WORLD TRADE ORGANIZATION  
ORGANISATION MONDIALE DU COMMERCE  
ORGANIZACIÓN MUNDIAL DEL COMERCIO  WT/TPR/M/181/Add.1 
13 June 2007 
 (07-2502) 
Trade Policy Review Body 
30 April and 2 May 2007  Original:  English                  anglais 
                 inglés
 
 
TRADE POLICY REVIEW 
MACAO, CHINA 
Minutes of Meeting  
Addendum  
Chairperson:  H.E. Mr. Vesa Himanen (Finland) 
 This document contains the advance writte n questions, and replies provided by Macao, 
China .1 
 
__________________________________________________________________________________ 
Organe d'examen des politiques commerciales 
30 avril and 2 mai 2007   
EXAMEN DES POLITIQUES COMMERCIALES 
MACAO, CHINE 
Compte rendu de la réunion
 
Addendum  
Présidente:  H.E. M. Vesa Himanen (Finlande) 
 
 Le présent document contient les questions écr ites communiquées à l'avance et les réponses 
fournies par Macao, Chine.1 
 
__________________________________________________________________________________ 
Órgano de Examen de las Políticas Comerciales 
30 de abril y 2 de mayo de 2007 
 
 
EXAMEN DE LAS POLÍTICAS COMERCIALES 
MACAO, CHINA 
Acta de la reunión  
Addendum  
Presidente:  Excmo. Sr. Vesa Himanen (Finlandia) 
 
 En el presente documento figuran las preguntas presentadas anticipadamente por escrito, junto con 
las respuestas facilitadas por Macao, China.1 
                                                        
1 In English only./En anglais seulement./En inglés solamente.  WT/TPR/M/181/Add.1 
 Page 3 
 
 
  WRITTEN QUESTIONS BY MEMBERS 
QUESTIONS BY SINGAPORE  
Structural policies 
Re  WT/TPR/S/181 page 9, "the Government has ta ken measures to encourage diversification of the 
economy including a guaranteed loan scheme for SMEs  and that are not directly benefiting from the 
expansion of the tourism and gaming sectors.  Re WT/TPR/S/181 page 48/49, "given that SMEs play 
an important role in the economy, supporting them  has become one of the Government's long term 
policies ...". 
 
Will Macao, China indicate how the SME Aid Sc heme, SME Credit Guarantee Scheme, and SME 
Credit Guarantee Scheme designa ted for Special Products as indicated in WT/TPR/S/181are 
consistent with the WTO ASCM?  And what benef its have these and other schemes for SMEs yielded 
for SMEs?  Tariffs 
Re WT/TPR/S/181 page 30, "Macao, China is consid ering binding more tariff lines in the current 
round of trade negotiations, provided that mutu ally satisfactory results can be achieved." 
 Will Macao, China give a broad indication on which tari ff lines it is considering to bind?  Separately, 
would it be considering in participating in sect oral tariff negotiations under the current DDA 
negotiations?  
Other charges on imports 
Re WT/TPR/S/181 page 31, "imports of tobacco pr oducts, alcoholic drinks, and fuels and lubricants 
are subject to consumption taxes levied on their c.i. f. value... these taxes are applied to domestically 
manufactured goods as well as imports, but as there is little, if any, local production, they primarily 
affect imports." It was further noted that motor cars and other motor vehicles with import value up to 
P100,000 would be levied at 30%; for import valu e between P100,001 to P200,000, they would be 
levied at 35%; for import value between P201,000 to P300,000; they would be levied at 45%; and 
finally, for import value exceeding P300,001,  they would be levied at 55%.   
 
Will Macao, China share with us the rationale fo r using such an excise duty structure for motor 
vehicles, instead of having an uniform ad-valorem  rate independent on import value? 
 
Government Procurement 
Re WT/TPR/S/181 page 47, "Macao, china does not participate in the WTO Plurilateral Agreement 
on GPA although the authorities state that procuremen t policies are being revised with a view to 
achieving more consistency w ith international practices." 
 Will Macao, China indicate reasons for its current re servations in signing onto the GPA? And, given 
that "procurement policies are being revised w ith a view to achieving more consistency with 
international practices,  will it consider becoming a signatory of the GPA? 
 
Gaming 
Re WT/TPR/S/181 page 53, "the Government carries out strict and thorough inspection and 
monitoring of the concession companies.  Any expansion of the concessionaires or the sub-
concessionaires' operations is subject to its prior approval". 
 What privileges and obligations do co ncessionaires and sub-concessionaires have? 
 WT/TPR/M/181/Add.1 
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  Bilateral agreements 
Re WT/TPR/S/181 page 59, "Mainland China has agreed to apply a zero tariff to all imported goods 
from Macao, China from 1 Jan 2006 as long as they satisfy CEPA origin rules and go through the 
required process to establish their origin.  Rules of origin for 625 tariff lines have been developed, 
including foodstuffs... and optical parts."    Have the rules of origin for the rest of the go ods been agreed?  Could Macao, China give a broad 
indication to what these specific rules of origin ar e and how these reflect the manufacturing pattern of 
Macao, China-based manufacturers?  
QUESTIONS BY THE UNITED STATES
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 
Measures Directly Affecting Imports - Import licensi ng, prohibitions, and other restrictions - Import 
licensing  
 1.  We note that paragraph 16 on page 32 of the Secretariat report states that there are only a few categories of products where the import license that ca nnot be obtained within three working days of 
the application.  In Table III.3 (pages 33-34), th e only category in which the applications extend 
beyond ten working days is for arms, ammunition and explosive.   
Please confirm that the licenses issued within 3-6 working days are automatic licenses and 
that approval of the application is granted in all cases. 
 
Measures Directly Affecting Imports - Standards and other technical requirements - Standards, 
technical regulations, testing, and certification  
 2.  We note that paragraph 34 on page 37 of the Secretariat report states that Macao, China’s approach 
to standards is to “align standards used in MSAR with international standards or overseas standards, 
where appropriate.”  
 
Please further clarify what is meant by overseas standards.  How do international standards 
and overseas standards differ?  Also, on what basis does Macao, China determine whether or 
not a standard is “appropriate”? 
 
Measures Affecting Exports - Export support
 
 3.  Paragraph 58 on page 43 of the Secretariat report states that, in order to promote economic 
development, “the Government offers tax incentives, inter alia , for projects that promote exports to 
new markets.”   
 
Please provide further information regarding these tax incentives, e.g., the type of tax 
incentive provided and requirements for co mpanies to receive these incentives.   
 Measures Affecting Exports - Export promotion and marketing assistance
 
 
4.  Paragraph 60 on page 43 of  the Secretariat report describes efforts by the Macao Trade and 
Investment Promotion Institute (IPIM) to promote tr ade and attract foreign investment.   It is our 
understanding that, in addition to the assistance noted in this report, the IPIM offers the following 
additional incentives: (1) property tax exemptions fo r real estate purchased exclusively for industrial 
purposes; (2) total exemption of the industrial tax;  (3) a 50 percent reduction of the complementary 
(profits) tax; and (4) a full exemption of the cons umption tax on fuel supplied to industrial units.   WT/TPR/M/181/Add.1 
 Page 5 
 
 
  Further, in order to qualify for the above-menti oned incentives, industrial companies must meet at 
least one of the following requirements:  promot e economic diversification; contribute to the 
promotion of exports to new unrestricted markets; promote added value; or contribute to technological 
modernization.   
 
Please provide further information regarding these tax incentives, e.g., the type of tax 
incentive provided and requirements for co mpanies to receive these incentives.   
 
Measures Affecting Production and Trade - Taxation System and tax incentives  
 5.  Paragraph 63 on page 45 of the Secretariat report states that, in order to promote Macao, China's 
long-term development, the “Government offers full or partial exemptions from tax for projects that 
benefit the Region's development.”    
Please provide further information regarding these tax incentives, e.g., the type of projects, 
the type of tax incentive provided and requirements for companies to bid on the projects and receive these incentives.   
 Measures Affecting Production and Trade - Non-tax and other forms of assistance 
 
 
6.  In its most recent subsidies notification to the WTO (G/SCM/N/155/MAC), Macao, China states 
that the Government does not grant or maintain s ubsidies as defined in paragraph 1 of Article 1, 
which are specific within the meaning of Article 2 of  the Subsidies Agreement.  However, several of 
the incentives described in this repor t appear to meet this definition, include several programs that 
appear to be prohibited, as provided under Article 3 of the Subsidies Agreement.  As such, we would 
encourage Macao, China to provide information on all s ubsidy programs that meet the requirements 
under Article 25.  7.  Paragraph 67 on page 47 of the Secretar iat report describes the process through which the 
Government allocates industrial and commercial land to companies in Macao, China.   
 
A) Please provide further information rega rding how the government calculates land 
premium payments under the “Land La w” referenced in Box III.1.   
 B) Please also explain whether there are ci rcumstances, under which the land leased to 
companies by the Government is provided at preferential rates. 
 Measures Affecting Production and Trade - Intellectual Property Rights Protection
 
 8.  On March 9, 2007, the Government of the People’s Republic of China notified the World Intellectual Property Organization that it had de posited instruments of accession to the WIPO 
Copyright Treaty and the WIPO Performances an d Phonograms Treaty.  These instruments of 
accession state that these Treaties “shall not apply … to the Macao Special Administrative Region of the People’s Republic of China.”    
What steps is Macao, China taki ng to accede to these Treaties? 
 
9.  Please describe the status of Macao, China’s e fforts to implement in its domestic law a making-
available right, legal protections for technologi cal protection measures and rights management 
information, and any exceptions or limitations to in fringement liability for Internet service providers.  
 WT/TPR/M/181/Add.1 
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  IV.  TRADE POLICIES BY SECTOR 
 10.  Footnote 2 page 56 of the Secretariat report states that “Macao does not need to import all its raw 
materials for local production of “made in Macao” te xtile and clothing articles for export to its main 
markets… because Macao participates in an Ou tward Processing Arrangement (OPA) under which 
many manufacturing phases may be performed outside Macao, as long as the rule of origin step is carried out locally.”    
What mechanisms have the Macao, China authorities established to ensure that the origin-conferring 
operation for textile and a pparel exports is carried out in Macao, China? 
 
QUESTIONS BY COLOMBIA
 
 
Secretariat report WT/TPR/S/181   
III. Trade policies and practices by measure (2) Measures directly affecting imports (x) Government procurement  (b) procedures - paragraph 46 
 
1. Which companies have exclusive supply rights? 
2. May a foreign company have exclusive supply rights?  If it may, what is the 
procedure to obtain such rights? 
3. Which goods, services or works can have exclusivity? 4. Regarding the exception “it is in the inter ests of the Macao, SAR, given the nature of 
the goods, works or services required, to awar d directly to a particular entity”, what 
determines such interest? 
 
III. Trade policies and practices by measure (4) Measures affecting production and trade (ii) Non-
tax incentives and other forms of assistance – paragraph 66  
 5. Have government-funded interest rate  subsidies been notified to the WTO? 
 6. Is there a plan to gradually eliminate those subsidies? 
 7. How do enterprises that export textiles and apparel benefit from such subsidies? 
 
QUESTIONS BY HONG KONG, CHINA
 
 
Maritime Transport Services  
(WT/TPR/S/181, P. 61, Para. 17; and WT/TPR/G/181, P. 14, Para. 49) 
1. We are pleased to note that, compared to its Uruguay Round commitments, Macao, 
China has made a considerable expansion of  the scope of potential liberalization in 
the current Round, introducing new commitments in a number of service sectors.  We 
however note from its revised offer (TN/S/O/MAC/Rev.1) that Macao, China still has 
no offer in transport services except certain services auxiliary to all modes of 
transport.  In the light that Macao, China is now expanding its maritime transport services and that there are no restrictions on the number of sea transport operators, we 
are interested in knowing whether Macao , China has any plan to undertake 
commitments in maritime transport sector in its next offer.  We would like to know the specific concerns if M acao, China has no such plan. 
Telecommunications
 
(WT/TPR/S/181, P. 61-63, Paras. 18-27; and WT/TPR/G/181, P. 13, Para. 41) 
2. We note that there was a renegotiation of  the concessionary agreement between the  WT/TPR/M/181/Add.1 
 Page 7 
 
 
  Government of the Macao Special Administrative Region (MSAR) and Macao 
Telecommunications Company (CTM) and consequently, CTM’s exclusive rights on 
fixed lines, data communication and leased lines were extended in 1999 to 2011 
whereas the market for mobile, internet a nd other value-added services was agreed to 
be open to competition.  Given MSAR’s co mmitment in the long term to liberalizing 
the telecommunications sector as stated in th e Secretariat’s Report, what is MSAR’s 
further liberalization plan in the sector, particularly in respect of the provision of 
those services currently under CTM’s excl usive rights after the expiry of the 
concerned concessionary agreement? 
3. We are glad to note that pursuant to the liberalization of mobile telephony and 
internet services, the MSAR is conducting a feasibility study on the establishment of 
a second fixed or wireless network for the provision of broadband services.  Grateful if Macao, China would confirm whether the provision of broadband services falls 
under CTM’s existing exclusive operation until the end of 2011 and indicate the 
intended timeframe for the comp letion of feasibility study. 
QUESTIONS BY THE EUROPEAN COMMUNITIES
 
 
II.  TRADE  POLICY  REGIME:  FRAMEWORK  AND  OBJECTIVES  
Sustainable development 
1. Could Macao, China provide some informa tion about how the issue of trade and 
sustainable development fits into the overall development strategies of Macao, 
China? Have any particular measures been taken since the last Trade Policy Review 
in 2001? 
Trade and environment  
 
2. What mechanisms does Macao, China have in  place to ensure adequate coordination 
of environmental policy and trade policy? 
 (2)
 TRADE  AGREEMENTS  AND  ARRANGEMENTS 
WTO Secretariat's Report, page 23, para. 16 
The impact of CEPA on trade in goods and trade in services remains limited, although successive 
rounds of supplementary protocols have been concluded since 2003.   
3. Could Macao, China provide detailed statis tics of exports of goods under CEPA and 
the total number of service providers applying for CEPA certification?   
 
4. How does Macao, China's authorities intend to en sure in the future that CEPA has no 
discriminatory effects on third coun try investors in Macao, China? 
 
5. Are any measures foreseen to reinfo rce the fight against corruption? 
 WT/TPR/M/181/Add.1 
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  III.  TRADE POLICIES AND PRACTICES BY MEASURE  
(2) MEASURES AFFECTING IMPORTS  
v) Other charges on imports 
 
WTO Secretariat's Report, page 31, para. 14.  
According to the WTO Secretariat's Report, imports  of tobacco products, alcoholic drinks, and fuels 
and lubricants are subject to consumption taxe s levied on their CIF value. Moreover, since 
17 June 2002, a motor vehicle tax has been levied  by the Finance Services Bureau. These taxes are 
applied to domestically manufactured goods as well as imports; however, since there is a reduced, if 
any, local production, they primarily affect imports.  
6. Could Macao, China explain the reasons for applying the abovementioned 
consumption taxes?  
 
7. Could Macao, China indicate the number of imports affected?  
  
8. Would Macao, China consider that levying this tax could have the effect of an 
"import tax"?  
 
(vii) Sanitary and phytosanitary measures 
WTO Secretariat's Report, page 37, para. 35-38 
 
Provided that the Chief Executive's Decision No. 211/ 2001 is still in force, the EC notes that Macao, 
China put a ban on imports of animal products. So far it seems that this measure affects Japan only 
but if the reason is to prevent the outbreaks of BS E this will be extended to all the BSE affected 
countries. In this context,  
9. Has this Chief Executive's Decision been properly updated in the light of recent OIE 
developments for BSE?  
10. If not, does Macao, China plan to amend its national legislation in accordance to OIE 
international rules concerning BSE? If not in full, would Macao, China introduce in 
its legislation, at least part of them, in particular the rules concerning products that 
should be safely traded regardless of the BSE risk status? 
(x) Government Procurement 
WTO Secretariat's Report, page 4, para. 47-48 
 Macao, China stated that it " has underlined its flexibility and openn ess to continue exchanges of views 
with GPA Members with a view to achieving mo re consistency with international practices ".  The EC 
remains at Macao, China's disposal to exchange views,  in particular in view of the fact that a new 
GPA text has been frozen since December 2006.   
11. When does Macao, China intend to resume work  in the context of the new GPA text?  
  WT/TPR/M/181/Add.1 
 Page 9 
 
 
  WTO Secretariat's Report, page 41, para.49   
12. When will the e-procurement coordina tion work group, working under 'e-
Government', submit recommendations  for legislative amendments? 
 
WTO Secretariat's Report, page  vii, para.9 
 
According to the WTO Secretariat's Report, open tendering accounts for less than  10% of public 
sector construction contracts.   
 
13. Can Macao, China explain why public tenderi ng has not been used more frequently, 
especially in recent years when many larg e-scale public infrastructure projects were 
carried out, such as the facilities for the East Asian Games, a new bridge and two new ferry terminals? 
 
In para 48, the WTO Secretariat's Report notes that the decree law of 1985, governing the procedures 
for public tender procurement has not been revised and that within the given general procedures, 
specific items may become outdated and require amendments:    
14. Does Macao, China consider that there is a need to enhance transparency of public 
procurement procedures, or of strengthe ning the regulatory framework for public 
procurement in order to improve the prevention of corruption? 
 
(4) MEASURES AFFECTING PRODUCTION AND TRADE  
(i) Taxation system and tax incentives 
Macao, Chinas' Report, page 11, para.31-32 
The Report contains a description of tax incentives gr anted for foreign investment in Macao, China. 
These incentives are described as to include full or partial corporate/profit tax exemption. They are 
further described as to be open both to local and foreign investors. However, as many tax regimes 
may de facto be aiming solely at attracting foreig n investment, it is not yet clear whom this tax 
legislation addresses actually and the extent of its impact. 
15. Could Macao, China indicate whether the abovementioned measures comply with one 
or more of the following criteria?  
- an effective level of taxation which is si gnificantly lower than the general level of 
taxation in the country concerned;  
- tax benefits aiming at non-residents;  
- tax incentives for activities which are is olated from the domestic economy and 
therefore have no impact on the national tax base;  
- granting of tax advantages even in the absence of any real economic activity;  
- the basis of profit determination for co mpanies in a multinational group departs from 
internationally accepted rules, in par ticular those approved by the OECD; 
- lack of transparency WT/TPR/M/181/Add.1 
Page 10  
 
  In addition, the EC would like to ask for furthe r clarification regarding the impact of the tax 
incentives which could lead to discriminatory fiscal incentives to certain regions and/ or sectors.   
16. In particular the EC would like to know whether there is any background information 
and quantification available on the preferen tial tax regimes in Macao, China, notably 
in view of the below criteria: 
- the presence and extent of a benefit,  - the aid being granted by the Authorities of Macao, China  
- the potential threat to distort competition and affect trade between Macao, China and 
other countries, notably the EC, and  
- the selectivity of the aid towards the addressed beneficiaries.  
WTO Secretariat's Report, page 43, para. 61-63 
The EC would like Macao, China to elaborate on the compliance of its regulatory framework with the 
principles of transparency and effective exchange of  information.  It should be noted that the absence 
of transparency is defined as when provisions are relaxed at administrative level in a non-transparent 
way and therefore impede to identify the final owner or beneficiary of assets, liabilities or 
transactions. Tax systems are considered transparent,  when reliable information (in particular bank, 
ownership, identity and accounting in formation) is available and power s to obtain and evaluate such 
information can be provided in response to a request. 
As regards effective exchange of information, this  is characterized by the fact that a jurisdiction 
effectively exchanges reliable information and is based upon the presence of a noteworthy number of 
Double Taxation Conventions and/or  Tax exchange of information agreements, including with EC 
Member States. Therefore, in case of absence of such agreements a tax regime lacks effective 
exchange of information for tax purposes.  
 17. Concerning Transparency and Effective Exchange of Information for tax purposes, 
could Macao, China provide a clearer picture of their present and envisaged legislative framework regarding both issu es (e.g. tax treaties under negotiation, 
national legislation under revision or elim ination of domestic tax interest for 
exchange of information purposes)? 
 WTO Secretariat's Report, page 43, para. 62.  
The WTO Secretariat's Report indicates that the Gove rnment of Macao, China has traditionally kept a 
low average taxation rate. In particular, the maxi mum profit tax is 12% (recently reduced from 15%). 
In addition, personal income in excess of P 280,000 is subject to a 12% flat rate.  
 
 18. Would Macao, China's authorities consider  the possibility of enhancing the exchange 
of information regarding taxation?  
  WT/TPR/M/181/Add.1 
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  (ii) Non-tax incentives  and other forms of assistance 
WTO Secretariat's Report, page 46, para. 65 
Macao, China encourages through repayable a nd non-repayable subsidies investment for 
manufacturing of new products that involve high economic risk, R&D furthering Macao, China's 
industrial development and installation of anti-pollution equipment and its operation. 
19. Have the authorities of Macao, China ev aluated the effects of these subsidies? 
20. With regard to investment for manufacturi ng, what were the effects with making such 
production sustainable? 
(b) Allocation of industrial land 
WTO Secretariat's Report, page 47, para 67 
21. Could Macao, China elaborate briefly on the policies underlying the allocation of 
government-owned land  and on the criteria decisive for assessing "a project (of entities needing land) as beneficial to the growth of Macao, China"?   
(iii) Intellectual property rights 
WTO Secretariat's Report, page 49 – 52, para. 76-87 
 
Macao, China indicates that Macao, China’s courts have implemented a special expedited prosecution 
system that allows a suspect to be brought to trial expeditiously. 
 
22. Could Macao, China describe in which c onditions this special prosecution procedure 
can be used? 
 
WTO Secretariat's Report, page51, para. 83 
 
In footnote 25, under paragraph 83, it is stated that the Customs Service has the authority to impose 
administrative penalties on offenders for cases involvi ng only violation of administrative regulations. 
 
23. Could Macao, China specify the level of  penalties that can be imposed by the 
Customs Service? 
 
For criminal cases, it is stated that approp riate penalties are imposed on the violators. 
 
24. Could Macao, China specify the level of pe nalties that can be imposed by the judicial 
authorities? 
 WTO Secretariat's Report, page52, para. 86 
 
It is stated that no compulsory licence h as been granted in Macao, China so far.  
 
25. Could Macao, China briefly describe the conditions and procedure under which a 
compulsory licence can be granted? 
 WT/TPR/M/181/Add.1 
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  (iv) Competition policy 
 WTO Secretariat's Report, page52, para. 88-89 
 The WTO Secretariat's report notes that Macao,  China does not have a comprehensive law on 
competition policy, but that Government follows closely competition policies formulated by other 
WTO Members.   
26. Could Macao, China inform whether there are any plans to establish a comprehensive 
law on competition policy in the future? 
  IV.
  TRADE POLICIES  BY SECTOR  
 
(2) MANUFACTURING  
WTO Secretariat's Report, page 56,  para. 5 and footnote 2 and page 57, para. 7 
 
The WTO Secretariat's Report notes that already be fore the elimination of international quotas on 
textiles and clothing in 2005, the textiles and clothi ng sector in Macao, China was in decline, both in 
absolute and relative terms, but that a reversal of  this decline began from the second half of 2005.  
 
 27. Could Macao, China give more details  on the increase of textile and garment 
production that has returned to Macao, China? 
 
 28. Could the same details be given for the increases in the footwear sector? 
 (3)
 SERVICES  
 WTO Secretariat's Report, page 55, para. 1 
 
Macao, China's rapid development in recent years has b een mainly attributable to the combined effect 
of the Individual Traveller Scheme and the libera lization of the gaming industry.  In addition to 
gaming, part of the telecom sector has also been liberalised.  
 29. Are there any other sectors of the ec onomy that  Macao, China's authorities would 
consider for liberalisation so as to facilita te the entry of new economic agents in 
sectors such as public utilities and maritime and air transport services? 
 
(i) Telecommunications 
 
WTO Secretariat's Report, page 63, para.25 
 Mobile and internet services have been liberalised , including the possibility for foreign companies to 
provide internet services with a license of up to five years. Basic telecommunication services have, 
however, not been liberalised and the one private provider's exclusive concessionary agreement has 
been extended to 2011.  
 30. Could Macao, China elaborate upon the reasons for this decision? 
  WT/TPR/M/181/Add.1 
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  (ii) Financial services 
(a) Banking services WTO Secretariat's Report, page 64, para.29 The legislative framework of Macao, China provi des for a statutory bank secrecy not limited to 
particular customers or market segments. Moreove r, bank information for exchange of information 
purposes can only be obtained in criminal tax matt ers. The procedures to obtain bank information 
include the requirement of a court order, based on a specific domestic definition of a criminal offence.  
 31. In view of the need to establish a level playing field in trade and in investment in 
financial services also with regard acces s for taxation purposes to information 
available to banks and other financial ins titutions from Macao, China, whether and if 
so, to which extent, Macao, China intends or actually undertakes a modification of its 
legislative framework on banking secrecy, notably :  
  - the abolishment of the possibility to  oppose statutory bank secrecy to requests  
for access from tax authorities which are not motivated by a domestic tax 
interest, 
 - the extension of the exchange of information, including on bank accounts, to 
civil tax matters, and 
  - the direct availability of bank inform ation to the competent tax authorities for  
exchange of information purposes, or any equivalent measure. 
 
FOLLOW-UP QUESTIONS FROM THE EUROPEAN COMMUNITIES
 
 
1) when issuing SPS related legislation, are the existent relevant International standards settled 
by IPPC, CODEX and OIE taken into consideration?  If not why? If it is the case, then in what 
percentage of cases the international st andards have already been applied? 
2) reply to EC question 14 on government procurem ent - is it possible to have a follow-up on the 
timeline when this new legislation is likely to be adopted?  
 
QUESTIONS BY JAPAN  
 
Report by the Secretariat (WT/TPR/S/181) 
 III. TRADE POLICIES AND PRACTICES BY MEASURE (2) MEASURES DIRECTLY AFFECTING IMPORTS 
(iii) Tariffs 
Question 1 (paragraph 13, page 30) 
The Secretariat report explains that Macao, China ha s bound 28.6% of its tariff lines at zero while no 
tariffs are applied to imports entering Macao, China.  The report also points out that Macao, China is 
considering binding many more tariff lines in th e current round of negotiations, provided that 
mutually satisfactory results can be achieved. 
 
Please elaborate on the consideration of Macao, China to bind tariff lines in the current round of negotiation. 
  
(vi) Anti-dumping, countervailing and safeguard measures 
Question 2 (paragraph 23, page 35) WT/TPR/M/181/Add.1 
Page 14  
 
  The Secretariat report points out that Macao, China has no laws or regulations governing anti-
dumping, countervailing actions or safeguard measures.  
Japan would like to be informed how Macao, Ch ina takes measures in case that anti-dumping, 
countervailing actions or sa feguard measures need to be taken for the future. 
 
(4) MEASURES AFFECTING PRODUCTION AND TRADE 
(iii) Intellectual property rights protection 
Question 3 (paragraph176-87, page 49-52) Japan appreciates that to protect intellectual prope rty rights, Macao, China has made positive efforts, 
such as to establish the related laws for contro lling over optical disc piracy and to improve the 
enforcement system under which the Macao Customs Service seizes infringing goods. 
 Japan would like to ask Macao, China to contin uously take effective measures for protecting 
intellectual property rights. 
 
QUESTIONS BY CANADA
 
 Report by the Secretariat (WT/TPR/S/181)
 
 
Part IV. Trade Policies by Sector, (3) Services, (i) Telecommunications, page 61, paragraph 19: 
  
The Secretariat Report notes that Macao SAR granted two mobile licences on a merit basis in 2002.  1. Could Macao SAR provide further details on how the number of licences to be granted is 
determined?  
 2. Could Macao SAR provide an y information on plans to issue any additional new mobile 
licenses?  Part IV. Trade Policies by Sector, (3) Services, (i) Telecommunications, page 63, paragraph 24: 
 
The Secretariat Report notes that Ma cao SAR has tabled an offer in the Doha Round of negotiations 
that includes mobile radio telephone services and radio paging services for local and international 
services. Canada notes that Macao SAR’s revised offer excludes Mode 1, which is vitally important to 
the delivery of services by electronic mean s such as business process outsourcing.  
 3. Could Macao SAR provide furt her details on why Mode 1 is excluded from its revised offer 
on services?  4. Does Macao SAR have any plans to extend its  offer to this mode of service delivery? 
 
Part IV. Trade Policies by Sector, (3) Services, (i) Telecommunications, page 63, paragraph 26: 
 
The Secretariat Report notes that Macao SAR maintain s no restrictions on foreign ownership, size of 
share holding, or other restrictions on investment in value-added telecom services. However, Canada 
notes that W/120 2Ck (electronic data interchang e) and 2Cn (on-line information and/or data 
processing including transaction processing) are not included in Macao SAR's revised offer on 
services.  5. Could Macao SAR clarify whether or not an y restrictions are maintained on these value-
added services in its domestic regime? 
  WT/TPR/M/181/Add.1 
 Page 15 
 
 
  6. In addition, could Macao SAR please provi de further details on why these sub-sectors of 
value-added telecommunications services are excl uded from Macao SAR’s revised offer on services? 
 
7. Does Macao SAR have any plans to extend its offer to include complete coverage of the 
value-added telecommunications sector?  
Part IV. Trade Policies by Sector, (3) Services, (i) Telecommunications, page 63, paragraph 27: 
 The Secretariat Report notes that Macao SAR is currently undertaking a study on the feasibility of 
establishing a second fixed or wireless network for the provision of broadband services.   8. Could Macao SAR provide information on wh en it anticipates that this study will be 
completed?  Part IV. Trade Policies by Sector, (3) Services,  (iii) Transport, (b) Air transport, page 
70, paragraphs 44-47:  
 
In 2001, the joint-venture SAIM won a 25-year extension of its original 25-year concession until 
2039.  In December 2001, SAIM unveiled a plan to develop a free trade logistics centre in which 
cargo could be consolidated and stored without passing through customs based out of Macao SAR’s 
new international airport.  9. Could Macao SAR provide information on th e ownership structure of the international 
airport? For example, who owns the airport? Is it subsidized? Are there airport access issues?  
10. Could Macao SAR provide additional inform ation on the ownership of its air carriers? 
Specifically Canada would be interested in learning  more about the joint venture involving Shun Tak 
Holdings, Air Macao and the China National Aviati on Company and the two other low-cost airline 
companies that have been  incorporated in Macao. 
 
11. Could Macao SAR provide add itional information on its intern ational air policy? Does Macao 
SAR advocate open air agreements?  12. Does Macao SAR have competency in air bilate ral relations? If not, does such competency lie 
with Beijing? 
 
General Observation: 
 
There is essentially no information on the laws  governing Maritime Transport in Macao. Canada 
recommends that information of this nature be  included in future trade policy reviews. 
 WT/TPR/M/181/Add.1 
Page 16  
 
  REPLIES PROVIDED BY MACAO, CHINA 
SINGAPORE  
Question  
Structural policies 
Re WT/TPR/S/181 page 9, "the Government has ta ken measures to encourage diversification of the 
economy including a guaranteed loan scheme for SMEs  and that are not directly benefiting from the 
expansion of the tourism and gaming sectors.  Re WT/TPR/S/181 page 48/49, "given that SMEs play 
an important role in the economy,  supporting them has become one of the Government's long term 
policies.". 
Will Macao, China indicate how the SME Ai d Scheme, SME Credit G uarantee Scheme, and SME 
Credit Guarantee Scheme designated for Special  Products as indicated in WT/TPR/S/181are 
consistent with the WTO ASCM?  And what benefits  have these and other sch emes for SMEs yielded 
for SMEs? 
Answer  
These incentive schemes are consistent with the ASCM  in that they are not specific. The schemes 
benefiting small and medium enterprises are horizont al in nature, having no specific industry in 
consideration. Thus, these incentives do not fall within  the notification requirem ent of Article 25.2 of 
the ASCM. 
Macao, China has introduced 3 different financial schemes to assist SMEs, namely the “SME Aid 
Scheme”, “SME Credit Guarantee Scheme” and “SME Credit Guarantee Scheme Designated for Special Projects”, in order to deal with the econom ic difficulties caused by the outbreak of SARS in 
May 2003: 
(a) The “SME Aid Scheme” provides interest-free fi nancial aid to assist SMEs to purchase equipment 
needed for their operation; renovation, decorati on and expansion projects; capital for signing 
commercial concession contracts or franchising contr acts of operation; acquisition of exclusive rights 
for use of technology and intellectual property. The legislation of this scheme is under Administrative Regulation no. 9/2003 of 12 May 2003. (This Regulation was revised as Administrative Regulation 
no.14/2006, which entered into force on November 1, 2006) 
(b) The “SME Credit Guarantee Scheme” provides each  SME with a credit guarantee equal to 50% of 
the loan approved by the participating banks. The amount of credit guarantee provided excludes 
interest and any other expenses re lated to repayment of the loan. 
(c) “The SME Credit Guarantee Scheme Designated for Special Projects” provides credit guarantee of 
up to 100% of the amount needed for SMEs to fina nce special projects, so as to support them to 
develop reforming projects and dive rsify their businesses; to promote and advertise their own brands; 
or to improve the quality of their products. In addi tion, this scheme aims to assist SMEs to acquire 
from banks the capital needed to resolve short-term  financial difficulties arising from payment of 
employees’ salaries, rental expenses etc., due to extr aordinary, unpredictable events or events which 
are beyond human control, especially natural disasters or epidemics.  
The legislation of “SME Credit Scheme” and “SME Credit Scheme Designated for Special Projects” 
are under Administrative Regulation no.19/2003 of 14 July 2003.  WT/TPR/M/181/Add.1 
 Page 17 
 
 
  Question  
Tariffs 
Re WT/TPR/S/181 page 30, "Macao, China is co nsidering binding more tariff lines in the current 
round of trade negotiations, provided that mut ually satisfactory results can be achieved." 
Will Macao, China give a broad indication on which ta riff lines it is considering to bind?  Separately, 
would it be considering in participating in sect oral tariff negotiations under the current DDA 
negotiations? 
Answer  
Since Macao, China has already bound  all agricultural products listed in Annex I to the Agreement on 
Agriculture at zero, further bindings will fall on non-agricultural tariff lines.  In the meantime, as 
Members are still seeking consensus on many im portant issues, Macao, China is following the 
development of the NAMA negotiations very closely.  Nevertheless, Macao, China is willing to bind 
more tariff lines as a contribution to  the current Doha Round negotiations. 
On the other hand, Macao, China, for the time being,  does not consider participating in sectoral tariff 
negotiations by the “critical mass” approach.  
Question  
Other charges on imports 
Re WT/TPR/S/181 page 31, "imports of tobacco pr oducts, alcoholic drinks,  and fuels and lubricants 
are subject to consumption taxes levied on their c. i.f. value... these taxes are applied to domestically 
manufactured goods as well as im ports, but as there is little, if any, local production, they primarily 
affect imports." It was further noted that motor cars and other motor vehicles with import value up to 
P100,000 would be levied at 30%; for import value between P100,001 to P200,000, they would be levied at 35%; for import value between P201,000 to P300,000; they would be levied at 45%; and 
finally, for import value exceeding P300,001, they would be levied at 55%.   
Will Macao, China share with us the rationale for using such an excise duty structure for motor 
vehicles, instead of having an uniform ad-v alorem rate independent on import value? 
Answer
 
The motor vehicles tax is not an import tax and it is a form of consumption tax. The tax is levied on 
the fiscal price of each vehicle model, which is fixed by the Commission of Motor Vehicles Tax. 
Fiscal price is introduced mainly to avoid different st andards of declaring c.i.f. value within the motor 
vehicle industry and the tax is levied only at the first time of purchasing (new motor vehicle). 
Question  
Government Procurement 
Re WT/TPR/S/181 page 47, "Macao, china does not  participate in the WTO Plurilateral Agreement 
on GPA although the authorities state that procurem ent policies are being revised with a view to 
achieving more consistency with international practices." 
Will Macao, China indicate reasons for its curren t reservations in signing onto the GPA? And, given 
that "procurement policies are being revised wi th a view to achieving more consistency with 
international practices, will it consid er becoming a signatory of the GPA? WT/TPR/M/181/Add.1 
Page 18  
 
  Answer  
There are laws and regulations on government proc urement, which provide a clear indication for all 
government agencies involved in the procurement process to follow. In essence, the procurement 
procedures and disciplines are virtually aligned with the international standards. 
Macao, China is not a party to the WTO Plurilateral Agreement on Government Procurement 
Agreement (GPA). This is mainly due to the di verse nature of procurement of goods and services 
throughout various governmental entities.   In fact, to  participate in GPA, the legislative framework in 
the procurement system of the SAR will need to be subject to further revisions. Macao, China 
reiterates its openness and flexib ility vis-à-vis this issue. 
Question  
Gaming Re WT/TPR/S/181 page 53, "the Government carries out strict and thorough inspection and 
monitoring of the concession companies.  Any expansion of the concessionaires or the sub-
concessionaires' operations is subject to its prior approval". 
What privileges and obligations do co ncessionaires and sub-concessionaires have? 
Answer
 
All concessionaires and sub-concessionaires are treated  equally and fairly by the Macao government 
throughout the course of their operation, thus, no single gaming operator possesses certain privileges 
that others do not have.  
Each of the concessionaires has the liberty to su bmit their requests related to gaming, such as 
expansion of their casino, addition of facilities, tables and slot machines or introduction of new 
gaming rule etc., to the Macao government for a pproval.  Whether such requests are approved or 
denied will be subject to the decision of the authority. 
All the obligations of the concessionaires and sub-c oncessionaires have already been set out in their 
respective concession or sub-concession contract . With regard to concessionaires and sub-
concessionaires’ obligations, please refer to Table no.10, page 74 of the Secretariat’s Report. 
Question  
Bilateral agreements 
Re WT/TPR/S/181 page 59, "Mainland China has agreed  to apply a zero tariff to all imported goods 
from Macao, China from 1 Jan 2006 as long as they satisfy CEPA origin rules and go through the 
required process to establish their origin.  Rules of origin for 625 tariff lines have been developed, 
including foodstuffs... and optical parts."   
Have the rules of origin for th e rest of the goods been agreed?  Could Macao, China give a broad 
indication to what these specific rules of origin a re and how these reflect the manufacturing pattern of 
Macao, China-based manufacturers? 
Answer  
As stipulated by the Supplement II to CEPA in 2005, the Mainland agreed to apply zero tariffs on all 
imported goods of Macao orig in as from 1 January 2006.   WT/TPR/M/181/Add.1 
 Page 19 
 
 
  According to the latest CEPA implementation, st arting from 1 Jan 2007, rules of origin have been 
agreed for Macao goods falling under 648 Mainland  China 2007 Tariff Codes. These goods therefore 
benefit from zero tariffs. For the rest of goods of Macao origin, the Supplement II to CEPA in 2005 
sets out the latest automatic mechanism conferring th e rules of origin, which states as below (Also see 
WTO document: WT/REG163/1/Add.2 of 16 January 2006):  
 “Both sides agreed to amend the detailed impl ementation procedures in Article 5 of Annex 1 of 
“CEPA” – “Arrangements for Implementation of Zero Tariff on Trade in Goods” as follows: 
 “(1) Submission 
  1. From 1 January 2006, Macao manufacturers may submit lists of goods 
 subject to zero tariff to the Macao Economic Services. 
  2. The Macao Economic Services shall, prior to 1 March and 1 September each 
 year respectively, submit the list of goods verified and certified in accordance 
 with relevant rules of the Macao Special Administrative Region Government  to the Ministry of Commerce. 
 (2) Consultation and Promulgation 
  The Ministry of Commerce shall confirm and then pass the list of goods to the 
Customs General Administration.  The Customs General Administration and the 
Macao Economic Services shall enter into consultation on the rules of origin for the 
relevant goods.  The two sides shall complete  the consultations on the rules of origin 
before 1 June and 1 December each year respectively, add the rules of origin of the 
relevant goods to Table 1 of Annex 2 of  “CEPA”, and promulgate them. 
 (3) Implementation 
  The Mainland shall, no later than 1 July of the same year and 1 January of the 
following year respectively,  release the re levant imports on zero tariff basis in line 
with “CEPA” upon presentation of the certifi cates of origin issued by the Macao 
Economic Services.” 
The specific rules of origin can be classified by  the following 5 criteria in determining substantial 
transformation: (Also see WTO document: WT/REG163/1/Add.2 of 16 January 2006) 
 (1) the criteria for determining ‘substantia l transformation’ may include ‘manufacturing 
or processing operations’, ‘change in tariff heading’, ‘value-added  content’, ‘other 
criteria’ or ‘mixed criteria’; 
  1. ‘manufacturing or processing ope rations’ refers to the principal 
 manufacturing or processing operations carried out in the area of one side  which confer essential characteristics to the goods derived after the  operations; 
  2. ‘change in tariff heading’ refe rs to the processing and manufacturing 
 operations of non-originating materials carried out in the area of one side and  resulting in a product of a different four-digit tariff heading under the  ‘Product Description and Harmonized System Codes’.  Moreover, no  production, processing or manufacturing operations will be carried out in  countries or territories other than that side which will result in a change in the 
 four-digit tariff heading; WT/TPR/M/181/Add.1 
Page 20  
 
    3. ‘value-added content’ refers to th e total value of raw materials, component 
 parts, labour costs and product develo pment costs exclusively incurred in one 
 side being greater than or equal to  30% of the FOB value of the exporting 
 goods, and that the final manufacturing or processing operations should be 
 completed in the area of that side.  The formula for calculation is as follows: 
  value of raw materials + value of component parts +  
  labour costs + product development costs   ------------------------------------------------------ x 100% ≥ 30% 
  FOB value of the exporting goods 
  (i) ‘product development’ refers to pr oduct development carried out in the area 
of one side for the purposes of produc ing or processing the exporting goods.  
Development expenses incurred should be related to the exporting goods.  These 
expenses include fees payable for the development of designs, patents, patented 
technologies, trademarks or copyrights (co llectively ‘these rights’) carried out by the 
manufacturer himself, fees payable to a natura l or legal person in the area of one side 
for undertaking development of these rights, and fees payable for purchasing these rights owned by a natural or legal person in  the area of one side.  The fees payable 
should be clearly identifiable under generally accepted accounting principles and the 
requirements of ‘Agreement on Implemen tation of Article VII of the General 
Agreement on Tariffs and Trade 1994’; 
  (ii) calculation of the above ‘value-a dded content’ will be  consistent with 
generally accepted accounting principles and the ‘Agreement on Implementation of 
Article VII of the General Agreem ent on Tariffs  and Trade 1994’; 
  4. ‘other criteria’ refers to methods agreed by both sides in determining 
‘substantial transformation’, other than ‘manufacturing or processing operations’, ‘change in tariff heading’  and ‘value-added content’ as set out 
above. 
 5. ‘mixed criteria’ refers to the use of two or more of the above criteria in 
 determining origin. 
 (2) other additional conditions. If the ‘subst antial transformation’ criteria set out in 
paragraph (1) above are not adequate for determining origin, additional conditions 
can be used (such as brand requirement, etc) upon agreement by both sides.” 
For the existing goods enjoying zero tariff treatment, their export patterns mainly consist of cement; 
textiles and clothing; yarn; plastic bags; record able compact discs; printing ink and ribbons for 
typewriter; food (confectionery, biscuits and co ffee beans); refined copper foil and electric 
conductors, etc.  WT/TPR/M/181/Add.1 
 Page 21 
 
 
  UNITED STATES  
Question  
III. TRADE POLICIES AND PRACTICES BY MEASURE 
Measures Directly Affecting Imports - Import licen sing, prohibitions, and other restrictions - Import 
licensing  
1.  We note that paragraph 16 on page 32 of the Secretariat report states that there are only a few 
categories of products where the import license that  cannot be obtained within three working days of 
the application.  In Table III. 3 (pages 33-34), the only category in  which the applications extend 
beyond ten working days is for arms, ammunition and explosive.  
Please confirm that the licenses issued within  3-6 working days are automatic licenses and 
that approval of the application is granted in all cases. 
Answer  
Yes.  Licenses for these products are issued in 3-6 days, in all cases, if all requirements are met. 
Question  
Measures Directly Affecting Im ports - Standards and other t echnical requirements - Standards, 
technical regulations, testing, and certification  
2.  We note that paragraph 34 on page 37 of th e Secretariat report states that Macao, China’s 
approach to standards is to “align standards used in MSAR with international standards or overseas 
standards, where appropriate.”  
Please further clarify what is meant by o verseas standards.  How do international standards 
and overseas standards differ?  Also, on what basi s does Macao, China determine whether or 
not a standard is “appropriate”? 
Answer  
International standards are standards that have been  adopted by international bodies, such as ISO, ITU 
etc.  
Overseas standards are standards that have been adopt ed by a particular country, region or territory 
outside Macao.  
Whether or not a standard is considered “appropriate” depends on  how it accommodates the 
development stages of the local economy, so as to  facilitate trade and transfer of knowledge and 
technology. 
For instance: 
 - An import licence application for teleco mmunications equipment may be refused if 
the equipment does not comply with the technical standards applicable in Macao, China.  These technical standards are mo stly in line with ITU standards, i.e. 
international.   WT/TPR/M/181/Add.1 
Page 22  
 
   - The Macao Civil Engineering Laboratory (LECM) has prepared a set of codes and 
standards that become part of the lega l framework that governs civil engineering 
activities in Macao, following a detailed an alysis of the corresponding codes and 
standards used in China, Europe, Hong Kong, China and the United States, i.e. 
overseas. 
Question  
Measures Affecting Ex ports - Export support  
3.  Paragraph 58 on page 43 of the Secretariat re port states that, in order to promote economic 
development, “the Government offers tax incentives, inter alia, for projects that promote exports to 
new markets.”   
Please provide further information regarding these tax incentives, e.g., the type of tax 
incentive provided and requirements for companies to receive these incentives.   
Answer  
In order to enhance the competitive edge of M acao’s economy, the SAR Government has introduced 
certain incentive measures to promote export divers ification.  Enterprises registered with Macao 
Economic Services and trade associations, and particip ating in trade promotion activities are eligible 
to apply for incentives on the related expenditures in curred.  Such incentives are usually available for 
promotion activities organized by the Macao Trade a nd Investment Promotion Institute (IPIM).   
Incentives will be granted to the following expenditur es incurred in relation to participation in such 
trade promotion activities:  
Expenditures eligible for 100% incentives
 
  - Rent for exhibition space 
 - Construction, assembling and dism antling costs of exhibition booth 
 - Decoration costs of exhibition booth  - Expenses related to assistance in ope rating exhibition booth during the trade 
exhibition concerned 
 - Participation fees charged by trade associations 
Expenditures eligible for 60% incentives
 
 
- Production costs of printed materials (a dvertising leaflets, catalogues, brochures, 
etc.), up to a limit of MOP40,000 
- Production costs of audio-visual materials, up to a limit of MOP70,000 - Participation fees of certain trade fairs/exhibitions taken place outside Macao 
(including booth rentals and decoration costs), up to a limit of MOP60,000 
Expenditures eligible for 50% incentives
 
 
 - Freight charges of product samples for par ticipation of international fairs/exhibitions 
or trade delegations organized by IPIM, with limits of 20 kilos in weight for air freight or 3 cubic metres in size for sea freight 
 - Two return tickets of economy class flight, provided that the tickets are purchased 
from local travel agencies 
The export diversification incentives are applicable to all enterprises, both local and foreign, that 
participate in overseas fair and exhibitions.  WT/TPR/M/181/Add.1 
 Page 23 
 
 
  Question  
Measures Affecting Exports - Expor t promotion and marketing assistance  
4.  Paragraph 60 on page 43 of the Secretariat re port describes efforts by the Macao Trade and 
Investment Promotion Institute (IPIM) to promote trade and attract foreign investment.   It is our 
understanding that, in addition to the assistance noted in this report, the IPIM offers the following 
additional incentives: (1) property tax exemptions for real estate purchased exclusively for industrial 
purposes; (2) total exemption of the industrial tax; (3) a 50 percent  reduction of the complementary 
(profits) tax; and (4) a full exemption of the consum ption tax on fuel supplied to industrial units.  
Further, in order to qualify for the above-mentioned incentives, industrial companies must meet at 
least one of the following requirements:  prom ote economic diversification; contribute to the 
promotion of exports to new unrestricted mar kets; promote added value; or contribute to 
technological modernization.   
Please provide further information regarding these tax incentives, e.g., the type of tax 
incentive provided and requirements for companies to receive these incentives.   
Answer  
Macao, China always strives to encourage industria l diversification in the Region.  Thus, those 
industrial units that are eligible under the terms imposed by Law no.1/86/M of 8 February 1986 (with 
revision of Decree-Law No.35/93/M of 12 July 1993), will enjoy consumption tax exemption on 
importing diesel fuels and lubricant oils.  
The terms defining eligibility mainly state that the industrial units must make a beneficial contribution 
to Macao’s industrial development, for example by  promoting industrial diversification, improving 
Macao’s economic environment, introducing modern scientific technologies, or investing in high 
added-value products. 
Tax Exemption Terms and Conditions 
Complimentary Tax 
(Income Tax) When income generated through e ngagement in offshore business. No 
time-limit constraint. 
Industrial Tax No time-limit constraint. 
Donations Tax on free transfer of movable and unmovable property. Applied only to fixed and mobile property exclusively used in offshore 
business. No time-limit constraint. 
Property Transfer Tax For properties exclusively for offshore activities. 
Tax shall be paid whenever the property will no longer be exclusively affected to the offshore business, with in five years after the exemption 
was granted. 
Stamp Duty 1.  Insurance policies concerning offshore risks; 
2. Contracts established with entities not domiciled in Macao SAR, as a 
result of the engagement in offshore business; 
3. Donations between living persons to whom the exemption described 
in row 3 above) applies; 
4. Bank transactions carried out within the scope of offshore business; 
5. The incorporation of offshore institutions as well supplements or 
increases in their share capital. 
Professional Tax  
(Salary Tax) Managers and high level speciali zed staff authorized to establish 
residence in Macao SAR, under the terms of the applicable law, are exempt from professional tax concerning the salaries paid to them by offshore institutions until the end of the third year after the beginning of the activity in Macao SAR. WT/TPR/M/181/Add.1 
Page 24  
 
  Question  
Measures Affecting Production and Trade - Taxation System and tax incentives  
5.  Paragraph 63 on page 45 of th e Secretariat report states that, in order to promote Macao, China's 
long-term development, the “Government offers full or  partial exemptions from tax for projects that 
benefit the Region's development.”   
Please provide further information regarding these tax incentives, e.g., the type of projects, 
the type of tax incentive provided and requirem ents for companies to bid on the projects and 
receive these incentives.   
Answer  
Please refer to Answer 4 above. 
Question  
Measures Affecting Production and Trade - Non-tax and other forms of assistance  
6.  In its most recent subsidies notification to the WTO (G/SCM/N/155/MAC), Macao, China states 
that the Government does not grant or maintain su bsidies as defined in paragraph 1 of Article 1, 
which are specific within the meaning of Article 2 of the Subsidies Agreemen t.  However, several of 
the incentives described in this report appear to me et this definition, include several programs that 
appear to be prohibited, as provided under Article 3 of the Subs idies Agreement.  As such, we would 
encourage Macao, China to provide information on  all subsidy programs that meet the requirements 
under Article 25. 
Answer  
Taking its rights and obligations under the WTO seriously, Macao, China has introduced several 
incentive measures to promote economic activities, a nd in particular industrial diversification, 
technological innovation and environm ental improvement, all of which are crucial for Macao, China’s 
development: 
(A) Repayable and Non-repayable Incentive to Investment Projects  
Decree-Law no. 49/85/M provides a general gui deline on granting repayable and non-repayable 
subsidies to investment projects in the following cases: manufacturing a new product and industrial innovation which involves a high economic risk; R& D project carried out in the Macao SAR or 
overseas which takes into account the industrial de velopment and is of bene fit to the Macao SAR; 
installation of anti-pollution equipment and its ope ration. The estimated value of the incentives for 
2001-05 was P 30.2 million patacas. 
(B) Government-funded Interest Rate Incentive
 
Decree-Law no. 23/98/M governs allocation of incentiv es to companies’ investment contributing to: 
business diversification and modernization; tec hnological innovation; business restructuring;  
improvement of the environment;  and the betterm ent of health and safety conditions through the 
construction and renovation of factory premises.  The beneficiary industries are:  fisheries; 
manufacturing; wholesaling and agency businesses excep t for motor vehicles and heavy motorcycles; 
cargo storage; warehousing; forwarding agencies and logistics-related businesses; communications  WT/TPR/M/181/Add.1 
 Page 25 
 
 
  and providers of services to enterprises. From 2001 to  2005, 30 loans at incen tive interest rates were 
approved by the authorities. 
(C) SME Aid Scheme  
Administrative Regulation no. 9/2003 provides interest -free financial aid to assist SMEs to purchase 
equipment needed for their operation; renovation, decoration and expansion projects; capital for 
signing commercial concession contracts or franc hising contracts of ope ration; acquisition of 
exclusive rights for use of technology and intell ectual property. The maximum amount of aid per 
enterprise is MOP 100,000. However, for SMEs dir ectly affected by extraordinary, unpredictable 
events or those which are beyond human control, esp ecially natural disasters, epidemics, or dramatic 
changes in the business environment that prompt operating expenditures hikes or affect operating 
conditions of an enterprise, the maximum amount of aid per enterprise is MOP 200,000. The maximum period for loan repayment is 6 years. (This Regulation was revised as Administrative Regulation no.14/2006, which entered into force on November 1, 2006) 
(D) SME Credit Guarantee Scheme and SME Credit Guarantee Scheme Designated for Special 
Projects  
Administrative Regulation no.19/2003 provides ge neral guidelines for these two schemes. The SME 
Credit Guarantee Scheme provides general financial support to SME, in granting to each SME a credit 
guarantee equal to 50% of the loan approved by the participating banks. The maximum amount of 
guarantee offered is MOP 1.5 million. The SME Cr edit Guarantee Scheme Designated for Special 
Projects provides credit guarantee of up to 100% of the amount needed for SMEs to finance special 
projects, so as to support them to develop refo rming projects and diversify their businesses; to 
promote and advertise their own brands; or to impr ove quality of their products. In addition, this 
scheme aims to assist SMEs to acquire from banks th e capital needed to resolve short-term financial 
difficulties arising from payment of employees’ salari es, rental expenses etc., due to extraordinary, 
unpredictable events or events which are beyond human control, especially natural disasters or 
epidemics. The maximum amount of guarantee offered per beneficiary is MOP 1 million. 
Macao, China is of the view that these incentive sc hemes are consistent with Article 2 of the ASCM 
in that they are not specific. They are available to a very wide range of economic activities, and subject to objective criteria and conditions as require d by Article 2.1 (b) of the Agreement. They are 
not selective among manufacturing industries and they  do not disproportionately benefit particular 
enterprises. The Repayable and Non-repayable Incen tive to Investment Project is designed for the 
entire manufacturing sector and is not concentrat ed on any specific manufacturing industry. The 
Government-funded Interest Rate Incentives cover a number of industries in the Primary; Secondary 
and Tertiary sectors of the economy. The schemes  benefiting small and medium enterprises are 
horizontal in nature, having no specific industry in consideration.  
Macao, China reiterates that these in centive schemes do not fall within the terms of Article 3 of the 
ASCM, since none of them is contingent on expor t performance or import substitution. Thus, these 
incentives do not fall within the notification requirement of Article 25.2 of the ASCM. 
Question
 
7.  Paragraph 67 on page 47 of the Secretaria t report describes the process through which the 
Government allocates industrial and commercial land to companies in Macao, China.   
A)  Please provide further information re garding how the government calculates land 
premium payments under the “Land Law” referenced in Box III.1.   WT/TPR/M/181/Add.1 
Page 26  
 
  Answer  
According to Administrative Regulation No. 16/2004, the following factors are considered for 
calculation of the land premium:  
the location of the land;  
the land use;  
the number of storeys of the building;  
the gross floor area;  the financial expenses;  
the project cost and monitoring cost;  
the use or re-use of the land. 
Details of the calculation formula:  
 
where:  
 
 P – land premium  
 ABC – gross floor area  
 V – unit value per square meter 
 CC - construction cost per square meter  
 PF – project and monitoring cost  
 EF - financial expenses  
 R - percentage of estimated profits 
 DU –value of land use right  
The coefficient "R" in the aforesaid formula reflects  the share of the profits that the Macao SAR can 
acquire from the land lease. According to the stipula tions of paragraph 4 of ar ticle 3 of Administrative 
Regulation No. 16/2004, "R" is 0.4 (40%) for new lease and 0.2 (20%) for re-used land (revision of 
lease). 
Question  
B)  Please also explain wh ether there are circumstances, under which the land leased to 
companies by the Government is pr ovided at preferential rates. 
Answer  
Paragraph 6 of Administrative Regulation No. 16/ 2004 lays down the circumstances under which 
preferential rates are provided. 
Those projects must be in accordance with the economic development needs of Macao SAR. For 
instance, hotels or tourism facilities are qualified to be granted preferential rates. The coefficient “R” 
in the above formula is adjusted for calculation of the professional rates. 
Question  
Measures Affecting Production and Trade - Intellectual Property Rights Protection  
8.  On March 9, 2007, the Government of the People’s Republic of China notified the World 
Intellectual Property Organization that it had deposited instruments of accession to the WIPO 
Copyright Treaty and the WIPO Performances and Phonograms Treaty.  These instruments of DU R )]EF PF()CC ABC()V ABC[( Pm
1  ij i,n
1  jj i, j i, j j i, j j i, − ∑∑ +− − =
==⋅ ⋅ WT/TPR/M/181/Add.1 
 Page 27 
 
 
  accession state that these Treaties “shall not apply … to the Macao Special Administrative Region of 
the People’s Republic of China.”   
What steps is Macao, China ta king to accede to these Treaties? 
Answer  
The Macao Economic Services has been preparing th e amendments to the existing “Copyright Code” 
(Decree-Law No. 43/99/M), so as to fulfil the requir ements of the WIPO Copyright Treaty and the 
WIPO Performances and Phonograms Treaty. Once th e relevant legislation has been passed, an 
application will be submitted to WIPO for th e Treaties to be extended to Macao, China. 
Question  
9.  Please describe the status of Macao, China’s efforts to implement in its domestic law a making-
available right, legal protections for technol ogical protection measures and rights management 
information, and any exceptions or limitations to infringement liab ility for Internet service providers.  
Answer  
The Macao Economic Services is taking the issues ra ised in this question, into account in the 
amendment of the existing “Copyright Code” (D ecree-Law No. 43/99/M), so as to fulfil the 
requirements of the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty. 
Question  
IV.  TRADE POLICIES BY SECTOR 10.  Footnote 2 page 56 of the Secretariat report states that “Macao does not need to import all its 
raw materials for local production of “made in Mac ao” textile and clothing articles for export to its 
main markets… because Macao participates in an Outward Processing Arrangement (OPA) under 
which many manufacturing phases may be performed out side Macao, as long as the rule of origin 
step is carried out locally.”   
What mechanisms have the Macao, China authorit ies established to ensure that the origin-
conferring operation for textile and apparel ex ports is carried out in Macao, China? 
Answer
 
A manufacturer who wishes to make use of  the Outward Processing Arrangement (OPA)  must be 
registered with Macao Economic Services. The Ar rangement enables the manufacturer to subcontract 
outside Macao certain authorised processes of production and the making up of specified component parts of certain types of garments, subject to the condition that those processes do not affect the status 
of the Macao origin.  
Under OPA, a manufacturer who imports specified co mponent parts for local production of   textile 
and clothing articles is required to submit to the Macao Customs an accurate and complete import declaration. Customs control of import goods is do ne through inspection of documentation and, where 
necessary, inspection of goods is conducted on a random basis. Selected consignments will be seized 
for physical examination by Macao Customs offi cers. The electronic data, or duplicate of the 
declaration, will be transmitted to the Macao Economic  Services and data examination of declaration 
will be conducted by Macao Economic Services o fficers. Moreover, Inspection of Economic Activity 
Department staff of the Macao Economic Services proceed to inspection of factories concerned. WT/TPR/M/181/Add.1 
Page 28  
 
  COLOMBIA  
Question  
Secretariat report WT/TPR/S/181  
III. Trade policies and practices by measure (2) Meas ures directly affecting imports (x) Government 
procurement  (b) procedures - paragraph 46 
1. Which companies have exclusive supply rights? 
Answer  
In Macao, China, electricity supply, water suppl y and fixed line telephone services are respectively 
provided by a single operator, while public bus services are provided by two companies, under 
concessions. The major rationales behind the situation are the relatively small geographical size of the territory and the comparatively small size of consumption, which results in higher efficiency and more effective allocation of resources for these services to be provided by a single or a limited number of 
companies.  
Notwithstanding this, the Macao Government has pu t in place regulatory frameworks in the exclusive 
concessions with the public utilities’ operators so as to ensure that public interest is attended to. Solely 
with the aim to protect the public interest, prices of most utilities are administered or monitored by 
respective regulatory bodies, as the operators need  to obtain administrative approval on fares and 
charge adjustments.  
Question
 
2. May a foreign company have exclusive supply rights?   If it may, what is the procedure to 
obtain such rights? 
Answer  
International firms are welcome to submit their bids  provided that their subsidiaries have registered 
with the Finance Services Bureau for tax purposes (for instance,  Macao, China major 
concessionnaries in public utilities come from France  and Great Britain, among others). The base 
regime for granting such concession contracts is clearly stated in Law no. 3/90/M. 
Question  
3. Which goods, services or works can have exclusivity? 
Answer  
Please refer to Answer 1 above. 
Question  
4. Regarding the exception “it is in the interests of the Macao, SAR, given the nature of the 
goods, works or services required, to award directly to a particular entity”, what determines such 
interest?  WT/TPR/M/181/Add.1 
 Page 29 
 
 
  Answer  
The reward of contracts directly to a particular  entity only occurs when circumstances do not warrant 
open tendering as, for instance, when additional work  is required in respect of the same contract, 
when goods or services corresponding to the original  contract are required, when the supply of 
proprietary products is involved, in cases of  extreme urgency and for security reasons.  
Question  
III. Trade policies and practices by measure (4) Meas ures affecting production and trade (ii) Non-tax 
incentives and other forms of assistance – paragraph 66 
5. Have government-funded interest rate s ubsidies been notified to the WTO? 
Answer  
Macao, China is of the view that these incentive schemes are consistent with Article 2 of the ASCM in 
that they are not specific. They are available to a very wide range of economic activities, and subject 
to objective criteria and conditions as required by Ar ticle 2.1 (b) of the Agreement. They are not 
selective among manufacturing industries and they do  not disproportionately benefit particular 
enterprises. The Repayable and Non-repayable Incen tive to Investment Project is designed for the 
entire manufacturing sector and is not concentrated on any specific manufacturing industry. The 
Government-funded Interest Rate Incentives cover a number of industries in the Primary; Secondary 
toTertiary sectors of the economy. The schemes  benefiting small and medium enterprises are 
horizontal in nature, having no specific industry in consideration. Thus, these incentives do not fall 
within the notification requirement of Article 25.2 of the ASCM. 
Question  
6. Is there a plan to gradually eliminate those subsidies? 
Answer  
No, Macao, China has no immediate plan  to eliminate those measures.  
Question  
7. How do enterprises that export textiles and apparel benefit from such subsidies? 
Answer  
The listed industries, including textile enterprises, may benefit from such measures, for instance, by 
way of equipment upgrade to enhance productivity. 
HONG KONG, CHINA  
Question  
Maritime Transport Services  
(WT/TPR/S/181, P . 61, Para. 17; and WT/TPR/G/181, P . 14, Para. 49) 1. We are pleased to note that, compared to its Uruguay Round commitments, Macao, China has 
made a considerable expansion of the scope of  potential liberalization in the current Round, WT/TPR/M/181/Add.1 
Page 30  
 
  introducing new commitments in a number of service  sectors.  We however note from its revised offer 
(TN/S/O/MAC/Rev.1) that Macao, China still has no offer in transport services except certain services 
auxiliary to all modes of transport.  In the light  that Macao, China is now expanding its maritime 
transport services and that there are no restrictions on the number of sea transport operators, we are 
interested in knowing whether Macao, China has any plan to undertake commitments in maritime 
transport sector in its next offer.  We would like to  know the specific concerns if Macao, China has no 
such plan. 
Answer  
In terms of policy, maritime transport is open to  competition. For the time being, the physical 
conditions of ferry terminals are limited, which prevent it from accepting more docking requests. The 
construction of an additional ferry terminal is underway and is expected to be completed by the first 
quarter of 2008. This new terminal will add si gnificant capacity to accommodate the increasing 
number of ferry-docking requests. 
Question  
Telecommunications  
(WT/TPR/S/181, P . 61-63, Paras. 18-27; and WT/TPR/G/181, P . 13, Para. 41) 
2. We note that there was a renegotiation of the concessionary agreement between the 
Government of the Macao Special Administrati ve Region (MSAR) and Macao Telecommunications 
Company (CTM) and consequently, CTM’s exclusi ve rights on fixed lines, data communication and 
leased lines were extended in 1999 to 2011 whereas the market for mobile, internet and other value-
added services was agreed to be open to competition.  Given MSAR’s commitment in the long term to 
liberalizing the telecommunications sector as stated  in the Secretariat’s Report, what is MSAR’s 
further liberalization plan in the sector, particularly  in respect of the provision of those services 
currently under CTM’s exclusive rights after the exp iry of the concerned concessionary agreement? 
Answer  
The Government already liberalized mobile tele communication services and Internet service since 
2001.  Due consideration will be given to further lib eralization of services currently within the scope 
of CTM concessionary agreement. 
The Government is currently preparing a revision of th e concessionary agreement. It is expected that a 
tentative consensus will be reached by the end of the year.  The final outcome is subject to 
negotiations between the concessionaire and the Government. 
Question  
3. We are glad to note that pursuant to the liberalization of mobile telephony and internet 
services, the MSAR is conducting a feasibility study on th e establishment of a second fixed or wireless 
network for the provision of broadband services.  Gr ateful if Macao, China would confirm whether 
the provision of broadband services falls under CT M’s existing exclusive operation until the end of 
2011 and indicate the intended timeframe for the completion of feasibility study.  WT/TPR/M/181/Add.1 
 Page 31 
 
 
  Answer  
Broadband service in terms of Internet access is not covered by the current CTM concessionary 
agreement.  The feasibility study for the provision of broadband wireless access is set to be completed 
by the end of this year. 
EUROPEAN COMMUNITIES  
Question  
II.  TRADE  POLICY  REGIME:  FRAMEWORK  AND  OBJECTIVES  
Sustainable development 
 1. Could Macao, China provide some in formation about how the issue of trade and 
sustainable development fits into the o verall development strategies of Macao, 
China? Have any particular measures been ta ken since the last Trade Policy Review 
in 2001?  
Answer  
Macao, China has been enjoying robust GDP growth  in the recent years and this growth is not 
expected to have reached its peak yet. Su bstantiating this is a number of factors: 
The Tourism industry, undeniably and presently the largest contributor to the growth of the Macao 
economy, is expected to report modest expansi on in the coming years. Many large gaming and 
entertainment projects, are still undergoing constructi on and are expected to be completed within the 
coming three to five years. The Historic Centre  of Macao was inscribed into the UN’s World’s 
Heritage List only in the latter half of 2005 and its attractiveness to tourists has not been fully 
realized.  
The deepening and broadening of the Mainla nd and Macao Closer Economic Partnership 
Arrangement (CEPA) and the inauguration of the M acao-Zhuhai Transborder Industrial Park in late 
2006 are likely to help ease th e declining exports of goods. 
Investment is likely to continue picking up, esp ecially with the various large-scale projects under 
construction and scheduled to be  constructed. These include not only the gaming and entertainment 
projects, but also other large commercial and residential high-rises.  
Public expenditure would also be sustained as ther e are numerous infrastructure projects that will be 
carried out in the next few years, such as a ne w ferry terminal, an under-river tunnel, the Science 
Museum, and, possibly, a light rail system. Large-scale public housing projects will also commence in 
2007.  
The emergence of sectors new to Macao, includi ng MICE (Meeting, Incentive, Convention and 
Exhibition), Chinese medicine, etc. is also anticipat ed to bring in new impetus for growth in the 
economy. 
Private consumption is also expected to remain stable, if not rise. Macao is close to achieving a 
technical full employment. Median income rose a bout 15.94% during 2006. Coupled with the wealth 
creation effect from the upsurge in property and fi nancial asset prices, private consumption by local 
residents of Macao is not anticipated to go down. WT/TPR/M/181/Add.1 
Page 32  
 
  To emphasize the attention the Gove rnment has been paying to nurtur e sustainable development in the 
economy, a Research Centre for Sustainable De velopment Strategies was established in 2005 
(formerly as the Center for the Studies of Quality  of Life) to, among other functions, analyze and 
propose strategic options that the Government may take on to support sustainable economic 
development.  
Question  
Trade and environment   2. What mechanisms does Macao, China have in place to ensure adequate coordination 
of environmental policy and trade policy? 
Answer
 
Macao, China has put in place a two-tier mech anism to ensure adequate coordination of 
environmental policy and trade policy.  Firstly, we ensure the compliance of the international 
conventions applicable in Macao, China, such as Convention on International Trade in Endangered 
Species of Wild Fauna and Flora (CITES), Un ited Nations Framework Convention on Climate 
Change (UNFCC), etc. Secondly, we promote th e development of an environmental protection 
industry platform.  The Government of Macao SA R constantly organizes and participates in many 
environmental protection-related business matching ac tivities exhibitions and seminars with the aim 
of boosting the development of Macao’s environm ental protection industry,  encouraging regional 
exchange and gradually establishing Macao as a pl atform and a bridge of cooperation for the 
environmental protection industry.  
Question  
(2) TRADE  AGREEMENTS  AND  ARRANGEMENTS 
WTO Secretariat's Report, page 23, para. 16 The impact of CEPA on trade in goods and trade in services remains limited, although successive 
rounds of supplementary protocols have been concluded since 2003.   
3. Could Macao, China provide detailed statistics of exports of goods under CEPA and 
the total number of service providers applying for CEPA certification?   
Answer
 
According to the latest CEPA implementation st atistics, starting from 1 Jan 2007, the Macao goods 
benefiting from zero tariff have been expande d to 648 Mainland China 2007 Tariff Codes (see 
http://www.economia.gov.mo). From 1 January 2004 to 31 December 2006, Macao Economic 
Services has issued 283 CEPA certificates of or igin, involving products of a total value of 
MOP19,236,624 with an estimate tariff saving amounting to MOP1,899,423.These goods include 
cement; textiles and clothing; yarn; plastic bags; r ecordable compact discs; printing ink and typewriter 
ribbons; food (confectionery, biscuits and coffee bean s); refined copper foil and electric conductors, 
etc. With respect to trade in services, Macao  Economic Services has approved 292 (326 as of the 
1st Quarter 2007) “Macao Service Supplier” certificates,  to suppliers which primarily engage in the 
sectors of transport and logistics; conventions and exhibitions; management c onsulting; construction; 
distribution; telecommunications; legal services, advertising, etc.  WT/TPR/M/181/Add.1 
 Page 33 
 
 
  Breakdown of CEPA Statistics 2004-2007 (1st Quarter) 
CEPA 2004 2005 2006 2007 (1st Q.) Total 
Trade in Goods:  
Value (MOP) of CEPA 
goods 1,836,082.17 7,161,592.59 10,238,949.00 2,917,421.04 22,154,044.80
Value (MOP) benefited 
from zero tariff  116,938.00 639,470.00 1,143,015.00 376,647.00 2,276,070.00
Trade in Services: 
No. of issued 
Certificate of  Macao 
Service Supplier 182 43 67 34 326
 
Question  
4. How does Macao, China's authorities intend to  ensure in the future that CEPA has no 
discriminatory effects on third country investors in Macao, China? 
Answer  
Macao, China does not discriminate between foreign a nd local investors: all investors in Macao are 
treated on an equal footing. With regard to enjo ying CEPA preferential treatment, on the trade in 
goods front, exports of any manufactured goods pro duced in the Macao SAR to the Mainland must 
fulfill the rules of origin stipulated under CEPA and be accompanied by th e specific Certificate of 
Origin as evidence of being qualified as “made in Macao”.  
As far as trade in services is concerned, the defin ition of Macao Service Supplier refers to any service 
supplier, either a natural person (individual bus iness owner) or a juridical person who has been 
registered locally and established in compliance wi th the Macao Commercial Registry Code or other 
relevant laws of the Macao SAR.  Different servi ce sectors are subject to their respective regulations 
and standards. 
Under general circumstances, natural persons to qualify as Macao Service Suppliers (excluding legal 
services) should be permanent residents of the Ma cao Special Administrative Region of the People’s 
Republic of China. For juridical persons, compan ies should be organized under the Commercial Code, 
Macao Commercial Registry Code or other releva nt laws of the Macao Special Administrative 
Region. The Macao service suppliers must comply  with the complementary tax obligations in 
accordance with the law; should own or rent premis es in Macao for operation purposes; should have 
more than 50% of the employees being residents staying in Macao without limit of stay and other 
persons permitted to reside in Macao according to re levant regulations in Macao, and they must also 
have engaged in substa ntive business operations for 3 years or more. Service suppliers providing 
construction and related engineering services, ba nking and other financial services, insurance and 
related services should be registered in Macao a nd have engaged in subs tantive business operations 
for 5 years or more. There is no requirement as to years of substantive business operations in Macao 
for Macao service suppliers providing real estate services.  For Macao service suppliers providing 
maritime transport services, 50% or more of the sh ips owned by them, calculated in terms of tonnage, 
should be registered in Macao. Law firms should ha ve engaged in substan tive business operations in 
Macao for 3 years or more and should also meet any of the requirements outlined above which are 
applicable to this sector. 
The aforesaid criteria are clearly set out in CEPA (Summaries and the legal text of the CEPA can be 
accessed by the public at the Macao Economic Services’ Web Portal: http://www.economia.gov.mo ). WT/TPR/M/181/Add.1 
Page 34  
 
  Foreign investors who fully comply with the above set of rules can enjoy the benefits of CEPA on a 
basis of equality and in the absence of any discrimin atory restrictions. (For transparency purposes, 
also see Macao, China’s notifications to th e WTO: WT/REG163/N/1–S/C/N/265, 12 January 2004; 
WT/REG163/1, 4 February 2004; WT/REG163/1/A dd.1, 31 January 2005; WT/REG163/1/Add.2, 
16 January 2006; and WT/REG 163/1/Add.3, 7 December 2006.) 
Question  
5. Are any measures foreseen to rei nforce the fight against corruption? 
Answer  
The CEPA does not cover scope and mechanisms against corruption.  
Question  
III.  T RADE POLICIES AND PRACTICES BY MEASURE  
(2) MEASURES AFFECTING IMPORTS  
v) Other charges on imports WTO Secretariat's Report, page 31, para. 14. 
According to the WTO Secretariat's Report, imports  of tobacco products, alcoholic drinks, and fuels 
and lubricants are subject to consumption taxes levied on their CIF value. Moreover, since 
17 June 2002, a motor vehicle tax has been levi ed by the Finance Services Bureau. These taxes are 
applied to domestically manufactured goods as we ll as imports; however, since there is a reduced, if 
any, local production, they primarily affect imports. 
6. Could Macao, China explain the reasons for applying the abovementioned 
consumption taxes? 
Answer
 
The reasons for applying consumption taxes are to  raise revenue and, following a global trend, 
discourage consumption. 
Question  
7. Could Macao,China indicate the number of imports affected?  
Answer  
Three categories: 
 - Tobacco products; 
 - Alcoholic drinks; 
 - Fuels and lubricants. 
Question  
8. Would Macao, China cons ider that levying this tax could have the effect of an 
"import tax"?   WT/TPR/M/181/Add.1 
 Page 35 
 
 
  Answer  
Although the consumption taxes do primarily aff ect imports, since the bulk of these products is 
imported, they do not discriminate against imported goods  and are not intended to restrict the level of 
imports. 
Question  
(vii) Sanitary and phytosanitary measures WTO Secretariat's Report, page 37, para. 35-38 Provided that the Chief Executive's Decision No. 211 /2001 is still in force, the EC notes that Macao, 
China put a ban on imports of animal products. So far it seems that this measure affects Japan only 
but if the reason is to prevent the outbreaks of BSE this will be extended to all the BSE affected 
countries. In this context,  
- Has this Chief Executive's Decision been properly updated in the light of recent OIE 
developments for BSE?  
Answer
 
The Chief Executive Decision No. 211/2001 is still in  force.  So far, it has not been reviewed. 
However the legislation updating process is in progress. Please note that before the restriction was in 
place there was no importation of such products into Macao SAR.  During the restriction period, the 
enquiry point of Macao, China did not receive any request from the local importers showing interest 
to import such products. 
Question  
10. If not, does Macao, China plan to amend its national legislation in accordance to 
OIE international rules concerning BSE? If not in full, would Macao, China 
introduce in its legislation, at least part of them, in particular the rules concerning 
products that should be safely trade d regardless of the BSE risk status?  
Answer  
Please refer to Answer 9 above. 
Question  
(x) Government Procurement WTO Secretariat's Report, page 4, para. 47-48 
Macao, China stated that it "has underlined its flexibility and openness to continue exchanges of 
views with GPA Members with a view to achieving more consistency with international practices".  
The EC remains at Macao, China's disposal to exchange views, in particular in view of the fact that a 
new GPA text has been frozen since December 2006.  
11. When does Macao, China intend to resume work in the context of the new GPA text?  WT/TPR/M/181/Add.1 
Page 36  
 
  Answer  
Macao, China does not have it in consideration to r esume work in the context of the GPA, at this 
stage. 
Question  
WTO Secretariat's Report, page 41, para.49   
12. When will the e-procurement coor dination work group, working under 'e-
Government', submit recommendations for legislative amendments? 
Answer  
The e-procurement group consolidated all th e recommendations for Decree-Law No. 63/85/M 
(governing the procedures on public tenders) a nd Decree-Law No. 122/84/M (purchases of goods and 
services) from various government agencies at the be ginning of 2007. Opinions and suggestions from 
both reports will be considered  for legislative amendments. 
Question  
WTO Secretariat's Report, page  vii, para.9 
According to the WTO Secretariat' s Report, open tendering accounts for less than  10% of public 
sector construction contracts.   
13. Can Macao, China explain why public tendering has not been used more frequently, 
especially in recent years when  many large-scale public in frastructure projects were 
carried out, such as the facilities for the East Asian Games, a new bridge and two 
new ferry terminals? 
Answer  
Large-scale public infrastructure projects are always subject to public tender, and this was the case of 
the above-mentioned projects for the East Asian Games, the Sai Van Bridge and Pac On Ferry 
Terminal.  
In addition, all large projects which represented 88 .3%, in terms of value, were subject to open 
tendering in 2006. Minor projects that did not requ ire open tendering only accounted for 11.7% of all 
public tendering. 
Type of tendering in public sector cons truction projects, 2003-2006 (in percent) 
 2003 2004 2005 2006 
 number value number value number value number value 
Open Tendering 
(Jobs value over 
MOP$2,500,000) 5.3 91.7 3.4 74.9 6.3 66.0 10.0 88.3 
Other forms of tendering  
(including Invited Tendering 
and Direct Consultation) 94.7 8.3 96.6 25.1 93.7 34.0 90.0 11.7 
Note:  Information are for DSSOPT construction project only. 
Source:  DSSOPT (Land, Public Works and Transport Bureau).  WT/TPR/M/181/Add.1 
 Page 37 
 
 
  Question  
In para 48, the WTO Secretariat's Report notes that the Decree-Law of 1985, governing the 
procedures for public tender procurement has not b een revised and that within the given general 
procedures, specific items may become  outdated and require amendments:   
14. Does Macao, China consider that there is  a need to enhance transparency of public 
procurement procedures, or of strengthe ning the regulatory framework for public 
procurement in order to improve the prevention of corruption? 
Answer  
There are laws and regulations on government proc urement, which provide a clear indication for all 
government agencies involved in the procurement process to follow. In addition, the Commission 
Against Corruption also continuously provides expeditious corruption prevention advice and 
guidelines to all government agencies in the formulat ion of policies or procedures for procurement. 
The Government is committed to amend the two ma in procurement laws, Decree-Law No. 63/85/M 
(governing the procedures on public tenders) a nd Decree-Law No. 122/84/M (purchases of goods and 
services). Then, Macao, China’s compliance with in ternational practices will ensure transparency  and 
fair competition to prevent corruption.  Fu rthermore the Commission Against Corruption will 
endeavour to continue to build a fair and efficient government. 
Question  
(4) MEASURES AFFECTING PRODUCTION AND TRADE  
(i) Taxation system and tax incentives 
Macao, Chinas' Report, page 11, para.31-32 
The Report contains a description of tax incentives granted for foreign investment in Macao, China. 
These incentives are described as to  include full or partial corporate/profit tax exemption. They are 
further described as to be open both to local and foreign investors. However,  as many tax regimes 
may de facto be aiming solely at attracting foreign investment, it is not yet clear whom this tax legislation addresses actually and the extent of its impact. 
15. Could Macao, China indicate whether the abovementioned measures comply with one 
or more of the following criteria?  
 - an effective level of taxation which is significantly lower than the general level of 
taxation in the country concerned;  
 - tax benefits aiming at non-residents;  
 - tax incentives for activities which ar e isolated from the domestic economy and 
therefore have no impact on the national tax base;  
 - granting of tax advantages even in the absence of any real economic activity;  WT/TPR/M/181/Add.1 
Page 38  
 
   - the basis of profit determination for co mpanies in a multinational group departs from 
internationally accepted rules, in par ticular those approved by the OECD; 
 - lack of transparency 
Answer  
Tax benefits aims  
Tax Exemption Contents 
Complimentary Tax 
(Income Tax) When income generated through the engagement in offshore business. No 
time-limit constraint. 
Industrial Tax No time-limit constraint. 
Donations Tax on free 
transfer of movable 
and unmovable 
property Applied only to movable and unmovable property exclusively affected to 
the offshore business. No time-limit constraint. 
Property Transfer Tax For properties exclusively for offshore activities. 
Tax shall be paid whenever the prop erty will no longer be exclusively 
affected to the offshore business, within  five years after the exemption was 
granted. 
Stamp Duty 1. Insurance policies concerning offshore risks; 
2. Contracts established with entities not domiciled in Macao SAR, as 
a result of the engagement in offshore business; 
3. Donations between liv ing persons to whom the exemption described 
in row 3 above) applies; 
4. Bank transactions carried out within the scope of offshore business; 5. The incorporation of offshore institutions as well supplements or 
increases in their share capital. 
Professional Tax  (Salary Tax) The managers and high level specialized staff authorized to establish 
residence in Macao SAR, under the terms of the applicable law, are exempt of professional tax concerning the salaries rendered available to them by the offshore institutions till 31
st of December of the third year after the 
beginning of the activity in Macao SAR. 
 
Tax incentives for activities  
The Decree-Law No. 58/99/M describes clearly the de finition of “offshore” in Macao, which is to use 
non-Macao currency with their activities, to target non-Macao residents as customers, to focus on 
non-Macao markets. 
Granting of tax advantages  
No. Macao offshore services institutions must have physical presence in Macao SAR; rent or purchase 
premises for office use, and employ full time staff running daily operations.  While a licence application is being lodged, the applicant has to pr ovide duly certified documents to that effect. Also, 
they have to engage a local auditor be fore obtaining the Macao offshore licence. 
Basis of profit determination for companies
 
At the Global Forum on Taxation, held in Mel bourne, 15-16 November 2005, Macao, China endorsed 
the principles of transparency and effective exchange of information in tax matters, as well as the  WT/TPR/M/181/Add.1 
 Page 39 
 
 
  willingness to work towards a level playing fi eld in these areas. Macao’s position and legal 
framework was published at the OECD 2006 Assess ment by the Global Forum on Taxation (OECD 
publishing). 
Transparency  
Please refer to Answer 14 above. 
Question  
In addition, the EC would like to ask for furt her clarification regarding the impact of the tax 
incentives which could lead to discriminatory fiscal incentives to certain regions and/ or sectors.   
16. In particular the EC would like to know  whether there is any background information 
and quantification available on the preferential tax regimes in Macao, China, notably 
in view of the below criteria: 
 - the presence and extent of a benefit,  
 - the aid being granted by the Authorities of Macao, China  
 - the potential threat to distort competition and affect trade between Macao, China and 
other countries, notably the EC, and  
 - the selectivity of the aid towa rds the addressed beneficiaries.  
Answer  
Background information and quantification av ailable on the preferential tax regimes  
Criteria for granting the interest incentives for investment projects:  
 - Contributing to diversification and modernisation of economic activities;  
 - Introducing technological innovation and transformation of companies in order to 
develop production capacity, produc t quality, competitiveness and reduce 
environmental damage;  
 - Modernising factory premises in terms of operation, safety and/ or health conditions. 
Criteria for the granting of fiscal incentives for investment projects:  
- Contributing to diversification and m odernisation of economic activities;  
- Contributing to promotion of exports to new unrestricted markets;  - Enhancing and supplementing added value of  production within the related industrial 
fields; 
- Introducing technological modernisation. 
The fiscal incentives include exemp tion from the industrial tax, 50%  reduction on profit tax, 50% 
reduction of stamp duty levied on property transf ers, exemption from property tax for properties 
leased exclusively for industrial purposes. WT/TPR/M/181/Add.1 
Page 40  
 
  For quantification, please refer to Table III.11 of the Secretariat’s Report (page 45). 
Presence and extent  
Tax Exemption Contents 
Complimentary Tax 
(Income Tax) When income generated through engagement in offshore business. 
No time-limit constraint. 
Industrial Tax No time-limit constraint. 
Donations Tax on free transfer of movable and unmovable property. Applied only to fixed and mova ble and property exclusively 
affected to offshore business. No time-limit constraint. 
Property Transfer Tax For properties exclusively for offshore activities. 
Tax shall be paid whenever the property will no longer be exclusively affected to the offshor e business, within five years after 
the exemption was granted. 
Stamp Duty 1.  Insurance policies concerning offshore risks; 
2. Contracts established with entities not domiciled in Macao 
SAR, as a result of the engagement in offshore business; 
3. Donations between living persons to whom the exemption 
described in row 3 above) applies; 
4. Bank transactions carried out within the scope of offshore 
business; 
5. The incorporation of offshore institutions as well supplements 
or increases in their share capital. 
 
Professional Tax  (Salary Tax) The managers and high level specialized staff authorized to 
establish residence in Macao SAR, under the terms of the applicable 
law, are exempt of professional tax concerning the salaries rendered available to them by the offshore institutions till 31
stof December o f 
the third year after the beginning of the activity in Macao SAR.  
 
Aid being granted by the Authorities of Macao, China  
Please refer to Table III.11 of the Secretariat’s Report (page 45). 
Potential threat to distort competition and affect  trade between Macao, China and other countries, 
notably the EC  
(a) There is no evidence of a potential threat to  distort competition. On the contrary, the 
Scheme is aimed at diversifying our economy and to serve as a platform for 
businesses from everywhere, including the EC. 
The selectivity of the aid towards the addressed beneficiaries  
There is no selectivity in granting these incentives. All applicants meeting the necessary requirements 
are eligible to enjoy such benefits. 
Question  
WTO Secretariat's Report, page 43, para. 61-63  WT/TPR/M/181/Add.1 
 Page 41 
 
 
  The EC would like Macao, China to elaborate on the compliance of its regulatory framework with the 
principles of transparency and effective exchange of info rmation.  It should be noted that the absence 
of transparency is defined as when provisions are relaxed at administrative level in a non-transparent 
way and therefore impede to identify the final owner or beneficiary of assets, liabilities or 
transactions. Tax systems are considered transparent,  when reliable information (in particular bank, 
ownership, identity and accounting information) is  available and powers to obtain and evaluate such 
information can be provided in response to a request. 
As regards effective exchange of information, this is characterized by the fact that a jurisdiction 
effectively exchanges reliable information and is based upon the presence of a noteworthy number of 
Double Taxation Conventions and/or Tax exchange of  information agreements, including with EC 
Member States. Therefore, in case of absence of such agreements a tax regime lacks effective 
exchange of information for tax purposes.  
17. Concerning Transparency and Effective E xchange of Information for tax purposes, 
could Macao, China provide a clearer pi cture of their present and envisaged 
legislative framework regarding both i ssues (e.g. tax treaties under negotiation, 
national legislation under revision or e limination of domestic tax interest for 
exchange of information purposes)? 
Answer  
At the Global Forum on Taxation, held in Melbou rne, 15-16 November 2005, Macao, China endorsed 
the principles of transparency and effective exchan ge of information in ta x matters, as well as the 
willingness to work towards a level playing fi eld in these areas. Macao’s position and legal 
framework was published at the OECD 2006 Assess ment by the Global Forum on Taxation (OECD 
publishing). Therefore, Macao, China accepts mechan isms for exchange of information upon request, 
exchange of information for purposes of domestic ta x law in both civil and criminal matters, has no 
restriction on exchange of information due to the dual criminality principle, respect safeguards and 
limitations as well as confidentiality rules for in formation exchanged and has the power to obtain 
most information if not by tax authorities through judicial actions. 
Two Double Taxation Arrangements are in force with the Peoples’ Republic of China and Portugal. 
Macao, China has also signed a Double Taxation Arra ngement with Belgium, which will come into 
force when Belgium’s domestic procedures are co mpleted. Several other potential agreements are 
under discussion, with Mozambique (the most adva nced), Hong Kong, China,  Cape Verde, Angola, 
Guinea Bissau, Brazil and Timor.  
All of those that are in force or signed provide fo r the exchange of information. As for the others 
Macao, China is aware of its international commitm ents and the need to provide and seek for the 
exchange of information. 
Question  
WTO Secretariat's Report, page 43, para. 62. The WTO Secretariat's Report indicates that the Go vernment of Macao, China has traditionally kept a 
low average taxation rate. In particular, the maximu m profit tax is 12% (recently reduced from 15%). 
In addition, personal income in excess of P 280,000 is subject to a 12% flat rate.  
18. Would Macao, China's authorities cons ider the possibility of enhancing the exchange 
of information regarding taxation?  WT/TPR/M/181/Add.1 
Page 42  
 
  Answer  
Since Macao’s legal system states  that the Conventions mentioned in Answer 17 prevail over all 
domestic laws, there is no immediate need for chan ges in our tax law as regards the exchange of 
information (Please also refer to Answer 17). 
Question  
(ii) Non-tax incentives  and other forms of assistance WTO Secretariat's Report, page 46, para. 65 Macao, China encourages through repayable and non-repayable subsidies investment for 
manufacturing of new products that involve hi gh economic risk, R&D furthering Macao, China's 
industrial development and installation of anti-pollution equipment and its operation. 
19. Have the authorities of Macao, China eval uated the effects of these subsidies? 
Answer
 
To promote Macao, China’s long-term economic deve lopment, the Government offers incentives for 
projects that benefit the territory’s development.  For instance, investors may enjoy interest rebates 
when they borrow loans from banks to promot e business diversification and modernization, 
technological innovation, business restructuring, im provement of the environment, as well as 
construction and renovation of factory premises.  During the 2001-2005 period, 32 enterprises that 
engaged in manufacturing, fisheries and other activiti es were granted interest rebates, and granting an 
estimated amount of MOP30.2 million.  These m easures have helped to  optimize the business 
structure of the SAR, improve the overall competiti veness of the existing enterprises and attract new 
investments. 
Question  
20. With regard to investment for manufacturing,  what were the effects with making such 
production sustainable? 
Answer  
Since the 1990s, the economy of Macao, China has been transformed from its former dependence on 
manufacturing industry into one dominated by services.  Nevertheless, the manufacturing sector is still important in terms of the number of workers it employs and its contribution to foreign trade. The Government of Macao is, therefore, committed to con tinue to assist the sector, but, as yet, we have no 
full assessment of the effectiveness of these policies.   
The policy objectives of Macao, China’s government  in the manufacturing sector are to pursue the 
right degree of diversification and enhance compe titiveness in industrial development, with minimal 
intervention.  One of the measures adopted is to  provide financial incentives to the manufacturing 
industry.  These schemes do not only encourage the ex isting manufacturers, particularly the small and 
medium-sized manufacturing enterprises, to invest in new technologies and high added value manufacturing, but at the same time, they also help to attract new investments.       
These measures, in combination with the implem entation of CEPA and the establishment of the 
Macao-Zhuhai Transborder Industrial Park, have helped  the manufacturing sector to revitalize despite 
the unfavorable impact of the termination of gl obal export quotas for textiles and clothing in 2005.  WT/TPR/M/181/Add.1 
 Page 43 
 
 
  Question  
(b) Allocation of industrial land 
WTO Secretariat's Report, page 47, para 67 
21. Could Macao, China elaborate briefly on the policies underlying the allocation of 
government-owned land  and on the criteri a decisive for assessing "a project (of 
entities needing land) as beneficial to the growth of Macao, China"?   
Answer  
From the procedural aspect, under normal circum stances, the land lease process is as follows: an 
application for land development from the applican t is submitted by the Land, Public Works and 
Transport Bureau to different authorities (e.g. Macau Government Tourist Office, Infrastructure 
Development Office, Gaming Inspection and Coor dination Bureau, Civil Aviation Authority and 
Urban Planning Department, etc.) for technical advi ce.  Upon receipt of the advice concerned, the 
land premium is calculated according to the Ad ministrative Regulation No. 16/2004 (Method for 
Determination of Land Premium), and contract conditi ons are drafted.  The draft land lease contract is 
sent for approval to the Director of Land, Public  Works and Transport Bureau, the Secretariat for 
Transport and Public Works and the Chief Executive; th e draft contract is then sent to the applicant.  
Following agreement by the applicant, the applicati on will be sent to the Land Committee for analysis 
and opinions; the proposal is sent to the Secretar iat for final approval from the Chief Executive.  
Procedures are finalized upon publication in the Gazette . 
Recently, the Government announced the setting up  of an independent consultation mechanism 
denominated "Urban Planning and Land Lease Grou p", comprising urban planning and engineering 
professionals, and officials in the competent area of world cultural heritage protection; environmental 
protection as well as land and public works. The objective of the Group is to promote public views on 
land lease cases, thus, increasing transp arency and public confidence.  
Calculation of land premium 
According to Administrative Regulation No. 16/2004, the following factors are considered for 
calculation of the land premium:  
 - the location of the land;  
 - the land use;   - the number of storeys of the building;  
 - the gross floor area;  
 - the financial expenses;   - the project cost and monitoring cost;  
 - the use or re-use of the land. 
Details of the calculation formula:  
 
DU R )]EF PF()CC ABC()V ABC[( Pm
1  ij i,n
1  jj i, j i, j j i, j j i, − ∑∑ +− − =
==⋅ ⋅WT/TPR/M/181/Add.1 
Page 44  
 
   where:  
 - P – land premium  
 - ABC – gross floor area   - V – unit value per square meter  - CC - construction cost per square meter  
 - PF – project and monitoring cost  
 - EF - financial expenses   - R - percentage of estimated profits  - DU –value of land use right  
The coefficient "R" in the aforesaid formula reflects  the share of the profits that the Macao SAR can 
acquire from the land lease. According to the stipula tions of paragraph 4 of ar ticle 3 of Administrative 
Regulation No. 16/2004, "R" is 0.4 (40%) for new lease and 0.2 (20%) for re-used land (revision of 
lease). 
Preferential rates 
Paragraph 6 of Administrative Regulation No. 16/2004 lays down the circumstances under which 
preferential rates are provided. 
Those projects must be in accordance with the economic development needs of Macao SAR. For 
instance, hotels or tourism facilities are qualified to be granted preferential rates. The coefficient “R” 
in the above formula is adjusted for calculation of the professional rates. 
Question
 
(iii) Intellectual property rights 
WTO Secretariat's Report, page 49 – 52, para. 76-87 
Macao, China indicates that Macao, China’s courts have implemented a special expedited 
prosecution system that allows a suspect to be brought to trial expeditiously. 
22. Could Macao, China describe in which c onditions this special prosecution procedure 
can be used? 
Answer  
The special expedited prosecution system is a system described in the Penal Code and is applicable to 
any criminal offences which me et the following conditions: 
 1) offenders are caught flagrante delicto 
 2) sentences are less than three years  3) offenders have not reached the ag e of 18 when committing the offence.  WT/TPR/M/181/Add.1 
 Page 45 
 
 
  Question  
WTO Secretariat's Report, page 51, para. 83 In footnote 25, under paragraph 83, it is stated that  the Customs Service has the authority to impose 
administrative penalties on offenders for cases involving only violation of administrative regulations. 
23. Could Macao, China specify the level of penalties that can be imposed by the 
Customs Service? 
Answer
 
 - Individuals may be penalized by a fine ranging from MOP50,000 to MOP500,000. 
 - Corporations may be penalized by a fine ranging from MOP200,000 to 
MOP1,000,000. 
Question  
For criminal cases, it is stated that appropriate penalties shall be imposed on violators.  24. Could Macao, China specify the level of penalties that can be im posed by the judicial 
authorities? 
Answer
 
Offenses and respective penalties are stated in  Article 209-Article 214 of Decree-Law No. 43/99/M 
<Copyright Law in Macao>.  
Article 211 states: “Those who, with intent to secure unlawful gains for themselves or for third 
parties, directly or indirectly re produce, in whole or in part, on an industrial scale, the protected 
works, phonograms or videograms of others without  the authority of the holder of the right of 
reproductions, shall be punished with  imprisonment for 1 to 4 years.” 
Article 212 states: “Those who, with intent to secure unlawful gains for themselves or for third 
parties, knowing or having reason to know of the ap propriation or counterfeiting, sell, offer for sale, 
store, import, export or otherwise distribute on an  industrial scale  copies of appropriated works or 
copies of counterfeited works, phonograms of vide ograms, whether made inside or outside the 
Territory, shall be punished with imprisonment for a term not exceeding 2 years or with a fine not 
exceeding 240 days.” 
For violating the regulations stipulated in Decr ee-Law No. 97/99/M <Industrial Property Code>, the 
unlawful acts and respective punishments ar e stated in Article 289 – Article 294. 
For violation of Article 291 (Counterfeiting, imitati on and illegal use of trademark), a prison sentence 
of up to 3 years or a fine for 90 up to 180 days may be applicable. 
For violation of Article 292 (Sale, circulation or concealment of products or  goods), a prison sentence 
of up to 6 months or a fine for 30 up to 90 days may be applicable.  
Question  
WTO Secretariat's Report, page52, para. 86 
It is stated that no compulsory licence has been granted in Macao, China so far.  WT/TPR/M/181/Add.1 
Page 46  
 
  25. Could Macao, China briefly describe the conditions and procedure under which a 
compulsory licence can be granted? 
Answer  
The conditions and procedure for granting of com pulsory licences are governed by Article 109 to 116 
of Industrial Property Code (Decree-Law no. 97/99/M) . However, please note that the relevant articles 
will be amended to facilitate the implementation of the “Protocol Amending the TRIPS Agreement” 
in respect of the public health issue. 
By decision of the Chief Executive, compulsory no n-exclusive licences can be granted for a certain 
patent in any of the following cases: a) No or inade quate exploitation of pate nts; b) Interdependence 
of patents; c) For reasons of public interest. 
In general, compulsory licences can be granted onl y when the potential licen see has made efforts to 
obtain a contractual licence from the patent-holder on acceptable commercial terms and such efforts have not been successful within a reasonable period . The conditions in brief of the granting of 
compulsory licence for the three different cases are as follows: 
For case a) - No or inadequate exploitation of patents: 
 i. if a patent is not or is inadequately ex ploited, there shall lie grounds to apply for a 
compulsory licence if the patent-holder, without good or legal reason, by 4 years from the date of the patent application or 3 y ears from the date of the granting, whichever 
is the longer: 
  a) Has not begun exploitation or made effective preparations to that end, nor 
granted licences for the patent in the Territory or in any other country or territory member of WTO; 
  b) Has not exploited the invention in such a way that the results satisfy the 
market requirements in the Territory. 
ii. Another ground for requesting a compulso ry licence shall be the patent-holder's 
failing, without good legal reason, to exploit the invention, either in Macao or in any 
other country or territory member of WTO, during 3 consecutive years. 
For case b) - Interdependence of patents: When the exploitation of an invention protected by a patent is not possible without damaging the 
rights conferred by a prior patent, the compulsory licence may be granted only if the subsequent 
invention represents a notable technical progress over the prior invention. 
For case c) - For reasons of public interest: In case of the beginning, the increase or the generali zation of the exploitation of the invention or the 
improvement resulted from the exploitation are of pr imordial importance for public health or safety, 
compulsory licence for the invention may be granted for reason of public interest. 
Basically, the concise procedure of the gr anting of compulsory licence is as follows: 
 i. Application for the granting of a compul sory licence shall be filed with the Macao 
Economic Services, accompanied by the n ecessary elements proving the respective 
grounds.  WT/TPR/M/181/Add.1 
 Page 47 
 
 
   ii. Once the Macao Economic Services has re ceived the application for a compulsory 
licence, it shall notify the patent holder to  respond and submit the respective proof 
within 2 months. 
 iii. The Macao Economic Services shall then have 2 months to analyze the arguments 
advanced by the parties and the guaran tees offered by the applicant for the 
compulsory licence, to prepare the corresponding opinion and to submit the proceedings for the Chief Ex ecutive's decision, which shall be handed down within 1 
month. 
 iv. When the compulsory licence applicati on is based on the public interests, the 
application shall be submitted to the Ch ief Executive only after having obtained the 
opinion of the authority with respect to  Science, Technology and Innovation, if 
applicable, of the Health Services of Macao  or of the Macao Security Services, and 
after the title-holder has had a chance to take a stand on those opinions. 
 v. If the application is approved, the Macao  Economic Services shall appoint an expert 
and notify both parties to appoint their own experts within 1 month, then the three 
experts shall agree on the conditions of th e compulsory licence and the remuneration 
to be paid to the patent-holder within 2 months. 
 vi. Appeal to the competent civil court shall, within 3 months of the date of the 
notification, lie against the decision by the Chief Executive to grant, refuse or revoke 
the compulsory licence, or just against the conditions on which it was granted. 
Question
 
(iv) Competition policy WTO Secretariat's Report, page 52, para. 88-89 The WTO Secretariat's Report notes that Macao, China does not have a comprehensive law on 
competition policy, but that Government follows cl osely competition policies formulated by other 
WTO Members.  
26. Could Macao, China inform whether there are any plans to establish a 
comprehensive law on competition policy in the future? 
Answer
 
Despite the fact that a competition law has not been enacted, the Macao Government is paying 
attention to the evolution of the economy, the eco nomic development dynamics in the region and the 
society’s demands and views in this respect.  
Macao, China’s policy towards competition aligns with its trade policy, i.e., to foster free trade in a 
fair and competitive environment, which has always been consistent with the basic principles of the 
WTO. In fact, this spirit towards competition is reflected and embodied in the Commercial Code of 
Macao 1999 and other sectoral regulations. The Co mmercial Code does contain explicit provisions, 
which the Macao Government believes are presently ad equate, that lay down the general disciplines in 
the context of competition. WT/TPR/M/181/Add.1 
Page 48  
 
  Question  
IV.  T RADE POLICIES  BY SECTOR  
(2) MANUFACTURING  
WTO Secretariat's Report, page 56,  para. 5 and footnote 2 and page 57, para. 7 
The WTO Secretariat's Report notes that already befo re the elimination of international quotas on 
textiles and clothing in 2005, the textiles and clothing  sector in Macao, China was in decline, both in 
absolute and relative terms, but that a reversal of th is decline began from the second half of 2005.  
27. Could Macao, China give more details  on the increase of textile and garment 
production that has returned to Macao, China? 
Answer  
Due to the global termination of the textile quota system in 2005, domestic manufacturers remained 
cautious about the textile and clothing market trends  and developments during that period, resulting in 
a fall of production. Nevertheless, as the manufactu rers began to observe the potential growth (and 
stability) in the textile trade, in addition to some  positive signs shown for the economic prospects of 
the region, textile and clothing production has rebounde d, leading to an increase in exports from the 
second half of 2005.  
Question
 
 
28. Could the same details be given fo r the increases in the footwear sector? 
 
Answer  
 The above situation also applied to the footwear  sector, even though this is not subject to the 
quota system. 
Question  
(3) SERVICES  
WTO Secretariat's Report, page 55, para. 1 Macao, China's rapid development in recent years has b een mainly attributable to the combined effect 
of the Individual Traveller Scheme and the liberaliz ation of the gaming industry.  In addition to 
gaming, part of the telecom sector has also been liberalised. 
29. Are there any other sectors of the econom y that  Macao, China's authorities would 
consider for liberalisation so as to facilitate the entry of new economic agents in 
sectors such as public utilities and maritime and air transport services? 
Answer
 
Air transport services  
The Macao government respects the concession contract s signed with the airline and with the Airport 
and has no plan to break the concession contract at this stage.  WT/TPR/M/181/Add.1 
 Page 49 
 
 
  Public Utilities  
In Macao, China, electricity supply, water suppl y and fixed line telephone services are respectively 
provided by a single operator, while public bus services are provided by two companies, under 
concessions. The major rationales behind the situation are the relatively small geographical size of the 
territory and the comparatively small size of consumption, which results in higher efficiency and more effective allocation of resources for these services to be provided by a single or a limited number of 
companies.  
Notwithstanding this, the Macao Government has pu t in place regulatory frameworks in the exclusive 
concessions with the public utilities’ operators so as to  ensure that public interest is attended to. With 
the aim of protecting the public interest, prices of  most utilities are administered or monitored by 
respective regulatory bodies, as the operators need  to obtain administrative approval on fares and 
charge adjustments.  
Maritime Transport
 
In maritime transport, there are currently four companies operating ferries carrying passengers to and 
from Mainland China, Hong Kong, China and Macao, Ch ina. It is important to emphasize that there is 
no exclusive right granted to any company operati ng maritime passenger transport. At present, the 
Outer Harbour Ferry Terminal houses 12 berths. The c onstruction of an additional ferry terminal is 
underway and is expected to be completed by the first quarter of 2008. This new terminal will add 
significant capacity to accommodate the increasing number of ferry-docking requests.  
Question  
(i) Telecommunications WTO Secretariat's Report, page 63, para. 25 Mobile and internet services have b een liberalised, including the po ssibility of foreign companies to 
provide internet services with a license of up to  five years. Basic telecommunication services have, 
however, not been liberalised and the one private provider's exclusive concessionary agreement has 
been extended to 2011. 
30. Could Macao, China elaborate upon the reasons for this decision? 
Answer
 
After the negotiations carried out between the Go vernment and the concessionaire, Companhia de 
Telecomunicações de Macau (CTM) in 1999, and havi ng taken in consideration the market situation 
and developments, the revision process was conclude d by liberalizing some services such as mobile 
telephone and Internet services.    
Question  
(ii) Financial services (a) Banking services WTO Secretariat's Report, page 64, para. 29 The legislative framework of Macao, China prov ides for a statutory bank secrecy not limited to 
particular customers or market segments. Moreover,  bank information for exchange of information WT/TPR/M/181/Add.1 
Page 50  
 
  purposes can only be obtained in criminal tax matte rs. The procedures to obtain bank information 
include the requirement of a court order, based on a specific domestic definition of a criminal offence.  
31. In view of the need to establish a level playing field in trade and in investment in 
financial services also with regard access for taxation purposes to information 
available to banks and other financial institu tions from Macao, China, whether and if 
so, to which extent, Macao, China intends or actually undertakes a modification of its 
legislative framework on banking secrecy, notably :  
  - the abolishment of the possibility to  oppose statutory bank secrecy to requests  
for access from tax authorities which are not motivated by a domestic tax 
interest, 
  - the extension of the exchange of information, including on bank accounts, to  
civil tax matters, and 
  - the direct availability of bank inform ation to the competent taxauthorities for  
exchange of information purposes, or any equivalent measure.  
Answer  
At present, Macao, China has no plans to modi fy its legislative framework on bank secrecy.  
EUROPEAN COMMUNITIES – FOLLOW-UP  
Question  
1) When issuing SPS related legislation, are the existent relevant International 
standards settled by IPPC, C ODEX and OIE taken into consideration? If not why? If 
it is the case, then in what percentage of cases the international standards have 
already been applied? 
Answer  
Under the principle of consistency, during th e process of establishing and issuing SPS related 
legislation, the international standards, guide lines and recommendations developed by WTO member 
governments in other international organizations, such as, for food safety, the joint FAO/WHO Codex Alimentarius Commission; for animal health, the Office International des Epizooties; and for plant 
health, the FAO International Plant Protection Conv ention are taken into consideration. Also, the 
national standards of other countries are taken in to account for adaptation to regional conditions, 
provided that such measures are consistent  with the provisions of the SPS Agreement. 
Question
 
2) Reply to EC question 14 on government pr ocurement - is it possible to have a follow-
up on the timeline when this new legislation is likely to be adopted?  
Answer  
The referred new legislation will possibly be adopted next year.  WT/TPR/M/181/Add.1 
 Page 51 
 
 
  JAPAN  
Report by the Secretariat (WT/TPR/S/181)  
III. TRADE POLICIES AND PRACTICES BY MEASURE  
(2) MEASURES DIRECTLY AFFECTING IMPORTS 
(iii) Tariffs Question
 1 (paragraph 13, page 30) 
The Secretariat report explains that Macao, China has  bound 28.6% of its tariff lines at zero while no 
tariffs are applied to imports entering Macao, China.  The report also points out that Macao, China is 
considering binding many more tariff lines in th e current round of negotiations, provided that 
mutually satisfactory re sults can be achieved. 
Please elaborate on the consideration of Macao, China to bind tariff lines in the current round of 
negotiation. 
Answer  
Since Macao, China has already bound  all agricultural products listed in Annex I to the Agreement on 
Agriculture at zero, further bindings will fall on non-agricultural tariff lines.  In the meantime, as 
Members are still seeking consensus on many im portant issues, Macao, China is following the 
development of the NAMA negotiations very closely.  Nevertheless, Macao, China is willing to bind 
more tariff lines as a contribution to  the current Doha Round negotiations. 
(vi) Anti-dumping, countervailing and safeguard measures 
Question  2 (paragraph 23, page 35) 
The Secretariat report points out that Macao, Ch ina has no laws or regulations governing anti-
dumping, countervailing actions  or safeguard measures. 
Japan would like to be informed how Macao, China takes measures in case that anti-dumping, 
countervailing actions or safeguard measures need to be taken for the future. 
Answer  
Macao, China has historically been a free port wh ich provides free entry for all imports from all 
sources of the world. As enshrined in the Basic Law , Macao, China shall maintain its free port status 
and, in the meantime, upholds the longstanding liber al trade policies and pr actices. Macao, China has 
never taken any antidumping, count ervailing action nor safeguard measures. There are no domestic 
laws on antidumping, countervailing action and safegua rd measures. At this stage, Macao, China does 
not intend to provide any legal framework for such trade measures. WT/TPR/M/181/Add.1 
Page 52  
 
  (4) MEASURES AFFECTING PRODUCTION AND TRADE 
(iii) Intellectual property rights protection Question
 3 (paragraph176-87, page 49-52) 
Japan appreciates that to protect intellectual propert y rights, Macao, China has made positive efforts, 
such as to establish the related laws for cont rolling over optical disc piracy and to improve the 
enforcement system under which the Macao Customs Service seizes infringing goods. 
Japan would like to ask Macao, China to con tinuously take effective measures for protecting 
intellectual property rights.  
Answer  
Macao, China will keep its system for the protectio n of IPRs under continuous review, and will take 
steps when necessary to en sure its effectiveness. 
CANADA  
Question  
Report by the Secretariat (WT/TPR/S/181)  
Part IV. Trade Policies by Sector, (3) Services, (i) Telecommunications, page 61, paragraph 19: 
The Secretariat Report notes that Macao SAR grante d two mobile licences on a merit basis in 2002. 
1. Could Macao SAR provide further details on how the number of licences to be granted is 
determined?  
Answer  
The number of licenses granted is based on the lo cal environment, including market conditions, 
population, and competition level, etc. 
Question  
2. Could Macao SAR provide any information on plans to issue any additional new mobile 
licenses? 
Answer  
Currently, there are four 2G mobile operators and one MVNO.  In addition, three of these 2G mobile 
operators will be granted 3G mobile licenses.  Th e issuance of the fourth 3G license will only be 
considered after an evaluation of market conditions. 
Question  
Part IV. Trade Policies by Sector, (3) Services, (i) Telecommunications, page 63, paragraph 24: 
The Secretariat Report notes that Macao SAR has tabl ed an offer in the Doha Round of negotiations 
that includes mobile radio telephone services and radio paging services for local and international  WT/TPR/M/181/Add.1 
 Page 53 
 
 
  services. Canada notes that Macao SAR’s revised offer ex cludes Mode 1, which is vitally important to 
the delivery of services by electronic means such as business process outsourcing.  
3. Could Macao SAR provide further details on wh y Mode 1 is excluded from its revised offer on 
services? 
Answer  
In consideration of the nature of mobile radi o telephone services and ra dio paging services, unbound 
condition has been stated for Mode 1 since the beginn ing and it was not changed in the revised offer.  
Question  
4. Does Macao SAR have any plans to extend its  offer to this mode of service delivery? 
Answer  
The Government has no plans to extend the current offer for the time being. 
Question  
Part IV. Trade Policies by Sector, (3) Services, (i) Telecommunications, page 63, paragraph 26: 
The Secretariat Report notes that Macao SAR mainta ins no restrictions on foreign ownership, size of 
share holding, or other restrictions on investment in value-added telecom ser vices. However, Canada 
notes that W/120 2Ck (electronic data interchang e) and 2Cn (on-line information and/or data 
processing including transaction processing) are not included in Macao SAR's revised offer on 
services. 
5. Could Macao SAR clarify whether or not any  restrictions are main tained on these value-
added services in its domestic regime? 
Answer  
There is no restriction on enterprises, whether forei gn or locally-owned, wishing to enter the business 
of providing these value-added services.  However,  all telecommunications operators have to be 
locally registered. 
Question  
6. In addition, could Macao SAR please provid e further details on why these sub-sectors of 
value-added telecommunications services are exclude d from Macao SAR’s revised offer on services? 
Answer  
2. These VASs are already included in the revised offer. 
Question  
7. Does Macao SAR have any plans to extend its offer to include complete coverage of the 
value-added telecommunications sector? 
Answer  
At the moment, there are no plans to am end the current offer at this stage. WT/TPR/M/181/Add.1 
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  Question  
Part IV. Trade Policies by Sector, (3) Services, (i) Telecommunications, page 63, paragraph 27: 
The Secretariat Report notes that Macao SAR is cu rrently undertaking a study on the feasibility of 
establishing a second fixed or wireless network for the provision of broadband services.  
8. Could Macao SAR provide information on when it anticipates that this study will be 
completed? 
Answer  
The said feasibility study is set to be completed by the end of this year. 
Question  
Part IV. Trade Policies by Sector, (3) Serv ices, (iii) Transport, (b) Air transport, 
page 70, paragraphs 44-47:  
In 2001, the joint-venture SAIM won a 25-year extension of its original 25-year concession until 
2039.  In December 2001, SAIM unveiled a plan to develop a free trade logistics centre in which 
cargo could be consolidated and stored without passing through customs based out of Macao SAR’s 
new international airport. 
9. Could Macao SAR provide in formation on the ownership stru cture of the international 
airport? For example, who owns the airport? Is it subsidized? Are there airport access issues? 
Answer  
The concession (BOT concession) for the construction and operation of the airport was granted for 
50 years to CAM (Sociedade do Aeroporto Internaci onal de Macau S.A.R.L), a private company in 
which the Macao SAR government is a majority sh areholder with a 55.4% stake in the company. 
Sociedade do Turismo e Diversões de Macau (STD M) has a 33.03% share, and the remaining shares 
are held by a number of Mainland Chinese and local business and institutions. 
There is no direct subsidy from the government to the airport.  Nevertheless, the government sponsors 
the airport for acquiring equipment for enhancing the safety and security systems of the Airport.  This 
includes the acquisition of security equipmen t (x-ray, CCTV, access control system) and 
communication equipment (AMHS, NETRIX, TES systems). 
The Airport Company – CAM was granted a 25-year  government concession.  This concession was 
granted to build, manage, and ope rate Macau International Airport was extended by the Macao SAR 
government in March 2001 for another 25 years.  Thus, CAM has the monopoly to operate the airport 
until 2039. Further, under this concession contract , CAM has the right to grant sub-concessions to 
other companies for the provision of airport services.   There are altogether 7 sub-concessions 
respectively for the provision of ground handling, cat ering, fuel supply, duty free, general aviation 
handling services, airport restaurant and security. These sub-concessions were granted after a process of public tender. As a result of this process, a sub-concessionaire was chosen for each type of service 
to which the exclusivity of providing that type of service for a certain period of time was granted. 
Therefore, during the sub-concession period, except for the sub-concession holders, no other 
companies, whether incorporated in  or outside Macao SAR, may be permitted to offer such services.   
Question
 
10. Could Macao SAR provide additional informa tion on the ownership of its air carriers? 
Specifically Canada would be int erested in learning more about the joint venture involving Shun Tak  WT/TPR/M/181/Add.1 
 Page 55 
 
 
  Holdings, Air Macau and the China National Aviation Company and the two other low-cost airline 
companies that have been incorporated in Macao. 
Answer  
Shareholders of Air Macau: % 
CANC -China National Aviation Corporation (Macau) Co. Ltd. 51% 
SEAP – Serviços, Administração e Participações, Limitada 20% 
STDM – Sociedade de Turismo e Diversões de Macau (Shun Tak 
Holdings) 14% 
Macau SAR government 5% 
Evergreen Airways Service (Macau) Ltd. 5% 
Other investors 5% 
 
Shareholders of Viva Macau: Amount: 
MOP 
Eagle Airways Holdings Ltd. 24,998,000.00 
Andrew Pyne 1,000.00 
Peak Projects HK Ltd 1,000.00 
 
Shareholder structure of Macau Asia Express Ltd. 
 
  
 
  Shun Tak Holdings 
Shun Tak Air Transport 
(Macau Co.) CNAC (Macau) 
Groupax (HK Co.) 
 
Starpax Limited  
Airpax Limited  
Air Macau 
Macau Asia Express Limited 
Issued capital MOP100 million (hold on trust for Groupax) 100% 
64% 36%
4% 
96%
48% 1% 51% WT/TPR/M/181/Add.1 
Page 56  
 
  Question  
11. Could Macao SAR provide add itional information on its int ernational air policy? Does 
Macao SAR advocate open air agreements? 
Answer The Macao SAR government advocates open sky policy.  Macao's liberal policy in air transport is 
reflected in the 45 Air Services Agreements (ASAs) already officially signed or initialed between the 
Macao SAR and its partners. In principle, Macao is willing to exchange fifth freedom traffic rights in 
addition to third and fourth freedom traffic rights. With regard to cargo transportation, the 7
th freedom 
was exchanged with the USA, Singapore and Iceland. 
Question  
12. Does Macao SAR have competency in air bilateral relations? If  not, does such competency lie 
with Beijing? 
Answer  
According to Article 136 of the Macao SAR Basic Law “The Macao Special Administrative Region 
may, on its own, using the name “Macao, China”, maintain and develop relations and conclude and implement agreements with foreign states and regions  and relevant international organizations in the 
appropriate fields, including the economic, trade, financial and monetary, shipping, communications, 
tourism, cultural, science and technology, and sports fields”. 
This article recognizes Macao SAR an international capacity to conclude treaties, although limited to 
certain matters. 
Regarding civil aviation treaties, there is a specific Article in the Macao Basic Law, Article 117 states 
that:  “ The Government of the Macao Special Administ rative Region may, with the authorization of 
the Central People’s Government formulate, on it s own, various systems for the civil aviation 
management.”  
This means that in civil aviation matters, Macao SAR needs the authorization of the PRC, case by 
case. As so, in accordance with th e Basic Law, Macao SAR, after obtaining the authorization of the 
Central People’s Government, may on its own negotiate and conclude agreements with the states and 
regions concerned in the fields of air services.  In  practice, the process to conclude an ASA is the 
following: 
i. Obtain the authorization of Central Peopl e’s Government to negotiate the ASA; 
ii. Approval of the text of the ASA; 
iii. Delegation from the Central People’s Govern ment to the Executive Chief (EC) of the 
signing power. 
General Observation: 
There is essentially no informa tion on the laws governing Maritime Transport in Macao. Canada 
recommends that information of this nature be included in future trade policy reviews. 
__________