rtment.  Viewed at:  http:// www.customs.gov.hk/en/cargo_clearance/ 
declaration/charges/index.html  
14. The HKSAR Government is considering intr oducing an "authorized economic operator 
(AEO)" framework to facilitate trade.  The C&ED  is implementing an AEO pilot programme, starting 
in June 2010, tentatively for 12 months.  The AEO programme is a voluntary certification scheme 
open to all local companies involved in international supply chain activities.3 
(ii) Tariffs 
15. All applied MFN tariffs are at zero.  Hong Kong, China implemented the HS2007 
nomenclature on 1 January 2007, although it is not a c ontracting party to the International Convention 
on the Harmonised Commodity Description and Codi ng System.  Annual updating is made to respond 
to new requirements of the system. 
16. In 2010, 3,084 tariff lines (43.9% of all tariff lines) were bound at the HS 8-digit level;  
65 lines (0.9% of all tariff lines) we re partially bound (Table III.2).4  The existence of partially bound 
tariffs is due to the yearly updates of HKC's tari ff lines and descriptions, and implementation of the 
reduction commitments under the Information Technology Agreement. 
                                                      
3 "Local companies" include manufacturers, importers, exporters, carriers, term inal operators, freight 
forwarders, warehouse-keepers, etc., irrespec tive of the company size and business model. 
4 Partially bound means that some of the goods covered under one tariff line is bound.  For example, 
HS61101930 corresponds to sweaters, pu llovers, cardigans, vests and similar articles, knitted or crocheted, of 
other goats.  This line is partially bound, because it co vers both bound items (i.e. men's or boys' articles) and 
unbound items (i.e. women's or girls' articles). Hong Kong, China WT/TPR/S/241 
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17. All bound tariffs are at zero rates;  all agricu ltural products (WTO defi nition) and 35.2% of 
non-agricultural goods are bound.  The share of bindings  remains low in some sectors, such as textiles 
and clothing (8.6%), chemical and photographic suppli es (10.2%), and transport equipment (10.8%).  
The authorities are willing to negotiate an increase of bindings under the D oha Development Agenda. 
Table III.2 
Number of lines and share of fully a nd partially bound tariff lines, 2006 and 2010 
 2006  2010 
 Total no. 
of lines Bound  Partially 
bounda  Total no. 
of lines Bound  Partially 
bounda 
Total lines  7,037  3,011 (42.8) 90 (1.3)  7,019  3,084 (43.9) 65 (0.9) 
WTO agriculture 951  951 (100.0) 0 (0.0)  943  943 (100.0) 0 (0.0) 
Animals and products thereof 149  149 (100.0) 0 (0.0)  153  153 (100.0) 0 (0.0) 
Dairy products 26  26 (100.0) 0 (0.0)  26  26 (100.0) 0 (0.0) 
Coffee and tea, cocoa, sugar etc. 168  168 (100.0) 0 (0.0)  170  170 (100.0) 0 (0.0) 
Cut flowers, plants 87  87 (100.0) 0 (0.0)  85  85 (100.0) 0 (0.0) 
Fruit and vegetables 196  196 (100.0) 0 (0.0)  198  198 (100.0) 0 (0.0) 
Grains 18  18 (100.0) 0 (0.0)  18  18 (100.0) 0 (0.0) 
Oil seeds, fats, and oils and their 
products 79  79 (100.0) 0 (0.0)  80  80 (100.0) 0 (0.0) 
Beverages and spirits 57  57 (100.0) 0 (0.0)  58  58 (100.0) 0 (0.0) 
Tobacco 12  12 (100.0) 0 (0.0 )  12  12 (100.0) 0 (0.0) 
Other agricultural products n.e.s. 159  159 (100.0) 0 (0.0)  143  143 (100.0) 0 (0.0) 
WTO non-agriculture (incl. petroleum) 6,086  2,060 (33.8) 90 (1.5)  6,076  2,141 (35.2) 65 (1.1) 
Fish and fishery products 224  224 (100) 0 (0.0)  238  238 (100) 0 (0.0) 
Mineral prod., precious stones & metals 388  188 (48.5) 0 (0.0)  376  189 (50.3) 0 (0.0) 
Metals 639  476 (74.5) 3 (0.5)  631  473 (75.0) 1 (0.2) 
Chemicals and photographic supplies 1,356  135 ( 10.0) 1 (0.1)  1,361  139 (10.2) 1 (0.1) 
Leather, rubber, footwear, and travel 
goods 217 83 (38.2) 1 (0.5)  214 84 (39.3) 1 (0.5) 
Wood, pulp, paper, and furniture 297  279 (93.9) 0 (0.0)  296  278 (93.9) 0 (0.0) 
Textiles and clothing 1,244  106 (8.5) 2 (0.2)  1,230  106 (8.6) 2 (0.2) 
Transport equipment 169  18 (10.7) 0 (0.0)  167  18 (10.8) 0 (0.0) 
Non-electrical machinery 623  165 (26.5) 21 (3.4)  636  174 (27.4) 17 (2.7) 
Electrical machinery 338  107 (31.7) 45 (13.3)  350  137 (39.1) 30 (8.6) 
Non-agriculture articles n.e.s. 570  279 (48.9) 17 (3.0)  549  305 (55.6) 13 (2.4) 
Petroleum 21  0 (0.0) 0 (0.0)  28  0 (0.0) 0 (0.0) 
a  Only part of the HS line is bound. 
Note: Figures in parentheses refer to the percentage share of bound and partially bound rates by product group.  The 2006 tarif f is based 
on HS02 nomenclature, and the 2010 tariff on HS07 nomenclature. 
Source:  WTO Secretariat calculations, based on data provided by the authorities of Hong Kong, China. 
(iii) Internal taxes collected at the border  
(a) Excise duties 
18. Excise duties are levied on liquor, tobacco, hy drocarbon oil, and methyl alcohol, and are 
applied to locally manufactured a nd imported products, if consumed locally (Table AIII.1).  Duties 
are prepaid by the seller and included in the price.  As there is little or no domestic production of these 
goods, the taxes fall mostly on imports.   WT/TPR/S/241 Trade Policy Review 
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19. The HKSAR Government has a small tax base, a nd excise duties account for a small share of 
total tax revenues (2.8% in 2008-09).  Lowering or  removing excise duties could contribute to the 
development of trade by reducing business costs.  For example, excise duties on wine were lowered 
from 80% to 40% in 2007, and removed in 2008.  As  a result, wine merchants established a greater 
presence in Hong Kong, in order to tap the potential ma rket in Asia, particularly in China.  The total 
value of wine imports into Hong Kong, China increased by 80% in 2008-09 and 45% in 2009-10.  At end-June 2010, over 150 wine-related companies ha d established in Hong Kong, China since the duty 
exemption, covering areas such as trading, stor age, and retailing.  In  2009, Hong Kong overtook 
London to become the second largest wine auction centre in the world.
5    
20. In 2009, excise duties on tobacco were increased by 50% for public health reasons.  As an 
additional measure to protect public health, th e duty-free concessions on tobacco products for 
incoming passengers have been redu ced with effect from 1 August 2010. 
(b) First registration tax for vehicles 
21. All motor vehicles for use on local roads are taxed on their first registration.  As none of the 
vehicles and parts are produced in Hong Kong, China,  this tax is levied exclusively on imports.  In 
2009, the first registration tax for vehicles acc ounted for 2.3% of total tax revenues.  
22. The tax is levied on the vehicle's published retail price.  If there is no published price, the tax 
is assessed on the purchase price plus insurance a nd freight fees, together with any brokerage or 
agency fee related to the purchase and importation of  the vehicle.  Tax rates range from 35% to 100% 
for private cars (Table AIII.2).  For environmental reasons, electric vehicles continue to be exempted 
from this tax (until March 2014).  Environment-friendly vehicles are subject to reduced taxes:  from 
1 April 2007, environment-friendly petrol vehicles for private use benefit from a 30% reduction in the 
first registration tax (the tax reduction is subject to  a cap of HK$50,000 per car).  From 1 April 2008, 
the tax on environment-friendly vehicles for comme rcial use has been reduced by 30%, 50%, or 
100%, depending on the class of the vehicle.  
(iv) Customs valuation 
23. As no customs tariffs are levied on imports, there are no general laws, regulations, or 
administrative procedures for valuing goods for tariff purposes.6   
24. The valuation method to assess excise duties is stipulated in Section 26A of the Dutiable 
Commodities Ordinance.7  Under the Ordinance, the value of a good is its "normal price", which is the 
sales price of the good in the open market between a buyer and a seller independent of each other.  
"Normal price" does not include the costs of transpor t and insurance and other related charges.  Where 
a "normal price" cannot be determined, the Customs may fix a value to assess and calculate the excise 
duties.  For imported and domestically produced liquor,  the ex-factory price is the basis for assessing 
the duty.    
                                                      
5 Hong Kong, China has signed agr eements with major wine -producing countries/regions, in France, 
Australia, New Zealand, Italy, Spain, Hungary, and th e United States to strengthen promotional activities in 
wine-related trade, tourism and investment, wine apprecia tion and education, and to combat counterfeit wine.   
6 WTO document G/VAL/N/1/HKG/1, 31 January 1996. 
7 Department of Justice online information.  View ed at:  http://www.legisla tion.gov.hk/blis_pdf.nsf/ 
6799165D2FEE3FA94825755E0033E532/8817B4C4D79B7E01482575EE003B1DE2/$FILE/CAP_109_e_b5.pdf [18/06/10]. Hong Kong, China WT/TPR/S/241 
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(v) Rules of origin  
25. Hong Kong, China implements a certification of orig in system for its exports (section (3)(ii)).  
It also maintains preferential rules of origin  under CEPA, and the Hong Kong, China-New Zealand 
CEP Agreement (Chapter II(4)).  In the case of re-ex ports, the origin initially conferred by the place 
from where the goods originated is maintained.   
(vi) Contingency measures  
26. Hong Kong, China has no laws or regulations  governing anti-dumping, countervailing, or 
safeguard measures8, nor has it ever applied such measures. 
27. However, some of Hong Kong, China's trading partners have adopte d anti-dumping measures 
against its exports.  During the review period, India imposed anti-dumping duties against 
Hong Kong, China exports of compact discs-recordab le (CD-Rs), digital versatile discs-recordable 
(DVD-R and DVD-RW), and flax fabric.  Turkey imposed an anti-dumping measure on tempered glass lids.  The Russian Federation imposed anti-du mping duties on bearings.  Since 1991, Mexico 
has imposed anti-dumping duties on imports of denim (of 85% cotton or more) from Hong Kong, China, unless such imports are supplied by comp anies specifically exempted by the Mexican 
authorities. 
(vii) Import prohibitions, restrictions, and licensing 
(a) Import prohibitions 
28. Hong Kong, China applies import prohibitions an d licensing mainly for reasons of health, 
safety, security, environmental protection, a nd compliance with international obligations.
9  Imports of 
wastes under the Waste Disposal Ordinance (WDO)  from member countries of the EU, the OECD, 
and Liechtenstein have been prohibite d since April 2006 (Table AIII.3).   
(b) Import licensing 
29. Since its last Review, Hong Kong, China's im port licensing regime has remained largely 
unchanged, although in 2008 non-pesticide hazardous chemicals and proprietary Chinese medicines 
and 36 Chinese herbal medicines were added to the list of products subject to import licensing 
(Table AIII.3).10  
30. Dutiable commodities are subject to licensing fo r purposes of collecting excise duties.  Rice 
imports require import/export licences under the Governme nt's Rice Control Scheme, to ensure stable 
supplies of rice and to manage a reserve stock scheme (Chapter IV(2)(ii)). 
31. Hong Kong, China operates its own control syst em for "strategic co mmodities", such as 
dual-use goods.  Transhipment cargoes of "strateg ic commodities" are treated as imports or exports, 
                                                      
8 WTO documents G/ADP/N/1/HKG/1, 24 March 1995;  G/SCM/N/1/HKG/1, 10 March 1995;  and 
G/SG/N/1/HKG/1, 20 March 1995. 
9 WTO document G/LIC/N/3/HKG/13, 18 Septem ber 2009.  The Smokeless Tobacco Products 
(Prohibition) Regulations (Cap. 132BW) prohibits the importation and consigning of smokeless tobacco 
products.  The Weapons Ordinance (Cap. 217) forbid s the possession of certain weapons, such as the 
Chinese-style throwing dart, knuckle-duster, gravity knife, gravity-operated steel baton, and spring-loaded steel 
baton (Customs online information.  Viewed at:  http://www.customs.gov.hk/en /trade_facilitation/prohibited_ 
articles/imports/index.html). 
10 WTO documents G/LIC/N/2/HKG/3, 20 October 2008 and G/LIC/N/2/HKG/4, 18 September 2009. WT/TPR/S/241 Trade Policy Review 
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and are subject to licensing requirements (and may be  subject to physical examination).  Goods in 
transit are normally not subject to licensing.  Howe ver, some "sensitive items" are subject to licensing 
control even if they are in transit through Hong Kong , China.  These items are listed in Schedule 2 to 
the Import and Export (Strategic Commodities) Regulations and include specified ammunition, 
nuclear-related materials, and articles for use rela ting to nuclear, chemical or biological weapons.  
Licensing is applied to prevent Hong Kong, China from being used as a conduit for the proliferation 
of weapons of mass destruction.  
(c) Quantitative restrictions  
32. A quantitative limit is imposed on imports  of some ozone-depleting substances 
(hydrochlorofluorocarbons) for local consumption, to  ensure that the import amount does not exceed 
levels agreed under the Montreal Protocol on Substances that Deplete the Ozone Layer.11  The quota 
is determined annually according to the requirements of the Montreal Protocol.  Licences are issued to 
registered companies on an individual consignment basis.  Part of the quota (normal quotas) is allocated to existing 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 of a certain amount of 
quota is assigned to each individual importer applying fo r free quota;  the ceiling is subject to change 
and review in accordance with the market situation. 
(viii) State trading  
33. Hong Kong, China has notified the WTO that it doe s not operate any state-trading enterprises 
as defined in Article XVII:4(a) of the GATT 1994 and Paragraph 1 of the Understanding on the 
Interpretation of Article XVII.
12 
(ix) Government procurement 
34. The share of government procurement to GDP remains low, ranging from 1.9% in 2006 to 
3.9% in 2009 (Table III.3).  Most products  purchased by government entities are imported.13 
35. Hong Kong, China has been a signatory to th e WTO Agreement on Government Procurement 
(GPA) since 1997 (it had been a signatory under the GATT).  In Hong Kong, China, the GPA applies 
to:  all government bureaus and departments for c ontracts of a value not less than 130,000 SDR for 
goods and specified services, and for contracts of a value not less than 5,000,000 SDR for construction services;  non-government public bodies (including the Housing Authority and Housing 
Department, the Hospital Authority, the Airport Authority, the MTR Corporation Limited), for contracts of a value no less than 400, 000 SDR for goods and specified services
14, and for contracts of 
a value no less than 5,000,000 SDR for construction services. 
36. The basic principles underlying government procurement in the HKSAR are:  public 
accountability,  value for money, transparency, and open and fair competition.15  When evaluating a 
                                                      
11 WTO document G/LIC/N/3/HKG/13, 18 September 2009. 
12 WTO document G/STR/N/13/HKG, 15 March 2010. 
13 Hong Kong, China maintains procurement statistics based on the place of origin for manufactured 
goods supplied under the Government Logistics Departme nt's contracts, according to which at least 81% of 
goods purchased in 2009 were imported. 
14 WTO document GPA/W/309, 27 September 2009.  Specified services are those specified in Annex 4 
of Appendix I in Hong Kong, China's offer. 
15 Financial Services and the Treasury Bureau , "Guide to Procurement".  Viewed at:  
http://www.fstb.gov.hk/tb/eng/procurement/tender04.html [12/04/10]. Hong Kong, China WT/TPR/S/241 
 Page 29 
 
 
tender, the authorities take into account not only co mpetitiveness in price, bu t also compliance with 
users' requirements, reliability of performance, qualita tive superiority, whole-life costs, and after-sales 
support, where applicable.  The authorities believe th ese principles are consistent with the spirit and 
objectives of the WTO GPA, aimed at providing open and fair competition amongst domestic and 
foreign suppliers.   
Table III.3 
Government procurement, 2006-09 
(HK$ million and %)  
 Central government 
entities a Other entities b Total c Ratio to GDP 
Total 2006 17,377.04 10,742.02 28,119.06 1.91 
Goods 3,719.92 3,249.57 6,969.49  
Services (other than construction) 4,393.68 2,478.37 6,872.05  
Construction services 9,263.44 5,014.08 14,277.52  
Total 2007 32,428.09 10,605.95 43,034.04 2.66 
Goods 3,584.05 3,811.35 7,395.40  
Services (other than construction) 3,901.64 1,746.36 5,648.00  
Construction services 24,942.40 5,048.24 29,990.64  
Total 2008 30,350.36 14,726.70 45,077.06 2.69 
Goods 3,862.17 5,527.64 9,389.81  
Services (other than construction) 2,481.04 3,016.12 5,497.16  
Construction services 24,007.15 6,182.94 30,190.09  
Total 2009 46,188.27 18,183.67 64,371.94 3.94 
Goods 3,326.44 3,288.34 6,614.78  
Services (other than construction) 973.79 1,012.06 1,985.85  
Construction services 41,888.04 13,883.27 55,771.31  
a For central government entities, statistic s include only procurement of goods and services of a value exceeding HK$0.5 millio n 
(2006-08)/HK$1.43 million (2009), and construction services of a va lue exceeding HK$1 milli on (2006-08)/HK$4 million 
(2009).   
b For other entities, statistics include only procurement of  goods and services of a value exceeding SDR 0.4 million 
(approx. HK$4.61 million in 2006-07 and HK $4.63 million in 2008-09), and construc tion services of a value exceeding 
SDR 5 million (approx. HK$57.64 million in  2006-07 and HK$57.93 million in 2008-09). 
c There may be a slight discrepancy between the sum of individual items and the totals due to rounding. 
 Note: The statistical thresholds were adju sted upwards in 2009 to align with the fina ncial limits for awarding contracts, which  require 
approval by the relevant tender boards. 
Source: Information provided by the authorities of Hong Kong, China. 
37. Government procurement is governed by the St ores and Procurement Regulations (SPRs) set 
by the Financial Secretary under the Public Finance Ordinance, which are supplemented by Financial 
Circulars issued by the Secretary for Financial Se rvices and the Treasury.  The SPRs are applicable to 
goods purchased or acquired on behalf of the G overnment, excluding land and buildings, as well as 
services performed by contractors for and on beha lf of the Government, including construction 
services. 
38. The Government Logistics Department (GLD) is the central procurement agent for the 
Government of Hong Kong, China.  It is also th e procurement agent for specific goods and equipment 
required by a few non-governmental organizations .  Construction services are procured by the 
concerned works departments, under the supervision of the Development Bureau.  This Bureau gives 
general guidance and technical advice on tendering pr ocedures and contract administration matters in 
respect of works contracts, and maintains a regist er of approved works contractors and a central 
works-contractors performance-report system. WT/TPR/S/241 Trade Policy Review 
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39. Government procurement exceeding HK$1.43 m illion (for goods and general services) and 
HK$4 million (for construction services) are subject to open and competitive tendering procedures.   
However, due to technical and financial capability requirements and magnitude, selective tendering is 
normally adopted for works contracts, whereby cont ractors on the relevant approved list (established 
through open and transparent procedures) are inv ited to submit tenders.  Tenders received from 
contractors/suppliers that are not on the approved lis ts may be considered, provided there is sufficient 
time to complete the qualification procedure.  Limite d tendering (i.e. single or restricted tendering) is 
allowed only under specified, exceptional circumstances.   In 2006-09, 63% of government contracts 
(exceeding certain thresholds) were awarded thro ugh selective tendering and 14% through single or 
restricted tendering (Table III.4).  
Table III.4 
Contracts awarded by government entities  under various tender procedures, 2006-09  
 2006a 2007a 2008a 2009b 
Contracts awarded 1,838 2,030 1,814 441 
Open tender 518 322 326 268 
Selective tender 1,070 1,427 1,208 145 
Restricted tender (includi ng single tender) 250 281 280 28 
Complaints by suppliers, contractors or  consulting firms to the relevant 
tender board, the Office of the Ombuds man, or the Independent Review 
Body on Bid Challenges 3 6 1 3 
a The statistics cover only procurement of goods and services of a value exceeding HK $0.5 million, and cons truction services of  a 
value exceeding HK$1 million.  
b The statistics cover only procurement of goods and services of  a value exceeding HK$1.43 million,  and construction services o f a 
value exceeding HK$4 million. 
Note: The statistical thresholds were adjust ed upwards in 2009 to align with the fina ncial limits for awarding contracts that r equire 
approval by the relevant tender boards. 
Source:  Information provided by the authorities of Hong Kong, China. 
40. According to the authorities, procurement proce dures and practices are clear and transparent.  
Information on procurement is published in the Government Gazette , newspapers, and homepages 
maintained by relevant govern ment departments and bureaus. 
41. The Financial Secretary has appointed several tender boards to decide on tenders.  The 
Central Tender Board, chaired by the Permanent Secretary for Financial Services and the Treasury, 
deals with high value tenders that exceed the fina ncial limits specified for the subsidiary tender 
boards.  The Government Logistics Department Tender Board deals with tenders not exceeding HK$10 million, except for those tenders dealt with by  other subsidiary boards;  the Public Works 
Tender Board deals with tenders for works and re lated contracts not exceeding HK$30 million;  and 
the Marine Department Tender Board consider s marine tenders not exceeding HK$5 million.  
42. The HKSAR government procurement system ha s an independent scrutiny mechanism to 
ensure accountability.  This incl udes the Audit Commission headed by the Director of Audit, the 
Office of Ombudsman, the Independent Commission Ag ainst Corruption, and the Legislative Council.  
In addition, an independent Review Body on Bid Challenges deals with complaints regarding alleged 
breaches of the GPA.  Aggrieved suppliers or cont ractors may lodge a complaint with the procuring 
department, the relevant tender board, the Review Body on Bid Challenges, and/or the Office of the 
Ombudsman.  Suppliers or contractors making an  allegation of corruption may approach the 
Independent Commission Against Corruption. Hong Kong, China WT/TPR/S/241 
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(x) Standards and other technical requirements 
(a) Standards and technical regulations 
43. Hong Kong, China does not have an official standards authority or standardization body.  The 
Innovation and Technology Commission (ITC) of the HKSAR Government is the enquiry point under 
the WTO TBT Agreement.  The ITC participates in  international and regional activities related to 
standards and conformity assessment, including those of ISO and the PASC (Pacific Area Standards 
Congress).  
44. Standards, including mandatory ones (i.e. technical regulations), are imposed for safety, 
health, and environmental reasons and, according to the authorities, are based mainly on international 
standards and/or prevailing overseas standards.  Th ere were no changes to the procedure for adopting 
technical regulations and conformity assessment procedures during the review period.  Generally, 
Hong Kong, China's notifications to the WTO allow about 60 days for comments.  
45. A number of amendments have been made to laws/regulations on standards or certification 
procedures/requirements since 2006 (Table AIII. 4).  Between 2006 and 2010, Hong Kong, China 
submitted 16 notifications to the TBT Committee (up to  15 April 2010).  These notifications concern, 
inter alia,  labelling requirements for food, and mandatory  energy efficiency labelling requirements 
(on room air conditioners, refrigerating appliances, compact fluorescent lamps, washing machines, and dehumidifiers).  Concerns we re raised by the EU in the TBT Committee on Hong Kong, China's 
technical regulations regarding the proposed mandatory energy efficiency labelling scheme.
16  T h e  
EU has claimed that the scheme would require EU manufacturers to have their products tested in an 
external laboratory accredited by the HKSAR authoriti es, or by a facility in a country with which 
Hong Kong, China had concluded an MRA.  The EU therefore considered this measure to be more 
trade restrictive than necessary to achieve its target .  According to the HKSAR authorities, the scheme 
does not require mandatory third-party certification for test results of the products concerned, and the 
testing standards adopted are international standards.  
46. The Air Pollution Control (Volatile Organic Compounds) Regulation, which entered into 
force in 2007, allows the import of regulated VOC-containing products for local sale or use only if 
their VOC contents meet the prescribed standards (Table AIII.4).   
(b) Testing and certification  
47. The Hong Kong Accreditation Service (HKA S), under the ITC, provides accreditation 
services to laboratories, certification bodies,  and inspection bodies.  The HKAS operates 
three accreditation schemes:  the Hong Kong Labor atory Accreditation Scheme (HOKLAS), the 
Hong Kong Certification Body Accreditation Scheme  (HKCAS), and the Hong Kong Inspection Body 
Accreditation Scheme (HKIAS).  The HKAS is a me mber of the International Accreditation Forum 
(IAF), the International Laboratory Accreditati on Cooperation (ILAC), the Pacific Accreditation 
Cooperation (PAC), and the Asia P acific Laboratory Accreditation Coope ration (APLAC).  It is also a 
signatory to the multilateral mutual recognition a rrangements of these agreements;  up to April 2010, 
HKAS had concluded 71 MRAs with 56 economies.17  The testing and certification services industry 
is one of the six industries where the Government  believes there is great potential for development 
(Chapter IV(5)(vi)). 
                                                      
16 WTO document G/TBT/M/42, 6 August 2007. 
17 ITC online information.  Viewed at:  http://w ww.itc.gov.hk/en/quality/hkas/about.htm [13/04/10]. WT/TPR/S/241 Trade Policy Review 
Page 32 
 
 
48. At the end of 2009, there were 167 laboratories, 20 inspection bodies, and 15 certification 
bodies accredited by HKAS.  These institutions must  undergo on-site assessments before they are 
accredited.  There are statutory requirements for testing and certification by accredited bodies.18  
Generally, mandatory product certification is not required. 
(c) Sanitary and phytosanitary regulations 
49. No major changes were made in the institutional framework governing the establishment and 
implementation of SPS measures during the review pe riod.  Hong Kong, China's enquiry point under 
the SPS Agreement is the Trade and Industry Depart ment.  Since its last Review, Hong Kong, China 
has made 16 SPS notifications (up to 22 April 20 10), mainly related to food safety regulations 
(Table III.5).  No specific trade concerns have b een raised by other Members vis-à-vis Hong Kong, 
China's SPS measures. 
50. Hong Kong, China participates in OIE mee tings, and meetings of the Commission on 
Phytosanitary Measures of IPPC under the auspices of China.  Hong Kong, China also participates in 
meetings of the Codex Alimentarius Commission and its committees as part of the China delegation.   
Table III.5 
Food standards and notifications, 2006-10 
Notifications Food-related legislation Objective and rationale 
G/SPS/N/HKG/33, 
26 March 2010 Food Safety Bill To strengthen legislative control measures on food safety.  Proposed 
new control measures include a registration system for food 
importers and distributors, and requirement for food traders to 
maintain proper transaction r ecords to enhance food traceability  
Rationale:  food safety 
G/SPS/N/HKG/23, 
13 September 2006 Food Business (Amendment) 
Regulation 2006 To require chilled beef, mutton or  pork to be pre-packaged and 
properly labelled if sold in fresh provision shops/market stalls which 
also sell fresh beef, mutton or pork 
Rationale:  food safety 
G/SPS/N/HKG/32, 
1 February 2010 Genetically Modified Organisms 
(Control of Release) Bill - Draft 
Genetically Modified Organisms 
(Documentation for Import and 
Export) Regulation To protect against the potential adverse biosafety effects of 
genetically modified organisms on the conservation and sustainable 
use of biological diversity.  In line with the Cartagena Protocol on 
Biosafety to the Convention on Biological Diversity 
G/SPS/N/HKG/31, 12 January 2009 Proposed legislation for the 
implementation of the Biosafety 
Protocol To provide a legislative framework to regulate the release of living 
modified organisms (LMOs) into th e environment.  In line with 
IPPC standards 
G/SPS/N/HKG/29, 
28 October 2008   Public Health and Municipal 
Services (Amendment) Bill 2008 To amend the Public Health and Municipal Services Ordinance to 
empower the Authority to make orders administratively to prohibit 
the import and supply of food and order a food recall for the 
protection of public health 
Rationale:  food safety and protecti on of humans from animal/plant 
pest or disease 
G/SPS/N/HKG/29/Add.1, 8 January 2009 Public Health and Municipal 
Services (Amendment) Bill 2008 To notify that the final date fo r comments with regard to WTO 
Notification G/SPS/N/HKG/29 on "Public Health and Municipal 
Services (Amendment) Bill 2008" has been extended until 
28 January 2009 
G/SPS/N/HKG/26, 
20 November 2007 Colouring Matter in Food 
Regulations (Chapter 132H) To amend the Colouring Matter in Food Regulations by removing 
Red 2G (INS 128), also known as CI Food Red 10 or azogeranine, 
from the list of permitted food colourings 
Rationale:  food safety 
G/SPS/N/HKG/26/Add.1, 
3 January 2008 Colouring Matter in Food 
Regulations (Chapter 132H) To notify that the final date for co mments with regard  to notification 
G/SPS/N/HKG/26 on "Proposed Amendments to the Colouring 
Matter in Food Regulations" has b een extended to 20 February 2008 
Table III.5 (cont'd) 
                                                      
18 Hong Kong Council for Testing and Certification (2010). Hong Kong, China WT/TPR/S/241 
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Notifications Food-related legislation Objective and rationale 
G/SPS/N/HKG/26/Add.2, 
11 November 2008 Colouring Matter in Food 
Regulations (Chapter 132H) To notify that the proposed amendment in the Colouring Matter in 
Food (Amendment) Regulation 2008 (the Amendment Regulation) 
in document G/SPS/N/HKG/26 will enter into force on 
1 December 2008 
G/SPS/N/HKG/34, 16 April 2010 Sweeteners in Food Regulations 
(Chapter 132U) To add (a) neotame and (b) steviol glycosides, which have been 
determined to be safe by the Joint Food and Agriculture 
Organisation/World Health Orga nisation Expert Committee on 
Food Additives (JECFA) to the list of the permitted sweeteners specified in the Schedule to the Sweeteners in Food Regulations 
Rationale :  food safety and to align the permitted sweeteners in 
Food Regulations with the latest  international and scientific 
developments 
G/SPS/N/HKG/28, 26 September 2008 Harmful Substances in Food 
Regulations (Chapter 132AF) To amend the harmful substances  in Food Regulations by adding 
melamine to the First Schedule of the Regulations 
Rationale:  food safety 
G/SPS/N/HKG/25, 
2 May 2007 Preservatives in Food 
Regulations (Cap. 132BD) To amend the Preservatives in Food Regulations by: 
(a) amendment of the definitions of  preservatives and antioxidants; 
(b) incorporation of those preservatives and antioxidants, as well as 
their permitted levels of use, that are listed in the General 
Standard on Food Additives (GSFA) into the Regulations; 
(c) combining Part I and Part II of the First Schedule to the 
Regulations;  and  
(d) introduction of a food category system 
Rationale:  food safety 
G/SPS/N/HKG/25/Add.1, 
28 May 2008 Preservatives in Food 
Regulations (Chapter 132BD) To notify that the proposed amendments in the Preservatives in 
Food (Amendment) Regulation 2008 (the Amendment Regulation) 
will enter into force on 1 July 2008.  The proposed amendments will bring about an increase of 11 new types of permitted preservatives 
or antioxidants.  The only case of  discontinuation is with propyl 
para-hydroxybenzoate, as the Codex Committee on Food Additives 
recommended the withdrawal of th e relevant standard, following the 
identification of significant toxicological concern.  A two-year transitional arrangement is provided to the effect that during the period 1 July 2008 to 30 June 2010, it is legally in order for any single food item to comply with e ither the standards set out in the 
Amendment Regulation or the existing Cap. 132BD, as before any 
amendment is made 
G/SPS/N/HKG/24, 
1 May 2007 Imported Game, Meat and 
Poultry Regulations (Chapter 
132AK) To amend the Imported Game, Meat and Poultry Regulations by: 
(a) requiring import permit/licence and health certificate for poultry 
eggs imported for huma n consumption;  and 
(b) requiring poultry egg importers to register with FEHD 
Rationale:  food safety and protecti on of humans from animal/plant 
pest or disease 
G/SPS/N/HKG/24/Rev.1, 30 October 2007 Imported Game, Meat and 
Poultry Regulations (Chapter 
132AK) To amend the Imported Game, Meat and Poultry Regulations by: 
(a) requiring import permit/licence and health certificate for poultry 
eggs (including shell eggs and egg yolks, but excluding egg or 
egg yolk in liquid or powder form) imported for human consumption;  and 
(b) requiring importers and distri butors of game, meat, poultry and 
poultry eggs (including shell eggs  and egg yolks, but excluding 
egg or egg yolk in liquid or pow der form) to register with the 
FEHD before importing or distributing such food 
Rationale:  food safety and protecti on of humans from animal/plant 
pest or disease 
Table III.5 (cont'd) WT/TPR/S/241 Trade Policy Review 
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Notifications Food-related legislation Objective and rationale 
G/SPS/N/HKG/27, 
20 November 2007 Consultation document on 
proposed regulatory framework 
for Pesticide Residues in Food To invite views on the proposal to introduce new subsidiary 
legislation under the Public H ealth and Municipal Services 
Ordinance (Chapter 132, Laws of Hong Kong, China) to regulate pesticide residues in food.  The proposed regulatory framework is 
summarized as follows: 
(1) to adopt the definition of "p esticide" and other related terms 
from the Codex Alimentarius Commission (Codex);  
(2) to adopt a "positive list" a pproach to clearly specify the 
maximum residue limits (MRLs) and extraneous maximum 
residue limits (EMRLs) of pes ticides allowed in food in the 
legislation; 
(3) to adopt MRLs/EMRLs devel oped by Codex as the backbone; 
(4) to develop a "default value" , in excess of which pesticide 
residues without specified MRLs are unacceptable, and a list of 
"exempted substances"; 
(5) to adopt Codex classi fication of foods;  and 
(6) to implement the next piece of subsidiary legislation with a 
two-year grace period 
Rationale:  food safety 
Source:  WTO notifications. 
Food safety and inspection   
51. The Food and Health Bureau, and the Food and Environmental Hygiene Department (FEHD) 
(with its Centre for Food Safety) are responsible for food safety.  Food safety is regulated under the 
Public Health and Municipal Se rvices Ordinance (Chapter 132) and its subsidiary regulations.19  Main 
provisions of the law cover general protection for c onsumers, offences in connection with the sale of 
unfit/adulterated food, composition an d labelling of food, food hygiene, seizure and destruction of 
unfit food, and the authorities' powers to prohib it the import/supply and recall of food under certain 
conditions.  The Centre for Food Safety operates a Food Surveillance Programme, to take samples of 
vegetables and fruits at import, wholesale, and retail levels for testing.  The Centre has conducted a 
public consultation on a proposed regulatory fra mework on pesticide residues in food, based on 
recommendations by the Codex Alimentarius , and is now refining the framework.  
52. Sanitary controls on imported food are imposed solely on public health grounds and on the 
basis of risk assessment.  Accord ing to the authorities, risk assessment is conducted using best 
available scientific evidence, and to provide inpu t to support risk-management decisions.  Food 
importers are responsible for ensuring that food ite ms comply with HKSAR legislation.  They are 
encouraged to obtain official health certifi cates issued by the competent overseas authorities 
certifying that the food products concerned are fit for human consumption.  
53. Currently, certain high-risk or perishable im ported food items (milk, milk beverages, frozen 
confections, game, chilled meat, and poultry) are govern ed by subsidiary legislation to the Public 
Health and Municipal Services Ordinance, which requires, inter alia , that imports be accompanied by 
a health certificate from a competent authority in th e country of origin.  Imports of these food items 
also require prior approval from the FEHD (Table III.6).   
                                                      
19 For relevant regulations, please see Centre for Food Safety online information.  Viewed at: 
http://www.cfs.gov.hk/english/food_ leg/food_leg.html [21/04/10]. Hong Kong, China WT/TPR/S/241 
 Page 35 
 
 
Table III.6 
Statutory import control measures for certain food, animals, and plants, 2010  
Commodity Relevant legislation Food and 
Environmental Hygiene Department as the 
authority Agriculture, Fisheries 
and Conservation Department as the 
authority 
Meat & poultry 
(including pork) Import and Export Ordinance (Cap . 60) Import licence and written 
permissiona  
Game Imported Game, Meat and Poultry Regulations 
(Cap. 132AK) Written permissionb  
Milk and milk products Milk Regulation (Cap. 132AQ) Written permission  
Frozen confections Frozen Confections Re gulation (Cap. 132AC) Written permission  
Live animals Public Health (A nimals and Birds) Regulations 
(Cap. 139A)  Special permit 
Plant Plant (Importation and Pest Control) Ordinance 
(Cap. 207)  Import licence 
Endangered speciesc Protection of Endangered Species of Animals 
and Plants Ordinance (Cap. 586)  Import licence 
Plant pests & soil Plant (Importation and Pest Control) Ordinance 
(Cap. 207)  Authorization 
a Written permission is required, as an administrative arrangeme nt, for imports of chilled meat & poultry (including pork) in v iew 
of their higher health risk.  This does not cover frozen meat and poultry (including pork). 
b Written permission is required for both chilled and frozen ga me under the Imported Game, M eat and Poultry Regulations 
(Cap. 132AK). 
c For the import of animals and plants liste d in the Convention on International Trade in Endangered Species of Wild Fauna and 
Flora (CITES) Appendix I (including their readily recognizable parts and derivatives, and medici nes containing or claiming to 
contain ingredients made from these enda ngered species), and live endangered species of wild origin in CITES Appendix II.  
Import licences are not required for the import of CITES Appendix II species other than live specimens of wild origin or CITES 
Appendix III species, subject to the production of a valid  CITES export permit or certificate of origin. 
Source: Information provided by the authorities. 
Food Safety Bill   
54. The Food and Health Bureau has notified to th e WTO that Hong Kong, China is preparing a 
new Food Safety Bill (Table III.5).20  The Bill was introduced into the Legislative Council on 
2 June 2010.  The main differenc es between the pending Food Safety Bill and the Public Health and 
Municipal Services Ordinance are, first, the de finition of "food".  The Bill proposes to expressly 
stipulate that live aquatic products and ice intende d for human consumption be considered as "food".  
Second, the Bill requires food importers and distributo rs to register with the Director of Food and 
Environmental Hygiene (DFEH).  The registrati on scheme will assist DFEH in identifying and 
contacting food traders in the event of a food incide nt.  Food retailers whose principal business is not 
the distribution or supply of food to other retaile rs or catering establishments are not required to 
register.  Third, the Bill requires any person who, in the course of business, imports, acquires or supplies by wholesale food in Hong Kong, China, to  keep transaction records of the business from 
which the food was obtained and the business to wh ich it was supplied, to enhance food traceability.  
Records must be kept for three months for live aquatic products and food with a shelf-life of 
three months or less;  otherwise records must be kept for 24 months.  
55. The Bill empowers the Secretary for Food and H ealth to make regulations and expand food 
safety controls on imported food with a high potential of health risk.  The Government also proposes to extend the current import control on game, meat, a nd poultry, to poultry eggs;  and to require that 
each import consignment of cultured live or unprocessed  aquatic products be accompanied by a health 
certificate issued by the health authorities in the place of origin. 
                                                     
 
20 WTO document G/SPS/N/HKG/33, 26 March 2010. WT/TPR/S/241 Trade Policy Review 
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Animal Health and Plant Health Regulation   
56. Imports of animals and plants are subject to strict inspection at the border to prevent the 
introduction and dissemination of animal diseases and pl ant pests.  Imports of animals are regulated 
under the Public Health (Animals and Birds) Ordinance Cap. 139, and the Rabies Ordinance 
Cap. 421.  Currently, imports of birds, poultry, and ostriches from countries/regions affected by avian flu are temporarily prohibited.   
57. Imports of plants are regulated under the Plan t (Importation and Pest Control) Ordinance 
(Cap. 207), administered by the Agriculture, Fish eries and Conservation Department (AFCD).  Its 
principles and procedures are based on the Plant Pr otection Agreement for the Asia Pacific Region, 
and the International Plant Protection Convention (IPPC ).  A Plant Import Licence (PIL) issued by the 
AFCD, and a phytosanitary certificate are generally required to import plants.
21  
Medicines   
58. In 2009, a number of incidents concerning pha rmaceutical products (including mislabelling, 
contamination in the manufacturing process, or supply of unregistered pharmaceutical products) 
caused public concern regarding the safety of drugs.22  A Review Committee on the Regulation of 
Pharmaceutical Products was estab lished in March 2009, to conduct a comprehensive review of the 
regime for the regulation of pharmaceutical products.  Currently, "western" medicines and their trade 
are regulated under the Pharmacy and Poisons Ordina nce (Chapter 138) and its regulations.  Imports 
of pharmaceutical products are inspected by the Customs and Excise Department (C&ED) at their 
entry port.  Chinese medicines are regulated unde r the Chinese Medicine Ordinance (Cap. 549). The 
Chinese Medicine Council of Hong Kong, set up un der this Ordinance, regulates Chinese medicine 
practitioners and Chinese medicine. 
(d) Labelling requirements for food and nutrition 
59. A new nutrition labelling scheme was introduced to assist consumers in making informed 
food choices, encourage food manufacturers to apply sound nutrition principles in the formulation of 
foods, and regulate misleading or deceptive labels and claims.  The Food and Drugs (Composition and 
Labelling) (Amendment:  Requirements for Nutritio n Labelling and Nutrition Claim) Regulation 2008 
entered into force on 1 July 2010.  The amen dment covers both nutrition labelling and nutrition 
claims, including nutrient content claims, nutrient comparative claims, and nutrient function claims.23  
Information on any nutrient for which a claim is made must be included on the nutrition label.24  It 
appears that this new regulation has been burdensome for some businesses.  
60. Food labelling requirements are specified in Schedule 3 of the Food and Drugs (Composition 
and Labelling) Regulations (Cap. 132W).  Manufact urers or packers of prepackaged food must 
                                                      
21 A PIL or a phytosanitary certificate is not requir ed for the imports of cut flowers;  fruits and 
vegetables for consumption;  grains, pulses, seeds, and sp ices for human or animal consumption or for industrial 
use;  timber and timber products including rattan and bamboo;  dried tobacco and manufactured articles 
incorporating dried leaves;  and plants produced an d imported from any place in China outside Hong Kong. 
22 Food and Health Bureau (2009). 
23 A nutrient content claim describes the energy value or the level of a nutrient contained in a food, e.g. 
'High calcium';  'Low fat';  'Sugar-free'.  A nutrient co mparative claim compares the energy value or the nutrient 
levels of two or more different versions of the same f ood or similar food, e.g. 'Reduced fat – 25% less than the 
regular product of the same brand'.  A nutrient function claim describes the physiological role of a nutrient in 
growth, development, and normal functions of the body, e.g. "Calcium aids in the development of strong bones 
and teeth".   
24 Items exempt from the nutrition labelling requirements are set out in Schedule 6 of Cap. 132W. Hong Kong, China WT/TPR/S/241 
 Page 37 
 
 
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.25  Regular inspections 
are carried out and random food samples are tested to verify the labelled content.  Violations are liable 
to a maximum fine of HK$50,000 and 6 months imprisonment.   
61. In September 2006, Hong Kong, China notif ied the SPS Committee that for chilled beef, 
mutton or pork, labels must indicate the name a nd address of the slaughterhouse and the slaughter 
date.26   
62. GM food labelling is voluntary.  In accordance with  the Public Health and Municipal Services 
Ordinance (Cap. 132), and the Food and Drugs (C omposition and Labelling) Re gulations, the Centre 
for Food Safety under the Food and Environmen tal Hygiene Department  issued Guidelines on 
Voluntary Labelling of Genetically Modified Food in July 2006.  The Guidelines follow a 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".  Nega tive labelling, i.e. "GM free" or similar labels, 
however, is not recommended, as the authorities consid er this might be misleading to consumers.   
(3) MEASURES DIRECTLY AFFECTING EXPORTS  
(i) Customs procedures 
63. An export declaration must be lodged electroni cally with the Customs and Excise Department 
within 14 days of the export of a consignment, except for exempted articles.27  Declarations are also 
required for re-exports.  In gene ral, required shipping documents include the manifest, commercial 
invoice, bill of lading/airway bill, packing list, an d other documents, such as  removal permits (i.e.  
licence/permit/certificate/authorization require d by law upon exportation of controlled items).28  
Exports are not subject to any customs actions unl ess they are selected for customs verification and 
inspection through risk profiling.  Cargo detained for further checks, which is a very small percentage 
of the volume of consignments, is ge nerally released within half an hour. 
(ii) Certificate of origin  
64. The Trade and Industry Department (TID) administ ers a certification of origin (CO) system, 
based on the Export (Certificates of Origin) Re gulations of the Import and Export Ordinance 
(Cap. 60), and the Protection of Non-Government Certificates of Origin Ordinance (Cap. 324).  The CO system is to facilitate Hong Kong, China's exports  to foreign markets.  In particular, it enables 
HKSAR products to benefit from tariff preferenc es under preferential agreements (Chapter II(4)).
29  
65. Hong Kong, China's certification of origin system follows internationally accepted practices, 
including the provisions contained in the WTO Agre ement on Rules of Origin.  Goods are accepted to 
be of Hong Kong origin if they are natural produc ts of the HKSAR, or if the manufacturing process 
that has changed permanently and substantially the sh ape, nature, form or utility of the materials used 
                                                      
25 See Sections 2(4E), 2(5) – 2(7) of Schedule 3 of Cap. 132W. 
26 WTO document G/SPS/N/HKG/23, 13 September 2006. 
27 Exempted articles are stipulated in regulation 3 of  the Import and Export (Registration) Regulations.   
28 Customs online information.  Viewed at:   http://www.customs.gov.hk/en/cargo_clearance/clearance/ 
index.html. 
29 COs may also be issued by five government-approved certification organizations:  the Hong Kong 
General Chamber of Commerce, Federation of Hong Kong Industries, the Indian Chamber of Commerce Hong 
Kong, the Chinese Manufacturers' Asso ciation of Hong Kong, and the Chin ese General Chamber of Commerce.  
The TID ensures that these organizations adopt th e same practices and follo w the same procedures. WT/TPR/S/241 Trade Policy Review 
Page 38 
 
 
in manufacture; and they are shipped directly.30  Only registered manufacturers with verified 
manufacturing capacity to perform the origin -conferring processes may apply for COs.   
66. In general, origin marking or labelling is not  mandatory in Hong Kong, China, although some 
wrist-watches of registered "Hong Kong Brand" must bear H ong Kong origin marking (e.g. 
"Manufactured in Hong Kong", "Made in  Hong Kong" or "Hong Kong", etc.)31 if exported to China 
under CEPA preferences.   
(iii) Export charges and levies, and rebates  
67. Hong Kong, China applies export declaration char ges (as for imports).  The Clothing Industry 
Training Levy, collected on exports of clothing, is  used for training courses for the clothing industry, 
the establishment and maintenance of industrial trai ning centres, and placement assistance for persons 
completing training courses by the Clothing Industry Training Authority (Table III.1). 
68. Hong Kong, China does not levy any export-related duties or taxes. 
69. When goods subject to excise duties are expor ted, excise duties are rebated upon written 
consent of the Commissioner of the Customs and Excise Department.32  The excise duty rebated must 
in no case exceed the amount of duty paid on the goods.  
(iv) Export prohibitions, licensing, and restrictions 
(a) Export prohibitions   
70. Hong Kong, China applies trade sanctions  imposed by the UN Security Council.33  To fulfil 
the international obligations, exports of rough diamon ds to non-participants of the Kimberley Process, 
and exports of ozone-depleting s ubstances to non-parties to the Montreal Protocol are banned.  
(b) Export licensing and restrictions  
71. Hong Kong, China has not made any significant ch anges to its export licensing regime since 
its last Review.  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, enforcing intellectual 
property rights, and fulfilling international obligations  (Table AIII.5).  The export licence requirement 
on dutiable commodities is aimed at preventing revenue fraud.  
                                                      
30 TID online information.  Viewed at:  https://www. tid.gov.hk/english/aboutus/pu blications/registcert/ 
registcert03.html. 
31 TID online information.  Viewed at:  http://www. tid.gov.hk/english/aboutus/tradecircular/coc/2005/ 
coc112005.html. 
32 Excise duties are also refunded on:  imported goods that do not correspond to the description of the 
contract of sale or are damaged in transit and therefor e destroyed in the HKSAR or returned to the overseas 
suppliers;  goods imported for consular use;  samples drawn for analysis by the Government;  reasonable 
quantity of fuel in the fuel tank of any "pleasure vesse l" (yacht) whose net registered weight is more than 
60 tonnes, to reach an identified port  outside the HKSAR;  and light diesel oil used in franchized buses and 
support vehicles (Customs and Excise Department online information, "Granting of a Refund".  Viewed at:   
http://www.customs.gov.hk/en/trade_fac ilitation/dutiable/payment/index.html). 
33 UN Security Council Resolutions adopted by China extend to Hong Kong, China. Hong Kong, China WT/TPR/S/241 
 Page 39 
 
 
(c) Export controls on textiles and clothing  
72. Hong Kong, China maintains a textiles control syst em to ensure origin compliance of textiles 
products claiming HKSAR origin so as to strengthen the confidence of its trading partners.  Under the 
Import and Export Ordinance and its subsidiary regulations, all impor ts and exports of textiles and 
clothing products, unless exempted34, require import or export licences, or notifications.   
73. Following the termination of the Agreement on Textiles and Clothing on 1 January 2005 and 
the elimination of textile quotas, Hong Kong, China has classified the export markets for textiles and 
clothing products into "sensitive" and "non-sensitive"  markets.  "Sensitive" markets are China for 
both imports and exports, the United States for exports , and the European Union for exports (between 
15 March 2006 and 28 June 2009).  A ll 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 th e Textiles Trade Registration Scheme (TTRS).  For 
non-sensitive markets, imports/exports may be covere d by a consignment-specific export licence, or a 
comprehensive licence that is valid for one  year and covers multiple shipments.  
74. In addition, all cut-and-sewn garments des tined for the United States (and the EU between 
15 March 2006 and 28 June 2009) are subject to a production notification (PN) requirement.  Under 
the Import and Export Ordinance and its subsidiary legislation, manufacturers are required to lodge a 
PN with the Trade and Industry Department on the day of production commencement or within 
three working days before the day production commen ces.  The PN requirement is intended to ensure 
that the origin-conferring process for the manuf acture of these garments has taken place in 
Hong Kong, China. 
(v) Trade promotion and export credit insurance 
75. Hong Kong, China notified the WTO that it di d not maintain or introduce any export 
subsidies on agricultural products from 2006 to 2009.35  Its 200736 and 200937 new and full subsidy 
notifications did not report any export subsidies.38  
76. Trade promotion is the responsibility of  the Hong Kong Trade Development Council 
(HKTDC).  Its major objectives are to diversify markets for the HKSAR's exports, and to promote 
Hong Kong, China's role as an international bus iness centre.  The HKTDC promotes exports through, 
inter alia , providing information on industries and servi ces, and organizing trade fairs and overseas 
business missions.  The HKTDC has focused partic ularly on promoting exports by SMEs, through 
various trade promotion activities, advisory services, and research publications.39  As a response to the 
global economic crisis, the HKTDC launched the SME Assistance Package (HK$120 million) in 
                                                      
34 Exempted items are (i) woven or knitted fabric swatches and sample yarn imported by air and not 
exceeding 0.8 m2 in size in the case of fabric swatches and 1.2 kg  in weight in respect of each type of yarn;  
(ii) textiles articles of reasonable qu antities that are imported or exported by an individual for his personal use or 
as a bona fide gift to another individual;  and (iii) textile s articles of reasonable quantities to be used by the crew 
or passengers of a vessel, aircraft, or vehicle on which the articles are carried. 
35 WTO documents G/AG/N/HKG/27, 21 January 2010;  G/AG/N/HKG/25, 23 January 2009;  
G/AG/N/HKG/23, 11 January 2008;  and G/AG/N/HKG/21, 9 February 2007. 
36 WTO document G/SCM/N/155/HKG, 19 December 2007. 
37 WTO document G/SCM/N/186/HKG, 5 October 2009. 
38 Hong Kong, China's 2007 and 2009 new and full subsidy notifications reported three programmes:  
the "Fisheries Development Loan Fund", "Fish Marketing Organization Loan Fund", and "Kadoorie 
Agricultural Aid Loan Fund". 
39 HKTDC online information.  Viewed at:  h ttp://www.hktdc.com/info/mi/a/sbr/en/1X0661V2/1/ 
Small-Business-Resources/SME-Finance.htm [30/04/10]. WT/TPR/S/241 Trade Policy Review 
Page 40 
 
 
November 2008 to help SMEs with their marketing efforts at the fairs it organized.40  M o r e  t h a n  
224,700 overseas buyers, mostly from emerging mark ets, attended trade fairs organized by the 
HKTDC in 2009 through financial incentives provide d in this package, while more than 
5,000 exhibitors received subsidies in the form of coupons for HKTDC's services to strengthen their 
promotion efforts.  The HKSAR Government also operat es an SME Export Marketing Fund 
(section (4)(ii)). 
77. Under the Hong Kong Export Credit Insurance Co rporation Ordinance (Chapter 1115), the 
Hong Kong Export Credit Insurance Corporation (ECI C) provides insurance protection for exporters 
against non-payment by buyers, and country risks arising from commercial and political events.  The 
ECIC is wholly owned by the Government of the HKSAR, which fully guarantees its contingent 
liability.  Since 2008, the ECIC has adopted vari ous measures to counter the negative effects on 
HKSAR's exporters of the global financial crisis.  In February 2009, the Statutory Maximum Liability 
of the ECIC was increased from HK$15 billion to HK $30 billion.  The ECIC has also been helping 
SMEs to export by expediting the processing time for small credit applications, and upgrading the 
market ratings for emerging markets where appropriate.41  The United States remains Hong Kong, 
China's biggest insured market, and China h as been the fastest growing (Table AIII.6). 
(4) MEASURES AFFECTING PRODUCTION AND TRADE  
(i) Taxation and tax incentives 
78. Hong Kong, China has a simple tax regime and a low tax burden.  Tax rates are also generally 
low.42  Total tax revenue accounted for 13.4% of  GDP in 2008-09, and 69% of total government 
revenue (Table III.7).  Indirect taxes accounted for about one third of total tax revenue, which is low 
compared with most other economies at a similar level of development. 
Direct taxes:  profits tax and salaries tax 
79. Profits tax and salaries tax are the two major direct taxes in Hong Kong, China.  All business 
taxpayers (irrespective of their resident status) are subject to the same corporation or unincorporated 
business tax rate for profits arising in or derived from Hong Kong, China.  In 2009-10, two statutory 
profits tax rates apply:  profits of corporations  are taxed at 16.5%, and profits of unincorporated 
businesses at the standard rate of 15%.  Both rat es were lowered by 1 percentage point in 2008-09;  
according to the authorities, this cost the Government HK$4.4 billion a year. 
80. Effective tax rates on profits tend to be lower than statutory rates, due mainly to various 
exemptions or concessions.  The following income/profits are exempted from profits tax:  dividend 
income;  capital gains;  offshore income/profits and interest income under specified circumstances 
(such as interest derived from deposits placed local ly with authorized banking institutions, as well as 
interest income from certain long-term debt instruments);  and certain profits earned from 
international shipping and from airline services (C hapter II(5)).  Hong Kong, China also provides 
depreciation allowances in respect of capital expe nditures incurred on the construction of industrial 
and commercial buildings and structures, as well as  on machinery and plant (excluding machinery and 
plant related to manufacturing and environmental pr otection).  For example, an initial allowance of 
60% is provided on the cost of machinery and plan t, followed by annual allowances at prescribed 
                                                      
40 HKTDC online information "Helping SMEs:  Annual Report 2008- 09".  Viewed at:  
http://info.hktdc.com/annualreport 2008-09/ PDF/06.pdf [30/04/10]. 
41 HKECIC (2009). 
42 For example, Hong Kong, China was ranked second in terms of competitiveness in taxation by the 
World Economic Forum.  Viewed at:  http://www .weforum.org/pdf/GCR09/G CR20092010fullreport.pdf. Hong Kong, China WT/TPR/S/241 
 Page 41 
 
 
rates.  Companies may also write off their cap ital expenditure immediately on manufacturing plant 
and machinery, computer software and hardware, or over five years on refurbishment of business 
premises, and specified environmental protection f acilities.  The granting of depreciation allowances 
or write-off on certain capital expenditures is to  encourage businesses to upgrade production, protect 
the environment or enhance operations by making ca pital investment.  The tax deduction is capped at 
the actual cost of acquisition, and the sale proceeds will be subject to tax upon disposal of the capital investment.  
Table III.7 
Structure of government revenue, 2006-10 
(HK$ million and %)  
  2006/07 2007/08 2008/09 2009/10 
Government revenue (HK$ million) 288,014  358,465  316,562   318,442  
of which:     
Taxes revenue (HK$ million) 188, 321  230,045  218,412   207,865  
  (% of tax revenue)  
Direct taxes 61.2  58.1  66.9  59.3 
Earnings and profit tax 61.2  58.1  66.9   59.3 
Indirect taxes  38.8  41.9  33.1  40.7 
Fees and charges (tax loaded fees) 3.1  2.7  2.2  2.3 
Bets and sweep tax 6.4  5.7  5.8  6.1 
Hotel and accommodation tax 0.2  0.2  0.1  0.0 
Stamp duties 13.3  22.4  14.7  20.4 
Air passenger departure tax 0.8  0.7  0.7  0.8 
Duties 3.8  3.1  2.8  3.1 
General rates 8.2  4.1  3.3  4.8 
Motor vehicle tax 2.3  2.4  2.3  2.3 
Royalties and concessions 0.3  0.4  1.1  0.8 
Estate duty 0.4  0.2  0.1  0.1 
Non-tax revenue (HK$ million)  99,693  128,420 98,150  110,577 
Investment income and interest 29,418  27,920  46,571  33,625 
Land premium 37,001  62,318  16,936  39,632 
Other 33,274  38,182  34,643  37,320 
Source : Government of HKSAR, Census and Statistics Department online information.  Viewed at:  
http://www.censtatd.gov.hk/hong_kong_statistics /statistical_tables/index.jsp, Tabl e 193 [25 June 2010];  and data 
provided by the authorities. 
81. Salaries tax is imposed on all income arisi ng in or derived from Hong Kong, China from an 
office or employment or any pension, for both resi dents and non-residents.  There are two methods for 
calculating salaries tax, and the lower of the two resu lts is levied.  The first is to apply progressive 
rates, currently ranging from 2% to 17%, to the net chargeable income (income after deductions and 
allowances).  Among the various allowances, Hong Kong, China currently provides a basic allowance 
at HK$108,000.  The second is to apply a standard ra te of 15% (lowered from 16% in 2008/09 which, 
according to the authorities, cost the Government  HK$960 million a year) to the net income without 
allowances. 
Indirect taxes 
82. Almost half of the revenues from indirect ta xes come from stamp duties.  In the 2010-11 
Budget, the Government proposed to increase the tr ansaction cost of property speculation by raising 
the stamp duty rate from 3.75% to 4.25% on transactions of properties valued over HK$20 million, 
and to stop allowing buyers to defer paym ent of stamp duty on such transactions.  WT/TPR/S/241 Trade Policy Review 
Page 42 
 
 
83. The Government has been considering broadeni ng Hong Kong, China's tax base.  However, 
according to the authorities, after a nine-month di scussion on the introduction of a goods and services 
tax (GST), the public was not convinced this was the most appropriate action.  Thus, the Government 
will continue to study optio ns on broadening the tax base.43  
Tax concessions, exemptions, and incentives 
84. Despite its low tax rates, Hong Kong, Ch ina maintains various tax concessions and 
exemptions.  Against the global economic crisis, the Government proposed several tax concession or 
exemptions in the 2010-11 Budget, with a view  to lowering the tax burden on enterprises and 
individuals.44 
85. The Government also uses tax incentives in an at tempt to affect the allocation of resources in 
the economy, which is inconsistent with the principl e of tax neutrality.  According to the authorities, 
the tax incentives in specified areas are within the bounds of neutrality of the tax system, to enable 
Hong Kong, China to compete in the region on a level playing field.   For example, since 2008-09, a 
100% profits tax deduction has been allowed in the first year of purchase for capital expenditure on 
environmental protection machinery or plant, to encour age the use of such machinery or plant.  In the 
2010-11 Budget, the Government proposed to acceler ate the tax deductions for capital expenditure on 
environment-friendly commercial vehicles by a llowing enterprises to have a 100% profits tax 
write-off in the first year of purchase, with a view to encouraging the purchase of electric, hybrid, or 
other environment-friendly vehicles for business us e.  Under the current tax arrangement, capital 
expenditure incurred by enterprises to purchase pate nt rights and industrial know-how is deductible 
under profits tax.  The Government also proposed  in the 2010-11 Budget to extend the deduction to 
cover registered trademarks, copyrights, and register ed designs, so as to promote the wider application 
of intellectual property and the development of creative industries. 
(ii) Non-tax incentives  
86. In addition to tax incentives, the HKSAR Gove rnment provides support to agriculture and 
fisheries, some services, small and medium-sized enterprises (SMEs), and research and development.  
Due to Hong Kong, China's low tax base, government support is mainly in the form of, inter alia , 
grants, loans, or government guarantee of lo ans (Table III.8);  there are also some land 
preference/concession policies (Chapter I). 
(a) Small and medium-sized enterprises 
87. Small and medium-sized enterprises (SMEs) are the backbone of Hong Kong, China's 
economy.45  They account for over 98% of business units in the HKSAR and about 48% of total 
employment in the private sector.  The authorities consider that SMEs often lack the resources to 
build their entrepreneurial and operational capab ilities, and are often the most vulnerable during 
economic downturns.  The HKSAR Government is th erefore committed to providing support to SMEs 
to enhance their competitiveness. 
88. The Government has been facilitating the development of SMEs mainly through 
three funding schemes administered by the Trade and Industry Department (TID):  the SME Loan 
                                                      
43 "Brief of other options for broadening the tax base".  Viewed at:  http://www.taxreform.gov.hk/ 
eng/pdf/Other_options.pdf [07/05/10]. 
44 Financial Secretary (2010). 
45 In Hong Kong, China, an SME is defined either as a manufacturing business that employs fewer than 
100 persons or a non-manufacturing business that employs fewer than 50 persons.   Hong Kong, China WT/TPR/S/241 
 Page 43 
 
 
Guarantee Scheme (SGS), the SME Export Marke ting Fund (EMF), and the SME Development Fund 
(SDF), together with a number of ot her supporting schemes (Table III.8). 
Table III.8 
Subsidies programmes, 2010 
Sector Objective Agency in 
charge Form of support Total amount 2008-09 
(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 meeting 
working capital needs Trade and 
Industry 
Department (TID) Government provides up 
to 50% guarantee to 
loans provided by PLIs to SMEs As at end 2008: $1,385 
As at end 2009: $1,683  
As at end-June 2010:  $1,840 
Special Loan 
Guarantee Scheme 
(SpGS) To help HKSAR enterprises 
secure loans from PLIs to 
tackle the liquidity problem 
during the global economic 
crisis (launched on 15 December 2008) TID Government provides up 
to 70% or 80% guarantee 
for loans approved by 
PLIs to Hong Kong 
enterprises As at end 2008:  $14.87 
As at end 2009:  $6,136 
As at end-June 2010:  $8,120 
SME Export 
Marketing Fund 
(EMF) To help SMEs expand their 
business through participating 
in export promotion activities 
such as exhibitions and trade 
missions TID The fund subsidizes 50% 
of the approved 
expenses, subject to a 
ceiling of HK$50,000 
(~US$6,410) per application, and a 
cumulative ceiling of 
HK$150,000 (~US$19,230) for each SME As at end 2008:  $131.64 
As at end 2009:  $181.41  
As at end June 2010:  $206.03 
SME Development 
Fund (SDF) To provide financial support to 
non-profit-distributing support 
organizations such as trade and 
industrial organizations, 
professional bodies, etc. to carry out projects that can 
enhance SMEs' 
competitiveness TID For each approved 
project, Government 
provides a grant to cover 
(maximum) 90% of total 
project expenditure, subject to a ceiling of 
HK$2 million 
(~US$0.26 million). As at end 2008:  $16.61  
As at end 2009:  $19.90  
As at end-June 2010:  $21.02  
Other programmes for SMEs     
Small Entrepreneur 
Research Assistance 
Programme (SERAP)  To provide pre-venture-capital 
stage financing to support 
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$4 million will be provided on a dollar-for-dollar matching basis As at end 2008:  $34.70 
As at end 2009:  $38.00 
Programmes for R&D     
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 As at end 2008:  $417 
As at end 2009:  $553 
Table III.8 (cont'd)WT/TPR/S/241 Trade Policy Review 
Page 44 
 
 
Sector Objective Agency in 
charge Form of support Total amount 2008-09 
(US$ million) 
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  As at end 2008:  $25.09 
As at end 2009:  $26.05 
General Support Programme To support projects that 
contribute to fostering an 
innovation and technology culture in the HKSAR, 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 As at end 2008:  $0.5 
As at end 2009:  $0.38 
Patent Application 
Grant To assist local companies and 
individuals to apply for patents 
of their own inventions ITC and 
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 As at end 2008:  $0.77 
As at end 2009:  $0.76 
New Technology Training Scheme To assist companies wishing to 
have their staff trained in a new 
technology that would be 
useful to their business ITC and the 
Vocational 
Training 
Council (VTC) Training courses As at end 2008:  $0.45 
As at end 2009:  $0.44 
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 
10% of the expenditure 
in:  projects under the 
ITF, and projects funded entirely by the 
companies and 
conducted by the designated local research 
institutions Scheme launched on 
1 April 2010 
Other R&D support programmes     
DesignSmart Initiative To promote integration of 
design into mainstream business and industrial processes as a value-adding 
activity Create Hong 
Kong (CreateHK) Set up of the InnoCentre 
to develop a design cluster with an incubation programme.  
Run funding schemes to 
support design and branding research, professional continuing education, design and 
business collaboration, 
and general promotional activities In 2008-09, 88 projects 
estimated at $4.17 million have been approved 
Up to end-July 2010, 
64 incubatees have been 
admitted to InnoCentre 
Sector-specific support programmesa    
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, 
Industry and 
Tourism Branch, 
Commerce 
and Economic Development 
Bureau For each approved 
project, Government 
provides a grant to cover (maximum) 50% of total 
project expenditure, 
subject to a maximum of HK$2  million (~US$0.26 million) As at end 2008:  $9.94 
As at end 2009:  $10.70 
As at end-June 2010:  $11.80  
Table III.8 (cont'd)Hong Kong, China WT/TPR/S/241 
 Page 45 
 
 
Sector Objective Agency in 
charge Form of support Total amount 2008-09 
(US$ million) 
Film Development 
Fund (FDF) To help the development of the 
film industry 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 2008-09, $2.96 million 
was committed 
Up to end-July 2010, an 
aggregate total of 
$17.71 million has been committed 
Film Guarantee Fund 
Scheme (FGF) To assist local film production 
companies to obtain loans from 
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 2008-09, no loan 
guarantee was issued 
Up to end-July 2010, total 
loan guarantee of $3.33 million was issued 
and discharged 
 
a For sector-specific subsidies programmes relating to agriculture, including fisherie s, please see Chapter IV. 
Source: WTO documents G/SCM/N/186/HKG,  5 October 2009;  information provided by  the authorities;  and Government 
online information.  Viewed at:  http://www.hktdc.com/info/m i/a/sbr/en/1X0661V2/1/Sm all-Business-Resources/ 
SME-Finance.htm [03/05/2010]. 
89. In the wake of the global financial crisis, th e Government introduced a series of measures to 
enhance its support for SMEs.  For the SGS, the gu arantee sub-ceilings for the Business Installation 
and Equipment Loan and the Working Capital Lo an were removed, while the overall guarantee 
ceiling for each SME was maintained at HK$6 million;   the guarantee period for the Working Capital 
Loan was extended from two to five years;  and each SME was allowed to recycle the guarantee once 
after it had fully paid up the loan backed up by SG S.  For the EMF, the cumulative grant ceilings for 
each SME, and the sub-ceilings for each application, were increased.  The scope of the EMF was also 
expanded to include advertisements  on eligible trade websites, as approved by TID, and printed trade 
publications targeting export markets.  In June 2 009, the Government inject ed additional funding of 
HK$1 billion into the EMF and SDF, and increased the total guarantee commitment of the SGS from 
HK$12.6 billion to HK$20 billion;  the total capital commitment now amounts to HK$22.75 billion. 
90. A Special Loan Guarantee Scheme (SpGS) was introduced in December 2008.  All 
enterprises registered and having substantive business operations in Hong Kong, China are eligible for 
the SpGS, except listed companies.46  An enterprise benefiting from the SpGS may obtain a 
government guarantee of up to 80% of its approved loan  granted by participating lending institutions.  
The maximum loan for each enterprise is HK $12 million, and the maximum guarantee period is 
60 months, or up to 30 December 2015, whichever is earlier.  Application for the SpGS is up to 
31 December 2010.47  The HKSAR Government has pledged to provide a total loan guarantee of up to 
HK$100 billion, with a view to helping enterprises  to overcome the liquidity problem during the 
global financial crisis. 
 
                                                      
46 See TID online information "Guideline on the requirement of substantive business operation" under 
the SpGS and SGS.  Viewed at:  http://www.smefund.tid.gov.hk/doc/sgs/Guidelines_Substantive_Business.pdf. 
47 TID online information.  Viewed at:   http:// www.smefund.tid.gov.hk/eng/eng_main.html?content=/ 
eng/spgs.htm. WT/TPR/S/241 Trade Policy Review 
Page 46 
 
 
(b) Innovation and technology 
91. Innovation and technology is one of the six economic areas identified by the Task Force on 
Economic Challenges for promotion and developmen t by the HKSAR Government (Chapter I(1) and 
Chapter IV(5)(vi)).  R&D expenditures in Hong Ko ng, China, including by the private sector, is 
relatively low compared with other advanced economies:  total R&D expenditures amounted to 
US$1,579 million (0.73% of GDP) in 2008, in cluding private-sector R&D expenditures of 
US$676 million (0.31% of GDP).   
92. The Innovation and Technology Commission (ITC) was set up with the mission of 
spearheading Hong Kong, China's drive to become  a world-class, knowledge-based economy.  It 
formulates and implements policies and measures to promote innovation and technology;  operates 
applied R&D funding schemes;  supports technolog y transfer and application;  promotes 
technological entrepreneurship;   provides technological infrastructure;  facilitates the development of 
human capital to support innovation a nd technology; and promotes in ternationally accepted standards 
and conformity assessment services (Table III.8).48  The ITC works with public institutions involved 
in innovation and technology (including Hong Ko ng Science and Technology Parks Corporation, 
Hong Kong Productivity Council, Hong Kong Applie d Science and Technology Research Institute 
Company Limited, and Hong Kong Design Centre Limited).  
93. Following a review and a public consultation in  2004, the Government adopted an innovation 
and technology development strategy that focuses resources on technology areas where Hong Kong, 
China has, inter alia , a competitive edge, market relevance, industry participati on, and opportunities 
in China.  R&D centres were set up in 2006 to  promote applied R&D in six technology areas:  
automotive parts and accessories;  information and communication technologies;  logistics and 
supply-chain-management enabling technologies;  na notechnology and advanced materials;  textiles 
and clothing;  and Chinese medicines. 
94. Under the R&D Cash Rebate Scheme (f unded with HK$200 million), enterprises 
participating in R&D projects under the Innovation and Technology Fund or conducting applied R&D 
projects or in partnership with local designated research institutions are granted a cash rebate 
equivalent to 10% of their investments (Table III.8). 
(iii) Price controls 
95. In general, the Government does not mainta in price controls on economic activities.  
Exceptions include price monitoring of some ener gy products, and dues for pilotage, which is a 
compulsory service in the HKSAR (Chapter IV(5)(iv).  
(iv) State-owned enterprises  
96. According to the authorities, the HKSAR Gove rnment has financial stakes in ten companies 
(Table III.9). 
97. In September 2007, the Government increased its shares in the Hong Kong Exchanges and 
Clearing Limited (HKEx) to 5.88% of the total equi ty, to enable the Government to contribute to 
HKEx's development, particularly in the developmen t of strategic partnershi ps and links with other 
institutions in the region.  
                                                      
48 ITC online information.  Viewed at:  http://w ww.itc.gov.hk/en/about/mission.htm [07/05/10]. Hong Kong, China WT/TPR/S/241 
 Page 47 
 
 
Table III.9 
Enterprises in which the Government has financial stakes, 2010 
(%) 
Company Government shareholding 
Airport Authority (AA) 100.0 
Hong Kong Cyberport Development Holdings Limited 100.0 
Hong Kong Science and Technology Pa rks Corporation (HKSTPC) 100.0 
Kowloon-Canton Railway Corporation (KCRC) 100.0 
IEC Holdings Limited  88.2 
MTR Corporation Limited (MTRCL) 76.7 
Hongkong International Theme Parks Limited (HKITP)  57.0 
Tradelink Electronic Commerce Limited (Tradelink) 12.3 
New Hong Kong Tunnel Company Limited 7.5 
Hong Kong Exchanges and Clearing Limited (HKEx) 5.8 
Source:  Treasury online information, "Accounts of the Government for the year ended 31 March 2009" .  
Viewed at:  http://www.try.gov.hk/internet/eharch_a nnu_statend09.html#p, and http ://www.try.gov.hk/internet/ 
pde_sinvest09.pdf.   
(v) Corporate governance 
98. Agencies responsible for regulating corporate governance (CG), to ensure an orderly and 
fair/efficient market in Hong Kong, China, incl ude the Hong Kong Exchanges and Clearing Limited 
(HKEx), and the Securities and Futures Commission (SFC).    
99. HKEx is the holding company of the SEHK (the Stock Exchange of Hong Kong Limited), the 
Hong Kong Futures Exchange Limited, and Hong K ong Securities Clearing Company Limited.  As a 
regulator of the securities and derivatives market in Hong Kong, China, HKEx administers listing, 
trading, and clearing rules.  The HKEx works closely with the SFC, which is responsible for 
regulating the securities and futures markets in Hong Kong, China. 
100. Corporate governance is regulated under the Hong Kong Companies Ordinance, and the 
Securities and Futures Ordinance.  The Government has been working on a revision of the Companies 
Ordinance since 2006 with a view to modernizing the legal framework for companies in Hong Kong, 
China.  Enhancing corporate governance is one of the key objectives of the exercise.  The draft 
Companies Bill contains a number of proposals to st rengthen the accountability of directors, improve 
disclosure of company information, strengthen audito rs' rights, enhance share holders' engagement in 
decision-making processes and foster shareholder prot ection.  The Government aims to introduce the 
Bill into the Legislative Council before the end of 2010.  The Companies (Amendment) Ordinance 
2010, passed by the Legislative Council on 7 July 2010, contains improvements in the area of 
statutory derivative actions.  The statutory deriva tive action procedure in the Ordinance allows a 
member of a company to bring an action or interv ene in proceedings on be half of the company in 
respect of "misfeasance" committed against the comp any.  This will also enhance the protection of 
shareholders in a corporate group. 
101. Hong Kong's Code on Corporate Governance Practices sets out the principles of good 
corporate governance and two levels of recommenda tions:  code provisions, and recommended best 
practices.  Compliance with the code provisions is  not mandatory but listed companies must state 
whether they have complied and give considered reasons for any deviation.  HKEx is currently 
reviewing whether to update the corporate governance code. WT/TPR/S/241 Trade Policy Review 
Page 48 
 
 
102. Other rules related to corporate governance in clude:  the Rules Governing the Listing of 
Securities on the Stock Exchange of Hong Kong Li mited (SEHK);  the Rules Governing the Listing 
of Securities on the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited;  the 
Codes on Takeovers and Mergers and Share Repur chases.  Other non-statutory guidelines include:  
A Guide on Directors' Duties issu ed by the Companies Registry49;  Supervisory Policy Manual: 
Corporate Governance of Locally Incorporated Authorized Institutions, issued by the Hong Kong Monetary Authority
50;  Guidance Note on the Corporate Governan ce of Authorised Insurers, issued by 
the Office of the Commissioner of Insurance51;  and the Hong Kong Financial Reporting Standards, 
issued by the Hong Kong Institute of Certified Public Accountants (HKICPA). 
103. There are various checks and balances designe d to ensure fairness and observance of due 
process by the SFC.  These include statutory rights of appeal against SFC decisions, judicial review, 
and scrutiny by the Ombudsman and the Independent Commission Against Corruption (ICAC).  In addition, the Process Review Panel for the SFC has been established by the Chief Executive of the 
HKSAR to review internal operational procedures of  the SFC and to determine whether the SFC has 
followed its internal procedures, including proced ures for ensuring consistency and fairness.  The 
Process Review Panel serves to enhance the SFC 's transparency and public accountability. 
(vi) Competition and consumer protection policy  
(a) Competition policy 
104. Currently, competition policy in Hong Kong, Chin a is regulated mainly under the Statement 
and the Guidelines issued by the Competition Policy Advisory Group (COMPAG) in 1998 and 2003, 
respectively.
52  COMPAG, chaired by the Financial S ecretary, is responsible for reviewing 
competition-related issues that have policy or systemic implications.  COMPAG issued the "Guideline 
to maintain a competitive environment and define  and tackle anti-competitive practices" in 2003 to 
supplement the 1998 Statement.  In addition, sect oral legislation for telecom and broadcasting 
services includes clauses aimed at preventing anti-competitive practices (Chapter IV(iii)). 
105. On 1 June 2005, COMPAG appointed a Compe tition Policy Review Committee (CPRC) to 
review competition policy.  The CPRC, comprising mostly non-Government stakeholders from the 
business, academic, consumer protection, and other sectors, reported to COMPAG in June 2006.  It 
noted that, although Hong Kong, China had a free an d open economy with few market barriers, there 
were possible cases of anti-compe titive conduct.  It concluded th at, to allow for an effective 
investigation of such cases and imposition of san ctions where appropriate, the Government should 
introduce a cross-sector competition law and establish an independent Competition Commission. 
106. Although feedback from the public consultation in  late 2006 to the CPRC proposal indicated 
significant support, there were concerns in the busin ess sector, particularly among SMEs, that the new 
law may adversely affect normal business operations.  To address these concerns, the Government 
published in May 2008 the proposed major provisions  that the competition law should contain, for 
comments from the public.  After another three-mo nth consultation, the Government prepared the 
Competition Bill taking account of the comments received during the consultation exercises, and 
introduced it into the Legislative Council in the 2009-10 legislative session (Box III.1).   
                                                      
49 Viewed at:  http://www.cr.gov.hk/en/publications/docs/director_guide-e.pdf. 
50 Viewed at:  http://www.info.gov.hk/hkma/eng/bank/spma/attach/CG-1.pdf. 
51 Viewed at:  http://www.oci.gov.hk/download/gn10-eng.pdf. 
52 For details of the COMPAG Statement on Competition Policy, and the Guidelines, see WTO (2007) , 
pp. 64-66. Hong Kong, China WT/TPR/S/241 
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Box III.1:  Hong Kong, China's draft cross-sector competition law 
The authorities presented a draft cross-sector competition law (the Competition Bill) to the Legislative Council 
(LegCo) on 14 July 2010. 
To ensure effective enforcement two institutions will be established:  an independent statutory Competition 
Commission (the Commission), and a Competition Tribunal (the Tribunal) as a superior court within the Judiciary.  The Commission would investigate and bring public enforcement action in respect of competition cases, and the 
Tribunal would hear and adjudicate on such cases, as we ll as hear private rights of action in all sectors. 
The law will apply to all sectors.  To reconcile this with the existing competition regulatory framework in 
telecommunications and broadcasting the Broadcasting Authority (BA) and the Telecommunications Authority (TA) will have concurrent jurisdiction with the Commission over competition matters in their respective sectors, while their adjudicative function will be transferred to the Tribunal. 
The law aims to prohibit and deter "undertakings" from adopting abusive or other anti-competitive conduct that has 
the object or effect of preventing, restricting, and dist orting competition in Hong Kong, China.  An "undertaking" 
is defined as any entity, regardless of its legal status  or the way in which it is financed, engaged in economic 
activities and includes natural persons.  There are genera l prohibitions in three major areas of anti-competitive 
conduct:  agreements, decisions, and concerted practices;  abuse of a substantial degree of market power in a market;  and mergers or acquisitions involving carrier licences granted by the TA that have or are likely to have the effect of substantially lessening competition in Hong Kong, China.   
As Hong Kong, China is a small economy, the conduct of a firm with a significant market share, albeit short of a 
50% presumption for "dominance", could have a major effect on competition.  The Competition Bill therefore proposes to adopt the threshold for investigating possible abuse at the level of "substantial market power".   
The public consultations raised diverse views on merger regulation.  The Government also noted the view of the 
Competition Policy Review Committee (CPRC) in June 2006 that the focus of competition law should be on prohibiting conduct, rather than targeting market structure through the regulation of monopolies and mergers, and that mergers may be an efficient way to achieve economies of scale in a small economy like Hong Kong, China.  Therefore, the Government proposes not to regulate merger activities under the Competition Bill, except for carrier licences granted by the TA, which is already subject to such regulation.  A review of the Bill will be conducted a few years after entry into force, which will allow adjustme nts in light of developments in merger rules in other 
competition jurisdictions.  
In cases where agreements or other activities carry greater economic benefit than their potential anti-competitive 
harm, or achieve other important social or public policy objectives, there may be justification for granting exemptions or exclusions from the application of the law.  The Commission is empowered to decide whether an agreement or conduct is excluded or exempt from the rules on grounds that the agreement enhances overall economic efficiency;  the undertaking concerned is entrusted with the operation of services of general economic interest;  or the agreement is made to comply with a lega l requirement.  The Chief Executive is also empowered to 
make orders, on the advice of the Executive Council (C E in Council), to exempt agreements or conduct where 
there are exceptional and compelling reasons of public policy, or if exemptions are required to avoid a conflict with international obligations.  Since public-sector activities are mainly non-economic, the Bill will not apply to statutory bodies or their activities, except as specified in regulations to be made by the CE in Council after 
enactment of the Bill. 
During the public consultation, SMEs raised concerns th at the competition law might increase the complexity of 
their operating environment and thus their costs.  They were also concerned that larger companies might threaten to sue SMEs in order to force them to comply with unreasonable business conditions.  The authorities believe that the 
new competition law would benefit rather than create problem s for SMEs.  Overseas experience indicates that a fast 
increase in litigations by larger companies against SMEs is  unlikely.  SMEs, almost by definition, do not have the 
power to influence markets substantially.  Their normal business practices (exchanging information and joint purchasing), are therefore unlikely to have the effect of  preventing, restricting or distorting competition in 
Hong Kong, China unless they engage in 'hard core' anti-competitive conducts.  Under the Bill the Commission is required to draw up regulatory guidelines on interpretation and implementation of the law, in consultation with the public.  The guidelines can be expected to further address specific concerns raised by SMEs.  Moreover, the Bill stipulates that the CE, when appointing members to the Co mmission, should in particular consider persons with 
experience and expertise in SMEs.  A transitional period is foreseen between the enactment of the law and entry into force of the main prohibitions, to provide some time for the business sector to make any necessary adjustments.  
Box III.1 (cont'd) WT/TPR/S/241 Trade Policy Review 
Page 50 
 
 
 
To prevent abuse of the Commission's investigation and co mplaint mechanism, the Bill allows the Commission to 
refuse to handle complaints that are trivial, frivolous or lacking in substance.  The Commission must also have reasonable cause to suspect that a contravention of any of  the competition rules has taken place, is taking place or 
is about to take place, before exercising its investigative powers.   
Source: Commerce and Economic Development Bureau, LegCo Brief – Competition Bill, July 2010.  Viewed 
at:  http://www.cedb.gov.hk/citb/ehtml/pdf/legcoBr iefs/LegCo_Brief_on_Competition_Bill_with_Annex_ 
2010_Eng.PDF;  Commerce and Economic Development Bureau (2008), "Detailed Proposals for a Competition Law – A Public Consultation Paper", May;  and COMPAG (2009), "Competition Policy Advisory Group Report 2008-09".  Viewed at:  http://www.compag.gov.hk/report/Compag_Report_2008-09_Eng.pdf [25/05/10].  
(b) Consumer protection  
107. There were no significant changes to Hong Kong,  China's consumer protection legislation 
during the period under review.53  The Trade Descriptions Ordinance was amended in 2008, mainly to 
prohibit additional forms of false trade descriptions and misleading price indications.  New subsidiary 
legislation and their amendments have been  issued, concerning trade descriptions of, inter alia , jade, 
diamonds, and gold. 
108. Enforcement of the consumer protection legisl ation is ensured mainly by the Consumer 
Council, and the Customs and Excise Department .  The Consumer Council provides wide-ranging 
services to consumers, and raises matters for gene ral discussion and action.  In 2009, the Council 
received 34,114 complaints, largely involving tel ecommunication services and related goods/services 
(30.8% of total complaints), financial services ( 14.6%), household electrical appliances (6.6%), and 
broadcasting services (4.4%).  In 2008-09, th e Council helped resolve 68.3% of cases with 
"pursuable" grounds (i.e. where there was sufficien t information to substantiate the complaint). 
Customs officers conduct spot checks and investiga tions to ensure consumer goods, including toys 
and children's products, are reasonably safe and bear bilingual warning labels.   
(vii) Intellectual property rights 
(a) Legislation 
109. Since the previous Review of Hong Kong, China, there have been no significant changes to 
the framework  protecting intellectual property rights.  No new laws or regulations have been issued 
on the protection of IPRs, although a number of am endments have been made and notified to the 
WTO Council for TRIPS (Table AIII.7).  The amendmen ts are mainly to better reflect international 
conventions, facilitate e-services, and implement the compulsory licensing scheme under Paragraph 6 
of the Doha Declaration.54  
110. A number of amendments were made to the Copyright Ordinance in 2007 and 2009 
(Table AIII.7);  and in December 2006, the Governme nt released a consultation document to review 
the legislative framework for copy right protection in the digital environment.  After considering 
                                                      
53 For details of consumer protection legislation, see WTO (2007). 
54 The WTO "Paragraph 6 system" enables, subject to certain conditions, production and export of 
pharmaceutical products under compulsory licence to meet the needs of  countries with inadequate domestic 
manufacturing capacity. Hong Kong, China WT/TPR/S/241 
 Page 51 
 
 
opinions received from the public, the Government issued its preliminary proposals in April 2008.55  
In November 2009, the Government issued revised proposals, introducing, inter alia , a right of 
communication covering all modes of electronic transmission for copyrights, a statutory limitation of the liability regime for online services providers in dealing with online piracy, and additional factors 
for the Court to consider when awarding additi onal damages.  It also introduced proposals for 
criminal sanctions against unauthorized communication of copyright works to the public, if the communication is for business profit, or where it affects prejudicially the copyright owners.
56  The  
Government is currently engaged in further discu ssions with the public to build consensus on the 
details of the revised proposals, with a view to submitting the amendment legislation to the 
Legislative Council in the 2010-11 legislative session.   
111. Hong Kong, China has standard patents and s hort-term patents (Table III.10).  During the 
period under review, Hong Kong, China implemente d 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 pr oducts.  Under the amendment, import compulsory 
licences for such products can only be granted durin g a period of extreme urgency declared by the 
Chief Executive, where the local in dustry has no or insu fficient capacity to manufacture the patented 
product.  In general, compulsory licences may be allowed under the Patents Ordinance for standard 
patents on limited grounds, including where the patent ed invention is not being commercially worked 
in the HKSAR, or where the demand for a patented product is not being met on reasonable terms, for 
example, through imports.  Government use of a pate nted invention or a registered design (equivalent 
to a compulsory licence) is allowed during a pe riod of extreme urgency declared by the Chief 
Executive.  Where Government use is made of a pa tent or registered design, the proprietor will be 
compensated.  No compulsory licences have ever b een issued.  There is no compulsory licensing for 
trademarks.   
112. In accordance with Article 28 of the TRIPS Agreement, Hong Kong, China law affords the 
holder of a patent for a product or process the exclusive right to import a patented product or a 
product made with a patented process.  Parallel im ports of trademarked goods are permissible, unless 
the goods have been impaired or changed and the reput ation of the mark is adversely affected.  Under 
the Copyright Ordinance, it is in general a criminal offence to deal in, or to import, other than for 
private and domestic use, any pa rallel imported copyright work, if  the work has been published 
anywhere in the world within a prescribed period (1 5 months - shortened from 18 months in 2007).  In 
2003, parallel imports into Hong Kong, China of  computer software products were allowed57, and in 
2007 the prohibition against parallel imports of copy right works by business end-users was relaxed.  
Thus, from July 2007, any person may import or pro cess a parallel-imported copy of a copyright work 
for use in business, subject to the following restricti ons:  the parallel-imported copy must not be used 
for commercial purposes;  and if such a copy is a movie, TV drama, musical sound recording or 
musical visual recording, it must not be used fo r playing or showing in public.  Therefore, for 
example, a lawyer may now import and possess pa rallel-imported reference books for his business 
use, but a karaoke operator is not allowed to im port a parallel imported karaoke disc for use by 
customers in his business.58   
                                                      
55 Preliminary Proposals for Strengthening Copyright Protection in the Digital Environment.  Viewed 
at:  http://www.ipd.gov.hk /eng/intellectual_property/copyright/Cons ultation_Document_P relim_Proposals_Eng 
(full).pdf. 
56 Refined Proposals for Strengthening Copyright Protection in the Digital Environment.  Viewed at:  
http://www.legco.gov.hk/yr09- 10/english/panels/ci/papers/ci1117cb1-341-8-e.pdf. 
57 However, restrictions continue to apply if the principal attraction of a computer software product is 
musical sound or visual recordings, movies, television dramas, e-books, or a combination of these. 
58 Intellectual Property Department online informa tion.  Viewed at:  http://www.ipd.gov.hk/eng/ 
intellectual_property/copyright/faqs_parallel_import_e.pdf. WT/TPR/S/241 Trade Policy Review 
Page 52 
 
 
Table III.10 
Framework protecting some intellectual property rights, 2010 
IPRs Eligibility of protect ion Length of protection 
Patents    
Standard patent Inventions that are new, involve an inventive step and susceptible 
of industrial application are elig ible for protection.  Grant of a 
standard patent is based on re gistration granted by the State 
Intellectual Property Office of th e People's Republic of China;  
the European Patent Office;  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 are elig ible for protection.  Grant of a 
short-term patent is based on an examination of the formalities of the application.  There is no s ubstantive examination, i.e., of 
whether the invention is novel, inventive, and susceptible of industrial application 8 years from the filing date 
Trademarks   
Registered trademarks Marks that are capable of distinguishing the goods or services of 
one undertaking from those of other undertakings;  there are no 
other applicable grounds for refusal of registration 10 years from the filing date of the 
application for registration;  may be 
renewed indefinitely for periods of 
ten 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 to obt ain copyright protection for a 
work in Hong Kong, China.  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 for copyright protection in the HKSAR 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 
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 offense under the Trade 
Descriptions Ordinance Same as for registered trademarks 
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 
Table III.10 (cont'd)  Hong Kong, China WT/TPR/S/241 
 Page 53 
 
 
IPRs Eligibility of protect ion Length of protection 
Trade secrets and 
undisclosed information Information disclosed to a person who is under a duty to keep it 
confidential, includi ng confidential information in a commercial 
setting, such as formulae, met hods, technologies, designs, product 
specifications, business plans, and client lists No time limit 
 
Source:  Intellectual Property Depa rtment online information.  Viewed at:  http://www.ipd.gov.hk/ eng/home.htm;  and 
information provided by the authorities. 
(b) Enforcement 
113. IPR protection appears to have been furt her strengthened during the review period 
(Table III.11).  Total fines for copyright and trad emarks infringement cases declined, and both the 
quantity and value of pirated optical discs were lowe red.  However, the quantity of seized counterfeit 
goods increased greatly in 2009 due mainly to  a crackdown involving substantial amounts of 
counterfeit cigarettes.  
114. Institutional arrangements for IPR protection re mains unchanged.  The Intellectual Property 
Department (IPD) of the Government operates the re gister of patents, trademarks, and registered 
designs.  It is also the WTO contact point for intellectual property rights purposes.   
Table III.11 
Enforcement of intellectual property rights, 2006-09 
 2006 2007 2008 2009 
Prosecution and sentencing under the Copyright 
Ordinance     
Persons given prison sentence 596 773 671 671 
% of sentences of:     
<6 months 33.2 38 51.7 60.2 
6-12 months 61.6 58.6 46.2 37.1 
>12 months 5.2 3.4 2.1 2.7 
Maximum sentence pa ssed (months) 55 48 24 74 
% of cases with fines of:     
<HK$50,000 96.9 94.6 95.7 98.9 
HK$50,000-100,000 2.1 3.6 4.3 0.0 
>HK$100,000 1.0 1.8 0.0 1.1 
Maximum fine (HK$) 696,000 171,200 100,000 120,000 
Total fines (HK$) 1,777,100 1,562,800 1,033,300 629,300 
Prosecution and sentencing under the Trade 
Descriptions Ordinance     
Persons given prison sentence 141 177 124 125 
% of sentences of:     
<6 months 70.9 63.3 66.1 80.0 
6-12 months 27.7 33.9 31.5 20.0 
>12 months 1.4 2.8 2.4 0.0 
Maximum sentence pa ssed (months) 55 24 24 8 
% of cases with fines of:     
<HK$50,000 97.9 95.6 93.3 98.4 
HK$50,000-100,000 1.8 2.9 6.1 1.3 
>HK$100,000 0.2 1.5 0.6 0.3 
Maximum fine 160,000 475,000 160,000 132,000 
Total fines 5,191,004 5,518,175 5,251,878 3,863,606 
Table III.11 (cont'd) WT/TPR/S/241 Trade Policy Review 
Page 54 
 
 
 2006 2007 2008 2009 
Seizure of illegal merchandise      
Pirated optical discs     
Quantity ('000) 3,034.9 4,263.5 2,163. 9 2,016.4 
Value (HK$ million) 72.4 99.2 52.3 46.4 
Counterfeit goods     
Value (HK$ million) 126.2 174.5 170.9 177.9 
Source:  Data provided by the authorities. 
115. The Customs and Excise Department (C&ED) protects intellectual property rights by 
combating related crimes at the border and in a ll districts of Hong Kong, China.  The C&ED has 
ex-officio power to seize infringing goods.  It maintains enforcement through intelligence-led 
investigations and repeated raids conducted at  different levels, including import and export, 
manufacture, distribution, and retail.  As well as  responding to complaints from IPR holders, the 
C&ED is proactive in dealing with pirating and co unterfeiting activities in Hong Kong, China.  It has 
launched various schemes to promote awareness of IPRs, such as the Youth Ambassador Against 
Internet Piracy Scheme (against online piracy), the Fast Action Scheme (against infringing activities 
in local large-scale trade exhibitions and fairs), and initiatives with the business software industry to 
promote the use of genuine business software.  Th e C&ED operates the Intellectual Property Rights 
Protection Alliance (IPRPA), which allows IPR owne rs to monitor IPR infringing activities in the 
market.  The number of online auctioned items susp ected to be counterfeit dropped by 85% in 2009, 
as the C&ED and local Internet auction sites bega n to cooperate closely to combat such activities.59 
 
                                                      
59 Hong Kong Information Services Department.  Viewed at:  news.gov.hk, 16 January 2010.