WORLD TRADE ORGANIZATION  
ORGANISATION MONDIALE DU COMMERCE  
ORGANIZACIÓN MUNDIAL DEL COMERCIO  WT/TPR/M/241/Add.1 
10 February 2011 
 (11-0673) 
Trade Policy Review Body 
1 and 3 December 2010 Original:   English/ 
 anglais/  inglés 
 
  
TRADE POLICY REVIEW 
HONG KONG, CHINA  
Record of the Meeting
 
Addendum  
Chairperson:  H.E. Mr. Bozkurt Aran (Turkey) 
 
 This document contains the advance written questions, and replies provided by Hong Kong, 
China.1 
__________________________________________________________________________________ 
Organe d'examen des politiques commerciales 
1 et 3 décembre 2010  
EXAMEN DES POLITIQUES COMMERCIALES 
HONG KONG, CHINE 
Compte rendu de la réunion
 
Addendum  
Président:  S.E. M. Bozkurt Aran (Turquie) 
 
 Le présent document contient les questions écrites communiquées à l'avance et les réponses 
fournies par Hong Kong, Chine.1 
__________________________________________________________________________________ 
Órgano de Examen de las Políticas Comerciales 
1 y 3 de diciembre de 2010 
 
EXAMEN DE LAS POLÍTICAS COMERCIALES 
HONG KONG, CHINA 
Acta de la reunión  
Addendum  
Presidente:  Excmo. Sr. Bozkurt Aran (Turquía) 
 
 En el presente documento figuran las pre guntas presentadas anticipadamente por escrito, 
junto con las respuestas facilitadas por Hong Kong, China.1 
 
                                                      
1 In English only./En anglais seulement./En inglés solamente.  
 
    WT/TPR/M/241/Add.1 
 Page 3 
 
 
  REPLIES PROVIDED BY HONG KONG, CHINA 
 
MEXICO  
 1. Apart from the decline in agricultural productio n and export, what are the results of the 
government policy of buying out livestock producers,  particularly in terms of increased output in 
other sectors of activity, social impact and migration to urban areas? 
Answer
 
Like other farmers, pig and poultry farmers w ho opted for the volunt ary surrender schemes may 
consider converting their farms to other agricultu ral purposes.  As the agricultural and fisheries 
sector in Hong Kong, China is very small, representing only 0.1% of GDP and 0.57% of employment, the increase in output in other secto rs of activity and the social impact as a result of the conclusion of 
the voluntary surrender schemes are very insignificant.  Geographi cally speaking Hong Kong, China 
is a rather small community and the rural areas a re well connected to the urban areas, there is no 
observable migration impact arising from the voluntary surrender schemes.   
 
2. Please explain what is meant by the "prudent  commercial principles" in accordance with 
which the Airport Authority is required to conduct its activities, as described in paragraph 108.   
Answer
 
According to the Airport Authority Ordinance (Cap  483) which governs the activities of the Airport 
Authority (AA), AA shall conduct business according to prudent commercial principles and shall, as 
far as practicable, ensure that, taki ng one year with another, its revenue is at least sufficient to meet 
its expenditure. 
 3. What were the reasons for putting on hold the initia tive to privatize the Airport Authority and 
what were the features of that initiative?   
Answer
 
The proposal of privatising AA has been put on hold due to the diverse views received during the 
public consultation on the proposal c onducted in 2004 - 2005.  The key fe ature of the proposal was to 
partially privatise AA through an initial public offering of the shares of AA. 
 
4. What are the criteria for selecting a city as a "designated" city under the Individual Visit 
Scheme within the framework of CEPA , as described in paragraph 114.   
Answer  
The Individual Visit Scheme (IVS) is a coopera tion and liberalization measure provided under the 
CEPA.  The formulation of the measure, including sel ection of designated cities, took into account a 
host of factors including consumer demands, busin ess needs and prospect, as well as the related 
policy of the Mainland of China.   
 5. Please provide more details about the control system on exports of textiles to ensure 
compliance of textile products clai med to be of Hong Kong origin. 
Answer
 
The Textiles Control System is a law-based system.  It is built upon an import/export licensing system 
and an origin certification system.  Vigorous enforce ment is taken to forestall origin abuses and any 
textiles malpractices where appropriate. 
 WT/TPR/M/241/Add.1 
Page 4  
 
  Under the laws of Hong Kong, all textiles export from and import into Hong Kong, China (other than 
a few exempted items
2) are required to be covered by valid li cences or textiles notific ations lodged by 
textiles traders registered under the Textiles Trader Registration Scheme  (TTRS).  Different licensing 
requirements apply to textiles exports/imports invo lving “sensitive” and “non-sensitive” markets.  
The current textiles control arr angements are summarized below: 
 
 (a) all textiles imports from and exports to the Mainland of China, and exports to the 
United States (classified as involving "sensiti ve markets"), shall be  covered by either 
consignment-specific import/export licences, or notifications lodged by registered 
traders under TTRS; 
 
 (b) all other textiles imports and exports (c lassified as involving "non-sensitive markets") 
shall be covered by either consignment specific import/export licences, or comprehensive import/export licences conven iently available for covering multiple 
shipments in a year; and 
 
 (c) manufacturers producing cut-and-sewn garme nts intended for export to the US are 
required to lodge Production Notification (PN)  on the day of or within three working 
days prior to the commencement of the ma jor assembly work in Hong Kong, China.  
The PN arrangement enables the conduct of real time checks to ensure that the origin 
conferring processes are carried out in Hong Kong, China as claimed. 
 
Another centrepiece of our textiles control system is a credible and sound origin certification system.  
It ensures origin compliance of textiles (and ot her products) claiming Hong Kong, China origin and 
facilitates their customs clearance overseas.  Our certification of orig in system follows internationally 
accepted practices.  Only registered manufacturers with verified manufacturing capacity to perform 
the origin-conferring processes may apply for Certificates of Hong Kong Origin. 
 
6. What are the criteria for determining a market to  be "sensitive" or "non-sensitive" for textile 
exports, as described in paragraph 73. 
Answer
 
Markets or places which are more prone to textiles a buses in terms of origin claims are classified as 
"sensitive markets".  All other markets/countri es are classified as "non-sensitive" markets. 
 
7. Are foreign geographical indications recognized under an international agreement subject to 
any legal procedure involving registration, payment of  duties, or remuneration in Hong Kong, China?   
Answer  
Foreign geographical indications ("Gis") are recognized in Hong Kong, China under the TRIPS 
Agreement of WTO.  GIs, whether domestic or fo reign, are protected in Hong Kong, China in a 
variety of ways.  A GI may be protected under tr ademark law, either by way of registration as an 
ordinary trademark or as a collective mark or a certification trademark as provided under the Trade 
Marks Ordinance (Cap. 559).  It is also possible to  protect a GI through the common law action of 
passing off.  Further, it is also a criminal offen ce to apply a false description to goods under the 
Trade Descriptions Ordinance (Cap. 362).  Thus, any false indication of the place of manufacture of 
                                                      
2 Exempted items are woven or knitted fabric swatches and sample yarn imported by air and not 
exceeding 0.8m2 in size in respect of fabric swatches and 1.2 kilograms in weight in respect of each type of 
yarn; textiles articles of reasonable quantity that are impor ted or exported by an individual for his personal use 
or as a bona fide gift to another individual;  and textile s articles of reasonable quantity to be used by the crew or 
passengers of a vessel, aircraft, or vehicle.  WT/TPR/M/241/Add.1 
 Page 5 
 
 
  goods may constitute an offence.  For GIs protect ed as registered trademarks, registration fees are 
applicable.  
8. In addition to recognizing geographical indica tions, does your legislation provide for the 
protection of appellations of origin?   
Answer
 
There is no specific legislation in Hong Kong, Ch ina to recognise the protection of appellations of 
origin.  Geographical indications or appellations of origin seeking protection in Hong Kong, China 
would have to do so through the Trade Marks Ordinance (Cap. 559), the Trade Descriptions Ordinance (Cap. 362) or the common law of passing off.  Please see the answer given in Question 7 
above. 
 
9. Does the legislation of Hong Kong, China pr ovide for the protection of geographical 
indications for wines and spirits? 
Answer
 
Protection of wines and spirits falls under the protect ion of GIs generally as explained in the answer 
to Question 7 above.  ADDITIONAL QUESTIONS FROM MEXICO 
 
 
SERVICES 
 
Mexico hereby requests that Hong Kong, China repl y to the following questions, which are based on 
document WT/TPR/S/241  of 27 October 2010. 
 
IV. TRADE POLICIES BY SECTOR / (5) SERVICES / (ii) Financial services / (a) Banking 
and finance 
 
Paragraph 42 mentions that "[…] Since June 2007, Mainland financial institutions (and their branches 
in the HKSAR), after obtaining regulatory approval,  have been permitted to issue RMB bonds in the 
HKSAR.  Eligibility for bond issuers was broadened to include Mainland subsidiaries of Hong Kong 
banks in 2009, when the Government of China also issued RMB sovereign bonds in Hong Kong, 
China […]".  Mexico would like to know whether fo reign financial institutions that issue or place 
bonds face any form of discrimination.    
Answer
 
Foreign financial institutions are welcomed to i ssue RMB bonds in Hong Kong, China and there is no 
discrimination against them.  There is no restriction on the range of eligible issuers, issue 
arrangements and target investors.  This year, we have seen a significant expansion in the range of 
issuers, with issuances by Hong Kong, China a nd multinational companies and most recently by 
international financial institutions, namely th e Asian Development Bank and the International 
Finance Corporation of the World Bank Group. 
 Paragraph 45 states that "[…] Authorized institutio ns may engage in securities business if they have 
obtained registration from the Securities and Futures Commission […]".  Please indicate the 
requirements for registration with this Commission.    
Answer
 
Securities and Futures Commission (SFC)'s paramount c onsideration in whether or not to register an 
authorised institution ("AI") is whether the AI is fit and proper.  SFC shall have regard to the 
following matters concerning the AI: WT/TPR/M/241/Add.1 
Page 6  
 
  - financial status or solvency; 
- qualifications or experience having regard to the nature of the functions to be 
performed; 
- ability to carry on the regulated activity concerned competently, honestly and fairly; 
and 
- reputation, character, reli ability and financial integrity. 
Detailed requirements are set out in the Fit and Proper Guidelines, Guid elines on Competence and 
Licensing Information Booklet issued by SFC.  These publications can be downloaded at the following hyperlink: http://www.sfc.hk/sfcRegulatoryHandbook/E N/sfcRegulatoryHandbookTBServlet?DEPT=LIC&TYPE
=CODE+GUIDELINES  
Paragraph 46 states that "[…] There was no need in 2008 for the HKSAR Government to provide any 
financial support (bail-out) to financial institutions as a result of the global financial crisis.  
Nonetheless, the HKMA implemented a series of measures to help maintain the stability and 
confidence in the monetary and banking sectors [… ]".  Mexico would like to know what measures 
were implemented and whether they are in lin e with Hong Kong, China's WTO commitments.   
 
Answer
 
HKMA has implemented a number of measures to help maintain the stability and confidence in the 
monetary and banking sectors, and facilitate banks to  better perform their function of financial 
intermediation.  The measures include – 
 
- HKMA introduced five temporary measures to provide liquidity assistance to licensed 
banks in Hong Kong, China.  The measures in volve expansion of the scope of eligible 
collateral for access to, and the duration of , liquidity assistance through the Discount 
Window, and conduct of foreign exchange swaps  and term repos by HKMA.  These 
measures were in place until the end of March 2009.  Following a review, two of the measures, namely, foreign exchange swaps and term repos, have been incorporated 
into the ongoing market operations while ot hers were terminated on 31 March 2009 
as planned; 
- on 9 October 2008, HKMA adjusted the formula in determining the Base Rate to 
further ease tensions in the money market.  Prior to the adjustment, the Base Rate 
was set at the higher of: (a) 150 basis points above the prevailing US Fed Funds 
Target Rate (“FFTR”); or (b) the average  of the 5-day moving averages of the 
overnight and 1-month HIBORs.  After the adjustment, the HIBOR leg was removed and the spread of the Base Rate over th e FFTR was reduced to 50 basis points.  
These changes effectively low ered the cost of Discount Window borrowing.  At end 
March 2009, the HKMA, after a review, decided to maintain the smaller spread of 50 
basis points, but restated the HIBOR leg so as  to allow the functioning of the interest 
adjustment mechanism under the Currency Board system; 
- on 14 October 2008, the Financial Secretary announced two pre-emptive measures, 
namely, the use of Exchange Fund to prov ide full guarantee for deposits held with all 
authorized institutions (“AIs”) in Hong Kong, China in accordance with the 
principles of the Deposit Protection Scheme , and the establishment of a Contingent 
Bank Capital Facility for the purpose of making available additional capital to 
locally incorporated licensed banks.  Th ese measures will be in force till end 2010.   WT/TPR/M/241/Add.1 
 Page 7 
 
 
  Legislative processes were completed to  enhance the regular deposit protection 
arrangement in Hong Kong, China, viz. the Deposit Protection Scheme, to dovetail 
with the expiry of the full deposit guarant ee to facilitate a smooth transition.  Major 
enhancements, including an increase in the protection limit to HK$500,000 per depositor per bank and product coverage, w ill take effect on 1 January 2011.  The 
HKMA, Bank Negara Malaysia and the Moneta ry Authority of Singapore continued 
to coordinate under a tripartite working grou p formed in July 2009 for a concerted 
strategy for the exit from the full depos it guarantee by the end of 2010 in their 
respective jurisdictions; 
- on 29 October 2008, HKMA issued a circular urging banks to be more 
accommodating in lending to SMEs within  the bounds of prudent credit assessment; 
- on 19 November 2008, HKMA issued a further circular on “Hong Kong Approach to 
Corporate Difficulties” to remind banks that  when dealing with corporate borrowers 
in financial difficulties, banks should remai n supportive and not hastily put them into 
receivership or issue writs demanding re payment if they have a reasonable chance of 
survival; 
- on 21 November 2008, HKMA announced a temporary measure about a flexible 
approach towards the premium on capital adequacy ratio of individual banks and introduced a new arrangement for the provisi on of liquidity to banks of Hong Kong  
operating on the Mainland of China.  Loca l AIs remained well capitalised without the 
need for HKMA to lower their minimum capital adequacy ratio requirements. In 
order to promote financial stability and support Renminbi (“RMB”)-denominated 
trade transactions between Hong Kong, Ch ina and the Mainland of China, HKMA 
and the People’s Bank of China established a RMB-HKD currency swap agreement in January 2009.  With the establishment of this currency swap arrangement, short-
term liquidity support (up to RMB200 billion or HK$227 billion) c an be provided to 
the Mainland China operations of banks of Hong Kong and the Hong Kong 
operations of Mainland China banks in case of need; 
- on 26 March 2009, HKMA announced the strengthening of the LOLR (Lender of Last 
Report) framework by expanding the typ es of assets and facilities eligible for 
obtaining LOLR support.  Specifically, fo reign exchange swaps have been included 
among the basic instruments to be used by  HKMA to provide LOLR support, and the 
definition of eligible securities for repos has been expanded to include securities in 
foreign currencies with acceptable ratings; 
- HKMA is in the process of implementing in Hong Kong, China the enhancements to 
the Basel II capital framework issued by the Basel Committee on Banking Supervision (“BCBS”) in July 2009.  Impl ementation of enhancements on capital and 
disclosure requirements (i.e. Pillars 1 and 3) will be effected through legislative 
process which is currently underway, and th ose on supervisory review process to 
strengthen risk management standards (i.e. P illar 2) came into effect on 4 June 2010 
through the issue of an updated supervisory guideline; 
- HKMA is studying and addressing comments received from the industry on a draft 
guideline issued in July 2010 to implement the systems and controls standards set out 
in the latest BCBS Liquidity Sound Principles.  The development of the guideline is an 
initial step of HKMA’s overall process towa rds strengthening the liquidity regime, 
which also covers, to be implemented in phases, enhancements to the supervisory 
process, quantitative liquidity standards, and reporting and disclosure frameworks;  WT/TPR/M/241/Add.1 
Page 8  
 
  - as a member of the BCBS, HKMA has c ontributed to, and relayed local issues and 
concerns, during the development of the consultative proposals on new capital and 
liquidity standards released by the BC BS on 17 December 2009 to strengthen the 
resilience of the banking sector.  Public consultation on the pr oposals ended on 16 
April 2010.  HKMA has provided further co mments arising from its discussions with 
the banking sector and various stakeholders to the BCBS.  Meanwhile, HKMA is 
participating in a comprehensive quantitative impact study (“QIS”) launched by the BCBS as an important part of the latter’s process for calibrating the standards.  The calibrated capital and liquid ity standards were presented to the Seoul G20 Leaders 
Summit in November 2010.  With a view to  better understanding the likely impact of 
the standards on the local banking sector, and formulating an appropriate plan for 
implementing these standards in Hong Kong, China, HKMA is also conducting its 
own QIS on a broader range of AIs; and 
- in the course of 2009 and 2010 so far, HKMA has issued new guidelines on 
"Counterparty Credit Risk Management", "Internal Audit Function", and "Sound 
Remuneration System".  The revised gu ideline on "General Risk Management 
Controls" will be issued shortly afte r addressing industry comments.  Guidelines 
under development / revision to reflect latest international standards and best practices include market risk management (new), valuation practices (new), 
competence and ethical standards (new)  st rategic risk management (revised), 
reputation risk management (revised) and stress-testing (revised). 
The above measures are in line with the rights and obligations of Hong Kong, China under the GATS, 
including its Annex on Financial Services. 
 
Paragraph 47 mentions that "[…] To facilitate  a smooth exit from the full deposit guarantee, 
legislative amendments have been made to e nhance the DPS, including the raising of the DPS 
protection limit from HK$100,000 to HK$500,000 […]".  Please indicate what kind of legislative 
amendments have been made to enha nce the Deposit Protection Scheme.   
 
Answer
 
The Deposit Protection Scheme (Amendment) Or dinance 2010 (“the Amendment Ordinance”), which 
was enacted in July 2010, amends the Deposit Pr otection Scheme Ordinance (Cap 581) to implement 
the enhancements to the Deposit Protection Scheme  ("DPS") identified in a review conducted by the 
Hong Kong Deposit Protection Board ("the Board" ) in 2009.  Major enhancements include:  
 
- raising the DPS protection limit from HK$100,000 per depositor per bank to 
HK$500,000 per depositor per bank;  
- widening the coverage of the DPS to cover secured deposits; 
- introducing cost mitigating measures to avoi d the cost of enhancing protection being 
transferred to depositors; and  
- improving the efficiency of the Board in  calculating and making compensation to 
depositors in a payout.  
These enhancements, which will take effect starting from 1 January 2011, will help facilitate the 
smooth withdrawal of the full deposit guarantee, wh ich was introduced at the height of the global 
financial crisis in late 2008, by the end of 201 0.  Depositors will benefit from receiving better 
protection and faster compensation payment, and an impr oved clarity of the protection status of their 
deposits.  As the amount of protected deposits will increase with the increase in protection limit, the  WT/TPR/M/241/Add.1 
 Page 9 
 
 
  amount of contribution payable by banks will also increase.  In order to contain the cost impact on 
banks due to raising the protection limit, the rates fo r charging contribution is cut by 65% in order to 
keep the absolute amount of annual contribution pa yable by banks largely unchanged.  With the 
enhancements to the DPS, Hong Kong, China is well positioned to maintain monetary and financial 
stability at and beyond the expiry of the deposit guarantee. 
 
IV. TRADE POLICIES BY SECTOR / (5) SERVICES / (ii) Financial services / (a) Banking 
and finance 
 
Paragraph 56 states that "[…] Insurance agents must  be registered/licensed with the Insurance Agents 
Registration Board (IARB) of the Hong Kong Federati on of Insurers, which also handles complaints 
against agents, and monitors compliance with th e Code of Practice for the Administration of 
Insurance Agents.  Insurance brokers  must either be authorized by OCI or be a member of the Hong 
Kong Confederation of Insurance Brokers or the Professional Insurance Brokers Association […]".  
Mexico would like to know the registration and licensing requirements of the Insurance Agents 
Registration Board (IARB) of the Hong Kong Federati on of Insurers and whether there is a nationality 
requirement for insurance agents or brokers.    
Answer
 
The registration and licensing requirements of IARB of The Hong Kong Federation of Insurers are as 
follows: 
 
1. The minimum qualifications that an individual must fulfil before he may be considered by the 
IARB to be fit and proper to be registered as a Registered Person (i.e. a person who has been 
registered as either an Individual Agent, a Resp onsible Officer of an Insurance Agency, or a 
Technical Representative of an Individual Agent or an Insurance Agency) are that: 
(a) he has attained the age of 18; 
(b) he is a Hong Kong Permanent Resident or Hong Kong Resident whose employment 
visa conditions, if any, do not restrict hi m from acting as an insurance agent, a 
Responsible Officer or a Technical Representative; 
(c) he has completed education to a level of Form 5 or equivalent unless he was engaged 
in the insurance intermed iary business in Hong Kong, China immediately before 1 
January 2000 and has not since ceased to be engaged in insurance-related work in 
the insurance industry in Hong Kong, China for two consecutive years; 
(d) he has successfully passed the relevant p apers of the Insurance Intermediaries 
Qualifying Examinations recognized by the Insurance Authority; and 
(e) he complies with such rules and policies as may be prescribed by the Insurance 
Authority or the HKFI as applicable to him from time to time. 
2. An insurance agent which is an Insurance Agency shall have an appointed Responsible 
Officer. (Please refer to point 1 above regarding the minimum qualifications for the Responsible 
Officer.) 
IV. TRADE POLICIES BY SECTOR / (5) SERVICES / (v) Tourism 
 Paragraph 122 explains that "The HKTB mainta ins a hotel classification system, which gives a 
composite score to a hotel based on five key indicator s:  achieved room rates;  staff-to-room ratio;  
location;  facilities;  and the business mix.  Based on the composite scores, hotels are classified into WT/TPR/M/241/Add.1 
Page 10  
 
  three categories.  While the HKTB does not make pu blic the listings of hotels by category, individual 
hotels are informed of their category so that they can compare their performance against their 
category averages".  Mexico wishes to know whether there are foreign invest ment restrictions for 
hotels.   
 
Answer
 
Regarding investment in hotel development, local and non-local investors are s ubject to the same set 
of statutory and regulatory requirements.  There are no specific barriers for non-local bodies to 
develop hotels in Hong Kong, China.  Many inter national hotel chains have built and been operating 
hotels in Hong Kong, China for many years. 
 
Paragraph 123 mentions that "[…] Tourist guides must obtain accreditation from the TIC and a 
Tourist Guide Pass (valid for three years)".  Please indicate the licensing requirements and state 
whether they include a nationality requirement.    Answer
 
Applicants for accreditation and the Tourist Guide Pass must meet the following requirements –  
 
- 18 years old or above;  
- satisfy immigration requirement for employment in Hong Kong, China;  
- Form 5 graduates or equivalent (applicants with one or more than one year’s tour-
guiding experience before the implementa tion of the Tourist Guides Accreditation 
System may apply for exemption);  
- holding certificates recognised by the TIC and passing the relevant examinations;  
- holding a first aid certificate or attendance certificate issued by a recognised 
institution;  
- making a declaration on physical and mental fitness; and  
- making a declaration of any criminal conv iction in Hong Kong, China or elsewhere 
in accordance with the Declaration Form provided by the TIC.  
There is no nationality requirement in applying for accreditation and the Tourist Guide Pass.   
 
Paragraph 127 states that "[…] The relevant policy bureaus of the HKSAR Government have 
developed and are implementing specific measures , some of which may also benefit Hong Kong, 
China's economic development in general".  Mexico would like to know what specific measures are 
being implemented and whether they are in line with Hong Kong, China's WTO commitments. 
 
Answer  
Paragraph 127 of the Secretariat Report refers to the development of six industries (i.e. not referring 
to the tourism sector).  The specific measures for the development of these industries are set out in 
paragraph 15, page 8 of  Hong Kong, China's Government Repor t (WT/TPR/G/241).  Those measures 
are in line with Hong Kong, China's WTO commitments.   WT/TPR/M/241/Add.1 
 Page 11 
 
 
  IV. TRADE POLICIES BY SECTOR / (5) SERVICE S / (vi) Development of new industries/ 
(b) Cultural and creative industries 
 
Paragraph 136 states that "[…] An injection of HK$300 million was made in 2007 and its scope was 
expanded to finance the production of small-to-m edium budget films.  Th e Film Guarantee Fund 
(FGF) was established in 2003 to help local film  production companies to obtain loans from lending 
institutions for producing films, and to stimulate the development of a film financing infrastructure in 
Hong Kong, China […]".  Mexico would like to know whether the funds are still earmarked solely for 
local companies.   Answer
 
One of the eligibility criteria for the Film Development Fund (FDF) and the Film Guarantee Fund 
(FGF) is that the applicant must be a film pr oduction company formed and registered under the 
Companies Ordinance (Cap.32).  Provided that other relevant eligibility criteria are met, foreign film 
producers can access these film funds by pairing up with their film industry partners in Hong Kong, 
China for co-production of films, whereby the latter can assume the role as applicants and the former 
as financiers.  Details about the FDF and FGF can be found at www.createhk.gov.hk. 
 
 UNITED STATES
 
 
WT/TPR/S/241 – Report by the Secretariat 
 II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES  
(5) F
OREIGN INVESTMENT REGIME  
 
Page 20, Paragraph 27:   According to the Report, the three industrial estates under the authority of 
the Hong Kong Science and Technology Parks Corpora tion (STPC) “provide a total of 217 hectares of 
land, at cost, to manufacturing and services companies.”    
- Please explain the meaning of "at cost".  How does the STPC determine the value of the land? 
- Please explain how this compares with the value of nearby land otherwise available for 
commercial use from private sources. 
- What limitations, if any, does the STPC impose on the provision of land with regard to area 
size, use, tenure, and any other criteria? 
- Please provide additional information as to any restrictions on the types of companies or 
industries eligible to purchase land w ithin the three industrial estates.  
Answer
 
The Hong Kong Science and Technology Parks Cor poration (HKSTPC) is a statutory organisation 
with a specific mission to promote innovati on and technology for Hong Kong, China’s overall 
economic benefit.  The Industrial Estates (IE) are operated with a view to contributing towards 
broadening the industrial base and upgrading technology levels in Hong Kong, China. 
 The three IEs have been developed by the Hong Kong Industrial Estates Corporation (HKIEC) which 
became part of HKSTPC from May 2001.  The HKIEC developed the IEs with its own resources and 
government loans.  Consistent with the non-profit ma king status of HKIEC, the established guidelines 
to determine the land premiums on IE have been to  incorporate the initial fu ll development cost but WT/TPR/M/241/Add.1 
Page 12  
 
  adjusted for inflation in subsequent years.  The HKSTPC regularly appoints professional consultants 
to make recommendations for the land  premium of IE, taking into consideration the recovery of the 
development costs for IE and the market situation.   There have been increa ses and decreases in the 
land premium, in line with inflation over the years.   The last adjustment of the land premium was 
made in September 2008, taking into account the late st market situation.  The HKSTPC has continued 
to keep the market situation and land premium under review. 
 The current land premium (with effect from 12 September 2008) is as follows: 
 US$ per sq meter 
Tai Po IE 308 
Yuen Long IE 244 
Tseung Kwan O IE Inland sites:  301 
 Water-front sites:  372 
 
IEs have been developed to provide affordable la nd for industries both in the manufacturing and 
service sectors, to facilitate th e overall development of Hong Kong, China’s economy.  Companies 
admitted to IEs must be able to fulfil the strict criteria and subject to strict admission procedures.  The admission criteria include (a) the project ca nnot be accommodated in ordinary multi-storey 
industrial or commercial buildings; (b) its opera tion is not classified as  offensive trade under 
Government regulations; and (c) it  is not engaging primarily in  storage and warehousing.   
Companies with heavy investment and new and improved  technology are favoured over others.  There 
is no restriction on local or foreign ownership of companies admitted.  Admission to the IEs is competitive and is determined, following these cr iteria, by a Committee of the HKSTPC Board. 
 
The land is made available from HKSTPC to the industry by leases which expire in June 2047.  The 
lessee shall only use the site fo r the purpose specified in the lease and shall not assign mortgage 
charge demise underlet or part with the possession  of the lot or any part thereof without prior 
approval from HKSTPC.  
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(2) M
EASURES DIRECTLY AFFECTING IMPORTS  
(iii) Internal taxes collected at the border 
 
Pages 25 and 26, paragraphs 18 and 19 :  The Secretariat Report notes that "lowering or removing 
excise duties could contribute to the development of trade by reducing business costs."  Would Hong 
Kong please explain why the excise duty on wine was eliminated while the 100 percent duty on spirits 
remains intact?   
 
Answer  
The objective of eliminating excise duty on wine, b eer and all other alcoholic beverages except spirits 
was to further develop Hong Kong, China's wine tr ading and distribution businesses and create more 
employment opportunities.  For public health reas on, it is considered necessary to maintain a 
reasonably high duty level for spirits to discourage excessive drinking.   
 
(ix) Government procurement 
 
Page 28, Paragraph 35 :  According to the Secretariat, "Hong Kong, China has been a signatory to 
the WTO Agreement on Government Procurement (GPA) since 1997 (it had been a signatory under 
the GATT)."  As a signatory to the WTO Agr eement on Government Pr ocurement (GPA), does  WT/TPR/M/241/Add.1 
 Page 13 
 
 
  Hong Kong, China plan to submit a market access offe r in the current negotiations on the revision of 
the GPA under Article XXIV.7 of the Agreement?    
Answer
 
Hong Kong, China has already made very extensive commitments without any party specific 
discriminatory and reciprocity provisions under the existing GPA.  The current commitments of 
Hong Kong, China have already met the level of amb ition and aspiration indicated by some Parties in 
the current round of GPA negotiations and covered  essentially the major services sectors.  
Nevertheless, Hong Kong, China has  been conducting internal consultations to explore whether there 
is any possibility to improve the existing comm itments under the domestic circumstances.   
(x) Standards and other technical requirements 
 
Page 34, paragraphs 51 to 53 :  The United States would like to note that Hong Kong also currently 
restricts imports of beef and beef products from certain countries that have had confirmed cases of 
bovine spongiform encephalopathy (BSE).  The guidelines of the World Organization for Animal 
Health (OIE) for BSE provide for the importati on of meat and meat products, including bone-in 
products, offal, and variety meats, regardless of ca ttle age, from countries or zones posing a controlled 
BSE risk if the appropriate tissues defined as specifi ed risk materials (SRMs) for such classification 
are removed.  Even though the OIE classifies the Un ited States as a controlled risk country for BSE, 
Hong Kong currently only accepts deboned beef fro m cattle less than 30 months of age from the 
United States.  Please describe in more detail the basis for this measure in light of HK's WTO SPS 
obligations.  In addition, please explain whether HK believes that this measure conforms to the OIE 
guidelines.   
Answer
 
Hong Kong, China was one of the fi rst in the region to partially lift import restriction on US beef in 
2005.  Hong Kong, China has no trade protection concerns in relation to US beef, the concern is over 
food safety.  As Bovine Spongiform Encephalopathy  (BSE) is an incurable disease, public health 
consideration is of paramount importance wh en regarding import control on US beef.   
 The Food and Environmental Hygiene Department has closely followed up on the BSE control 
strategies in the US, and conducted a visit to ca ttle farms and processing plants in US in October 
2009.  Apart from the absence of a mandatory national identification system, it was observed during 
the visit that full traceability to individual ca ttle and cohorts was impossible under its current system 
of animal record keeping.  Total feed ban has not  been implemented and the current enhanced feed 
ban does not apply to fertilizers.  The risk of feed contamination by specified risk materials cannot be ruled out. 
 
According to paragraph 3 of the General Remarks of  User’s Guide to the OIE Terrestrial Animal 
Health Code, "For Members of the World Trade Organisation (WTO), international trade measures 
should be based on a relevant international st andard (i.e. for animal health measures, an OIE 
standard) or an import risk analysis, to meet th eir obligations under the WTO Agreement on the 
Application of Sanitary and Phytosanitary Measures (SPS Agreement).”  In the opinion of Hong 
Kong, China, animal identification and traceability, as well as full feed ban, are key control measures 
to safeguard public health, irrespective of the risk st atus of the producing country.  Currently, most 
other countries with BSE cases (e.g. Japan, Canada and the United Kingdom) have mandatory 
national cattle identification system and full feed ban systems in place. 
 
Hong Kong, China notes that the US announced in February 2010 a new framework for animal 
disease traceability in the US.  Howe ver, very limited implementation de tails are currently available.  
Hong Kong, China has requested the US to prov ide more information on this latest animal WT/TPR/M/241/Add.1 
Page 14  
 
  identification and traceability system to facilitate ou r assessment on its efficacy and effectiveness.  
Hong Kong, China is awaiting response from the US. 
 Page 36, paragraph 59 :   The Secretariat Report notes that the new nutritional labeling regulation 
"has been burdensome for some businesses."  U.S.  businesses report that these regulations are 
problematic.  Why does Hong Kong believe that these regulations are not more trade-restrictive than 
necessary?   Answer
 
The Nutrition Labelling Scheme (the Scheme) for pre-packaged food und er the Food and Drugs 
(Composition and Labelling) (Amendment: Requirem ents for Nutrition Labelling and Nutrition 
Claim) Regulation 2008 took effect on 1 July 2010 after a grace period of about two years.  The 
Scheme is in line with international standards.  In formulating the Scheme, Hong Kong, China has 
taken into consideration the principles adopted by the Codex Alimentarius Commission (Codex), local 
health and disease patterns, overseas regimes, impact on the food trade and its implications on food 
choice.  It complies with the WTO SPS standards  and does not create any unnecessary trade barrier 
for the import of pre-packaged food.    The Scheme aims to assist consumers in making informed food choices, to regulate misleading or 
deceptive labels and nutrition claims, and to enc ourage food producers to apply sound nutrition 
principles in the formulation of foods.   In drawing up the Scheme, the HKSAR Government is  mindful of the need to minimize its impact on 
food choice for consumers and to facilitate the trade’s  compliance with the Scheme.  With the efforts 
of the food trade, the Scheme has been implem ented smoothly without undue impact on consumer 
choice since 1 July 2010.  The complia nce rate of traders is over 99%.   
 Hong Kong, China has adopted a number of trade fa cilitation measures to enab le traders to comply 
with the new requirements under th e Scheme, including formation of a working group with the trade 
to address various compliance issues, facilitating the provision of laboratory support, workshops, 
web-based technical information and tools (e.g . guidance notes, frequently asked questions and 
Nutrition Label Calculator), telephone enquiry servi ce.  In particular, the Scheme has included a 
Small Volume Exemption (SVE) Scheme for food pro ducts with annual sales volume of 30 000 units or 
below.  Apart from Hong Kong, Ch ina, it is understood that US is the only country having in place a 
small volume exemption scheme.  W ith small volume exemption, many  ethnic food, organic food, or 
niche food products that are mos tly imported or manufactured in small volume would be exempted 
from the nutrition labelling requirem ents.  In addition, the exemption will be able to cater for the 
staging of food fair and trade prom otion events held usually for market testing purpose.  The SVE 
application fee is calculated on a full cost recovery basis.  
Hong Kong, China has already approved over 30 0 00 applications under the SVE scheme, of which 
46% relate to Japanese products, 11% relate to US products, and 9 % re late to UK products. 
 
(4) M
EASURES AFFECTING PRODUCTION AND TRADE  
(vii) Intellectual property rights 
 
Page 51, paragraph 110:   The Secretariat reports that in Hong Kong's 2009 copyright law reform 
project (which is still in the consultation process) , that package included "proposals for criminal 
sanctions against unauthorized communication of copy right works to the public, if the communication 
is for business profit, or where it affects prejudicially the copyright owners."  Please elaborate on the proposed "business profit" standard in this proposed le gislation, and in particular, how that standard 
will comply with the WTO Panel's view of the TR IPS Article 61 "commercial scale" standard as 
outlined in the recent US-China Intellectual Property Rights case (DS 362).    WT/TPR/M/241/Add.1 
 Page 15 
 
 
   
Answer  
Under the existing Copyright Ordinance (Cap. 39), criminal sanctions are already available against 
specific acts of copyright infringe ment conducted for the purpose of or  in the course of any trade or 
business.  The "for profit" concept already exists in  Hong Kong, China's existing copyright offence.  
 The proposed criminal sanctions against unauthorized communication of copyright works stem from a 
review exercise aimed at strengthening copyright protec tion in the digital environment.  They make it 
an offence for any person who engages in a trade  or business that consists of communicating 
copyright works to the public through electronic tr ansmissions, without authorization, for profit or 
reward (be it profit or reward obtained (a) directly from  subscribers e.g. in the form of a fee, or (b) 
indirectly through advertisements e.g. revenue gene rated from advertisements placed on a website 
from which unauthorized communication could be obta ined).  The policy intent is to impose criminal 
sanctions against any unauthorized communication of  copyright works which is made for the purpose 
of, or in the course of, a trade or business for profit or reward.  The formulation of the criminal 
sanctions as to the part "for profit or reward" w ould be focusing on the "intent" (qualitative) rather 
than to any "scale" (which includes both quan titative as well as relativity concepts).  
  Hong Kong, China notes that the relevant WTO Panel, in deciding the recent US-China Intellectual Property Right case (WTO DS362), pointed out that “scale” includes both the concept of quantity, in 
terms of magnitude or extent, as well as the con cept of relativity and concluded that counterfeiting or 
piracy "on a commercial scale"
3 refers to counterfeiting or piracy carried on at the magnitude or 
extent of typical or usual commercial activity with respect to a given product in a given market, which 
may be small or large.  The magnitude or extent of typical or usual commercial activity relates, in the 
longer term, to profitability.   
 
Hong Kong, China believes that the coverage of th e proposed criminal sanctions goes beyond the 
"commercial scale" standard.  As such, it more than meets the minimum standard of protection prescribed in Article 61 of the TRIPS Agreement. 
 
WT/TPR/G/241 -- Report by the Government of Hong Kong 
 
Page 21, Paragraph 82:   Your government reports that it "dismantled" the Hong Kong-based 
elements of an international TopSite syndicate.  Please elaborate on the status of this important action 
by explaining what the government means by dism antling and any follow-up activities.  For example, 
were criminal indictments filed in this case?  Ha ve prosecutions been initiated?  Does the government 
think this specific action has helped deter the gr owth of other such businesses based in Hong Kong?  
 Answer
 
In 2009, Hong Kong Customs and Excise Department detected a Top-Site case involving an international piracy syndicate.  It used high-speed  servers to distribute infringing materials over the 
Internet.  It was believed that the syndicate had recruited about 200 members in Hong Kong, China 
and other economies.  We seized all the syndicate’s high-speed servers (five in to tal) installed with a 
large number of infringing movies, music, com puter programmes and video game software with built-
in password protected devices.  
During the follow up investigations, Customs officers arrested two suspects w ho were believed to be 
the mastermind and an active member of the syndica te.  Pending completion of forensic analysis of 
                                                     
 
3 TRIPS Article 61 provides that "Members shall pr ovide for criminal procedures and penalties to be 
applied at least in cases of willful trademark counterfeiting or copyright piracy on a commercial scale….."  
[emphasis added]. WT/TPR/M/241/Add.1 
Page 16  
 
  the computers and the related digita l evidence, the case will be referred  to the Department of Justice 
for considering criminal prosecution.  
Since our seizure of the high-speed  servers in this first ever "Top-Site" case, no other similar case has 
been detected in Hong Kong, China. 
  
AUSTRALIA
 
 
GOVERNMENT OF HONG KONG, CHINA REPORT 
 
IV. SECTORAL DEVELOPMENTS 
(A) Developments in Trade in Goods (a) Textiles and clothing   
 
1. Australia notes Hong Kong, China's applica tion of licencing requirements for import and 
export of textiles and clothing products (page 14, paras 47-50).    
 In relation to import licensing, can Hong Kong Ch ina confirm that licences are "automatic" for the 
purposes of the WTO Agreement on Import Licensing Procedures?  
 
Answer
 
All applications for import licence are subject to approval, which is straightforward and generally 
automatic if certain conditions are met, e.g. duly completed with necessary details, with proper 
declaration, and duly signed by the authorized signatory.  This apart, import licence applications, 
particularly those involving the sen sitive markets, may be subject to consignment checks conducted by 
the Customs and Excise Department (C&ED).  Licence applications will be approved if no 
discrepancy between the particulars declared on the licence application and the result of consignment 
check is found.   
In the case of "sensitive markets" , are there factors that would tri gger non-approval of either import or 
export licences?  
 Answer
 
Import/export licence applicants must provide n ecessary consignment-specific details on the 
applications, and must ensure information prov ided therein are true and correct, and make proper 
declarations duly signed by the authorized signatories to that effect.  Licence applications may be subject to consignment checks conducted by C&ED.  The applicants are required to make available 
sufficient and accurate information/documents to  substantiate their applications if necessary.  
Inadequate or faulty submission of documents/inform ation or any discrepancies between the result of 
consignment check and the particulars declared in the licence applications may result in non-
approval of the applications.  The issue of an import/ export licence is also subject to the compliance 
of certain prescribed conditions of licence (e.g. a licence is non-transferable, it can only be used to 
cover import/export of textiles as appropriate within th e validity period) by the applicant.  A breach of 
any of such conditions may render the licence li able to be cancelled, revoked and suspended.  
  WT/TPR/M/241/Add.1 
 Page 17 
 
 
  WTO SECRETARIAT REPORT 
 IV. TRADE POLICIES BY SECTOR (ii) Financial Services  
(a) Banking and finance 
 
1. Australia notes that in October 2008, the Financial Secretary announced provision of a full 
guarantee for deposits held with all authorised in stitutions in Hong Kong, China. To facilitate a 
smooth exit from the full deposit guarantee (in force until end 2010), legislative amendments, to take 
effect from beginning 2011, have been made to enhance Hong Kong, China's Deposit Protection 
Scheme (DPS) (page 66, para. 47).  
 Can Hong Kong, China give a more detailed account  of amendments to the DPS, explaining their 
expected impact on its banking sector a nd commenting on why it selected HK$500,000 as the 
appropriate protection limit? 
 
Answer
 
The Deposit Protection Scheme (Amendment) Or dinance 2010 (“the Amendment Ordinance”), which 
was enacted in July 2010, amends  the Deposit Protection Scheme Or dinance (Cap. 581) to implement 
the enhancements to the Deposit Protection Scheme  (“DPS”) identified in a review conducted by the 
Hong Kong Deposit Protection Board (“the Board” ) in 2009.  Major enhancements include:  
 
- raising the DPS protection limit from HK$100,000 per depositor per bank to 
HK$500,000 per depositor per bank;  
- widening the coverage of the DPS to cover secured deposits; 
- introducing cost mitigating measures to avoi d the cost of enhancing protection being 
transferred to depositors; and  
- improving the efficiency of the Board in  calculating and making compensation to 
depositors in a payout.  
These enhancements, which will take effect starting from 1 January 2011, will help facilitate the 
smooth withdrawal of the full deposit guarantee, wh ich was introduced at the height of the global 
financial crisis in late 2008 up to the end of  2010.  Depositors will benefit from receiving better 
protection and faster compensation payment, and an impr oved clarity of the protection status of their 
deposits.  As the amount of protected deposits will increase with the increase in protection limit, the 
amount of contribution payable by banks will also increase.  In order to contain the cost impact on 
banks due to raising the protection limit, the rates fo r charging contribution is cut by 65% in order to 
keep the absolute amount of annual contribution pa yable by banks largely unchanged.  With the 
enhancements to the DPS, Hong Kong, China is well positioned to maintain monetary and financial 
stability at and beyond the expiry of the deposit guarantee.    
 
At the increased protection limit of HK$500,000, th e DPS will deliver a reasonably high level of 
protection that is cost effective to provide, a ccompanied by a manageable level of moral hazard and 
easily understandable by the public.  Major consid erations in setting the protection limit include – 
 
- about 90% of all depositors will become fully covered under a protection limit of 
HK$500,000, which will help cultivate public confidence in the DPS; WT/TPR/M/241/Add.1 
Page 18  
 
  - raising the limit to HK$500,000 will also bring the protection for depositors in 
Hong Kong, China in line with protection in major countries in absolute terms and as a ratio to per capita GDP. 
2. Australia notes that the Hong Kong Monetary  Authority (HKMA) is implementing measures 
to strengthen the Basel II capital framework, issu ed by the Basel Committee on Banking Supervision 
in July 2009. Enhanced capital and disclosure requirements are currently being implemented 
legislatively.  Improvements on the supervisory revi ew process to strengthen authorized institutions' 
risk and capital management practices took e ffect in June 2010 (page 67, para. 48). 
 The G20 has agreed to implement changes to th e Basel II framework, including enhanced capital 
requirements, additional capital buffe rs and a supplementary leverage ratio.  The G20 has also agreed 
to introduce a global framework for bank liquidi ty.  These reforms are collectively being called 
Basel III.  What is Hong Kong's position on the new Basel III capital and liquidity framework?  Does 
HK plan to implement these new rules?  If so, what  are the likely impacts on businesses in the sector? 
 Answer
 
It has been the Hong Kong, China's long-standing  policy to align the regulatory and supervisory 
regime with international standards and best prac tices.  Hong Kong, China will therefore implement 
Basel III in line with the recommendations of  the Basel Committee on Banking Supervision 
(“BCBS”).  The banking sector in Hong Kong, China has  already indicated support to the objectives 
of Basel III of promoting a less leveraged and bett er cushioned global financial system that supports 
sustainable economic growth.   
 The BCBS will finalize the detailed rules and calibr ation of Basel III in respect of the December 2009 
proposals by the end of this year.  The Hong K ong Monetary Authority (“HKMA”) will consider its 
implementation approach and timetable for the various reform initiatives in 2011 in consultation with 
the banking industry.  Basel III also includes the Ju ly 2009 enhancements to the capital requirements 
on and transparency of trading book  and securitisation activities of banks under Basel II.  In this 
regard, we are in the process of amending the Ba nking (Capital) Rules and Banking (Disclosure) 
Rules to implement the enhancements concerned by 1 January 2012 in line with the BCBS' timetable.   
 Banks in Hong Kong, China are generally well-pla ced to meet the higher capital standards under 
Basel III.  They tend to be conservative in their c apital management, as can be seen from an average 
capital adequacy ratio of 16.2% and an average Tier 1 ratio of 12.6% at the end of June 2010.  More 
reliance is placed on common equity to meet re gulatory capital requirements than in many other 
jurisdictions.  Moreover, many of the regulatory adj ustments from common equity have already been 
included in the Banking (Capital) Rules.  Our qu antitative impact study on Basel III also indicated 
that, generally speaking, our banks' leverage ratios can comply with BCBS' testing level of 3%.  
Therefore, we do not see the need fo r large capital raising by local banks or expect any major change 
in the business models of the banks as a result of implementing Basel III.    As regards the new liquidity standards, we do not expect banks in Hong Kong, China to have major 
problems in meeting the standards, although some may need to adjust their liquidity profiles or liquid 
assets composition.  However, the transition arr angements and lengthy lead- in period should enable 
banks to prepare for the transition to the new st andards without significant disruption to their 
business.  One issue which affects Hong Kong, Chi na along with a few other jurisdictions (e.g. 
Australia) is the insufficient supply of domestic gov ernment debt for banks to hold as liquid assets.  
The BCBS is developing a proposal for alternati ve arrangements in the affected jurisdictions. 
 
3. Australia notes that in late 2008, HKMA issued circulars urging banks to be more 
accommodating in lending to SMEs and to be supportiv e when dealing with corporate borrowers in 
financial difficulties (page 67, para. 49).  WT/TPR/M/241/Add.1 
 Page 19 
 
 
   
Is Hong Kong, China able to provide informati on (e.g. lending volumes a nd other conditions) on 
banks' dealings with SME and other cor porate clients following the circulars? 
 
Answer  
We do not have the relevant data specifically on le nding to SMEs and other corporate clients. 
 
(iii) Telecommunications 
 
4. Australia notes that since 2006, Hong Kong, China's Office of Telecommunications Authority (OFTA) has investigated 17 cases of alleged anti- competitive conduct but no breach of law has been 
found (page 70, para. 62).    What forms of anti-competitive conduct were alleged in these 17 cases?  Answer
 
In all 17 cases, allegations that the conduct was in breach of section 7K of the Telecommunications 
Ordinance (Cap 106) (TO) (in respect of anti-compe titive practices) were made.  Further, in 6 of 
these 17 cases, allegations that the conduct was in breach of sections 7L (in respect of abuse of 
position) or 7N (in respect of non-discrimination) were also made.  Access to the full provisions of 
sections 7K, L and N of the TO can be gained at:  http://www.legislation.gov.hk/blis_ind.nsf/ 
WebView?OpenAgent&vwpg=CurAllEngDoc*106*0*106#106  
Does Hong Kong, China anticipate any changes to  its telecommunications competition regulatory 
framework, including any changes arising from th e proposed merger of the Telecommunications 
Authority (TA) and the Broadcasting Authority, the Proposed Communications Law or the Proposed 
Competition Law? 
 
Answer
 
The Competition Bill was introduced into the legisl ature in July 2010.  The Competition Rules under 
the Bill will apply to all sectors, including the te lecommunications sector.  A Competition Commission 
(the Commission) will be set up to enforce the new competition law by conducting investigation and 
bringing enforcement proceedings to the Competition Tribunal (the Tribunal),  a superior court of 
record with the Judiciary set up to hear and adj udicate on competition cases.  When the Competition 
Rules become effective, the corresponding competition provisions in the TO will be repealed.  The Bill 
contains transitional provisions in respect of th e TO to ensure smooth transition from the existing 
sectoral competition regulation to the future a pplication of the Competition Rules in the 
telecommunications industry.  The TA will be gi ven concurrent jurisdiction with the Commission to 
enforce the new competition law in the teleco mmunications sector, by investigating cases and 
bringing enforcement proceedings to the Tribunal.  The TA’s existing adjudicative functions, i.e. to 
decide whether there is a breach and to impose sanctions, will be  transferred to the Tribunal.  
Therefore, so far as the TA’s role  is concerned, there will be a change  from the current administrative 
model to the judicial enforcement model.  U pon the merger of the TA and Broadcasting Authority 
(BA), the concurrent jurisdiction conferred on the TA (and the BA) in the telecommunications sector 
(and the broadcasting sector) will vest with the m erged entity, the Communications Authority (CA). 
 
Do industry stakeholders appear supportive of the current sectoral competition rules?  Answer
 
The sectoral competition provisions have been enac ted in the TO for the telecommunications sector 
for 10 years.  So far, the provisions have been functioning well and the industry has grown accustomed to conducting their business having re gard to the requirements of the competition 
provisions.  That said, the telecommunications in dustry should welcome the introduction of a general WT/TPR/M/241/Add.1 
Page 20  
 
  competition law in Hong Kong, China, bringing th e other sectors on par with the telecommunications 
sector in terms of their obligation to  comply with the competition rules. 
 
5. Australia notes that Hong Kong, China has introduced a new Unifie d Carrier Licence (UCL) 
to replace fixed carrier, mobile carrier and pub lic radio-communications system licences upon their 
expiry, and an updated services-based operator (SBO) licence to replace the previous Public Non-
Exclusive Telecommunications Services (PNETS) and SBO licences (page 72, paras 72-73).  Do the UCL and/or updated SBO licence impose an y additional requirements or obligations on 
telecommunications service suppliers that were (o r would have been) formerly regulated under the 
superseded licences? 
 
Answer
 
UCL, FCL MCL and Public radio-communications system (PRS) licences4  
 
The General Conditions ("GCs") of UCL are the same as those of the existing fixed carrier licence 
("FCL") and mobile carrier licence ("MCL").  This is  to ensure that the same basic obligations will 
apply to a carrier irrespective of whether it is li censed under the unified carrier licensing regime or 
the existing fixed/mobile carrier licensing regime.  After the consultation on the licensing framework of UCL, a common set of Special Conditions 
("SCs") which would be universally applied to all unified carrier licensees ha s been adopted.  These 
SCs were basically modelled on the corresponding SCs in  the existing FCL and MCL.  In addition, 
some new SCs have been introduced to the UCL to a lign with the latest regulatory environment, for 
example: -  
- SC 30 on "Provision of Information to Customers", which was modelled on an 
existing licence condition in the SBO li cence and Class Licence for Offer of 
Telecommunications Services, was introdu ced in the UCL for better consumer 
protection. 
- SC 36 on "Service Contracts and Dispute Resolution" was introduced to require 
licensees to comply with the Code of Prac tices issued by the TA in respect of the 
requirements to apply in the contracting of  telecommunications services to customers, 
and the submission of consumer disputes fo r handling under an independent dispute 
resolution scheme.  Although the SC was intended to provide a more formal 
framework for the improved handling of contractual disputes, the TA has made it clear that the industry would be encouraged to continue tackling these issues 
voluntarily. 
The approach of adopting a common set of SCs helps to harmonise the basic obligations for different 
operators providing different types of  services under the UCL.  That sa id, the TA may, in addition to 
this common set of SCs, attach other SCs whic h are consistent with the Telecommunications 
Ordinance and not inconsistent with the GCs.  The TA may consider attaching other SCs in a UCL to 
be granted in the following circumstances: 
 
- specific services provided by an applican t which call for specific obligations; 
                                                     
 
4 PRS licences here refer to the predecessor of MCL. On ly one such licence is stil l in force, which will 
expire in February 2011 an d be replaced with a UCL, subject to th e Telecommunications Authority’s approval. 
The differences from UCL in terms of  licence conditions are greater for PRS than for MCL, for PRS was issued 
based on an earlier regulatory regime.  For the sake of charting a concise discussion, we will not explore the 
details of the PRS here.  WT/TPR/M/241/Add.1 
 Page 21 
 
 
  - specific commitments of an applicant which constitute the relevant considerations of 
the TA in granting a new UCL to the applicant; or 
- obligations in an existing carrier licence wh ich the TA considers it would be in public 
interest to maintain under the UCL. 
SBO and PNETS  
 
The unified set of GCs and SCs of the modified SB O licence were based on the existing GCs and SCs 
of the original SBO licence created in 2006, with appropriate updates to cater for the inclusion of 
services originally under the PNET licences.  Furth ermore, an SC on "Service Contracts and Dispute 
Resolution" was also introduced to the modified SBO. 
 6. Australia notes that Hong Kong, China has withdrawn its mandatory "Type II" 
interconnection policy except for buildings meeting the "essential facilities criterion" that justifies 
mandatory Type II interconnection in the consumer interest (page 72, para. 75). 
 
To what extent has Type II interconnection continued to be provided through commercial 
negotiations?  
Answer
 
As mentioned in the Secretariat Report, Type II (f acilities-based) interconnection (the equivalent of 
local loop unbundling) policy required the incumben t fixed network operator to open its copper-based 
customer access network (CAN) to new entrants so that they can provide competing services in the 
start-up phase, while building their own networks.  Type II interconnection can be made at either the 
exchange level (point A), street level (point B), or building level (point C).  In July 2004, the TA 
decided, after conducting a public consultation, to withdraw the mandatory Type II interconnection at 
exchange level (point A) by a 4-year transitional p eriod.  At the same time, the mandatory Type II 
interconnection at street level (point B) and building level (point C) were maintained.  For details on 
the above interconnection configurations, please refer to the statement of the TA entitled "Withdrawal 
of Mandatory Type II Interconnection" available at:  http://www.ofta.gov.hk/en/tas/interconnect/ 
tas20080703.pdf.  The mandatory Type II interconnection at the exchange level was formally withdrawn in July 2008.  
As far as we understand, although the mandatory re gulation was withdrawn, the incumbent operator 
will provide Type II interconnection to some operators through commercial arrangements.   
 We wish to point out that the role of Type II in terconnection plays a relatively less important role in 
Hong Kong, China because of very effective facilit y-based competition among operators.  With the 
local telecommunications market liberalised for mo re than 15 years, the fixed network operators are 
actively competing with each other by rolling out self-built CAN to connect their potential customers.  
As of March 2010, around 86% of households in  Hong Kong, China are served by at least 
two self-built CANs established by the FNOs, wher eas around 70% of households are served by at 
least three self-built CANs. 
 How many facilities have been designated as “e ssential facilities” to which mandatory Type II 
interconnection will continue to apply?  On what basis is this designation made? 
 
Answer
 
The TA would consider designating a fa cility as an essential facility, i.e.  the operator has to open that 
facility for new entrants, when there are relevant requests for regulatory intervention in respect of 
Type II interconnection.  So far we have not received any such request.   
 WT/TPR/M/241/Add.1 
Page 22  
 
  If the TA receives such a request in the future, the TA will assess the request on the basis of, among 
others, whether the incumbent’s CA N can be duplicated and whether refusal to access that CAN will 
foreclose competition. 
 
7. Australia notes that regulatory guidance on fi xed-to-mobile interconnection charges (FMIC) 
was withdrawn in April 2009 after a two year trans itional period for operators to adapt to change 
(page 73, para. 76).   Has the deregulation of FMIC led to any significa nt change in fixed-to-mobile interconnection 
charges, including any shift away from the mob ile party’s network pays (MPNP) approach? 
 
Answer
 
The FMIC arrangement was formally deregulat ed on 27 April 2009 after a two-year transitional 
period such that the previous regulatory guidance in favour of the MPNP  approach was withdrawn 
and no replacement guidance was issued.  At present,  whether there is any FMIC between fixed and 
mobile network operators for the traffic conveyed be tween them, and the level of such charge, if any, 
are solely subject to the comme rcial agreements between the resp ective interconnecting operators.  
From the information available to the TA so  far, many operators have reached commercial 
agreements on FMIC based on a Bill-and-Keep ( “BAK”) approach, i.e. no interconnection charge 
needs to be settled among the network operators. 
 Since deregulation of FMIC, have there been any in stances in which parties have failed to reach an 
agreement and have requested a de termination of the terms and cond itions of interconnection by the 
TA?  
Answer
 
The majority of operators have rea ched commercial agreements on FMIC  based on a BAK approach.  
So far, no network operator has requested th e TA to make a determination on the terms and 
conditions of interconnection in relation to the FMIC since its deregulation. 
 
8. Australia notes that mobile-to-mobile interc onnections have never been regulated (page 73, 
para. 77). 
 
How do mobile-to-mobile interconnection rate s in Hong Kong, China compare with rates 
internationally?  
Answer
 
Charges for interconnection between mobile network operators have not been subject to regulation by 
the TA.  Whether any interconnection charge would be  levied for the traffic between mobile network 
operators, and the level of such charge, if any, is  solely subject to commercial agreements between 
the mobile network operators.  According to the information av ailable to the TA, the direct 
interconnections between mobile network opera tors are generally based on the Bill-and-Keep 
approach, i.e. no interconnection charge needs to be settled and publis hed among the network 
operators.  
 
KOREA
 
 
Question 1: Secretariat Report, pages 6-7, paragraphs 13-22  
 
Hong Kong, China has traditionally been a strong advo cate of open and liberal trade.  Some recent 
changes in the role of the Hong Kong, China Govern ment, however, as demonstrated in the policies to 
promote the six industries, are seen by some as functioning as factors of uncertainty in the  WT/TPR/M/241/Add.1 
 Page 23 
 
 
  Hong Kong, China's future trade policy.  What are, if any, the Government's plans and/or policies to 
address this concern?    
Answer
 
Hong Kong, China remains a strong advocate of  and practices free and open trade.  Regarding the 
six industries, the role of the Go vernment is to facilitate a conduci ve environment for the development 
of these industries.  The ultimate success of these industries, however, will be determined by the 
market.  The Government does not and cannot hand-pi ck winners.  Hong Kong, China remains a firm 
believer and supporter in a free market economy and investment liberalisation.   
Question 2: Secretariat Report, page 16, paragraphs 10-11  
 
Hong Kong, China initiated FTA negotiations with the EFTA in January 2 010, and concluded FTA 
negotiations with New Zealand in March 2010. Wh at are the expected effects of these FTAs? In 
particular, what is the Hong Kong China Government 's estimate of the impact of such FTAs on Hong 
Kong, China's domestic employment and growth?   Answer
 
Hong Kong, China believes that the FTA with Ne w Zealand and the one being negotiated with EFTA 
will bring positive impact on the employment and econom ic growth.  In broad terms, the FTAs could 
lead to expansion of trade and investment, open up more business opportunities, and provide traders 
with better access to the New Zealand and EFTA market s.  A wide spectrum of trade and investment 
related economic activities will also be stimulated  thereby creating employment opportunities.  All 
these will be beneficial to the long term economic growth of Hong Kong, China. 
 
Question 3: Secretariat Report, pages 28-30, paragraphs 34-42  
 
Hong Kong, China's government procurement depends  mostly on imports and selective tendering 
seems to be normal in many of the cases.   (1) In order to participate in selective te ndering, contractors a nd suppliers should be on 
the approved list. It would be appreciated if the information on the country 
distribution of the contractors and s uppliers on the list could be provided. 
  (2) In 2006-09, 63% of government contract s were awarded through selective tendering. 
It would be appreciated if detailed explan ation could be provided why dependency on 
selective tendering is high. 
 
 (3) According to the Secretariat Report,  the value of government procurement per 
contract is increasing. What is the reason behind this trend? 
 
Answer to (1)
 
In respect of non-works contracts, open tender is th e norm.  Selective tender would only be adopted 
for supply of traffic management tools such as tra ffic lights.  For this we maintain four qualified 
supplier lists for traffic signals and controllers. The lis ts consist of a total of seven different suppliers.  
Six out of the seven suppliers on the lists are Hong Kong companies while the remaining one is from 
Australia.  Selective tendering is more commonly adopted by works departments for works contracts.  Works 
departments maintain lists of qualified construction suppliers. 
 WT/TPR/M/241/Add.1 
Page 24  
 
  The number of contractors and suppliers on the List of Approved Contractors for Public Works, and 
the List of Approved Suppliers of Materials and Specialist Contractors fo r Public Works (as at 
18 November 2010) is set out below:  
Country of incorporation
  No.  
Hong Kong, China    728 Mainland of China      13 
Japan          5 
Belgium       1 Netherlands         2 
United Kingdom         2  
Answer to (2)
 
Most of the contracts awarded through the "sel ective tendering" approach are works contracts.  In 
2009, 132 (91%) out of the 145 cont racts awarded through selective tendering were works contracts.  
If we take out the works contracts, the number of  non-works contracts awarded in 2009 by selective 
tendering will just be 13 cases which represents around 3% of the overall total of 441 cases (as 
shown in Table III.4 of the report).  
For most of the public work contracts in Hong K ong, China, only contractors on the approved lists 
are allowed to participate in tendering.  The lists cover major categories of public works. Contractors 
with the necessary management, technical and financial capability as well as capable to meet the site 
safety standards, can apply for inclusion in the approved lists.  The purpose of establishing and 
managing the approved list is to ensure that only qualified contractors can tender and undertake 
public works contracts, so that the quality and safety  of public works can meet the required standards.  
In addition, through the listing system, performance of  the contractors in public works contracts will 
be monitored and systematically recorded.  Regulati ng action can also be taken when doubt arises on 
their capability and integrity. 
 
Some public works contracts are very special in natu re.  When contractors on the approved lists do 
not have the necessary expertise, open tenders will be invited for those contracts so that contractors 
with the necessary expertise but not on the approved  lists can also participate in the tendering. 
 
Answer to (3)
 
The reported increase in the value of government proc urement per contract is in fact largely caused 
by the uplift of the statistical threshold in 2009.   As explained in "note a" to Table III.3 and 
Table III.4, prior to 2009, the statistics covered  procurement of goods and services of a value 
exceeding HK$0.5M and construction services of a va lue exceeding HK$1M.  The two statistical 
thresholds were adjusted upwards in  2009 to HK$1.43M and HK$4M respectively to align with the 
financial limits for awarding contracts that require a pproval by the relevant tender boards.  As minor 
purchases below the relevant tender board threshold (w hich are in great numbers but of relatively 
small value) are no longer included, the number of  contracts has reduced considerably from over 
1,800 in 2006-2008 to 441 in 2009.  With a reduced  number of contracts, the value per contract has 
hence increased. 
 
Question 4: Secretariat Report, page 35, paragraphs 54-55  
 
Hong Kong, China is preparing a new Food Safety Bill that gives a broader definition of food, 
requires the registration of food importers and dist ributors, and transaction records to enhance food 
traceability. How does the Hong Kong, China Governme nt evaluate the potential export restricting 
effect of the proposed bill?     WT/TPR/M/241/Add.1 
 Page 25 
 
 
  Answer  
The Food Safety Bill (the Bill) has been introduced  into the legislature on 2 June 2010 and is being 
scrutinised.  The Bill and the Brief for it coul d be downloaded from the following weblink: 
http://www.legco.gov.hk/yr09-10/en glish/bills/brief/b28_brf.pdf 
 
The Bill will provide for food safe ty control measures including – 
 
(a) a registration scheme for food importers and distributors; 
(b) a requirement for food traders to mainta in proper transaction records to enhance 
food traceability; 
(c) power to make regulations for tightening import control on specific food types based 
on risk assessment;  and 
(d) power for the authorities to make orders to prohibit the import and supply of problem 
food and order the recall of such food. 
The registration scheme and the requirement to ma intain proper transaction records do not apply to 
overseas food suppliers. 
 The Public Health and Municipal Services (A mendment) Ordinance 2009, which empowers the 
Director of Food and Environmental Hygiene (DFE H) to make orders to prohibit the import and 
supply of problem food and order a food recall wh en DFEH has reasonable grounds to believe that 
public health is at risk, commenced operati on on 8 May 2009.  This had been notified to WTO 
members via notification G/SPS/N/HKG/29 in 2008.  The Public Health and Municipal Services 
(Amendment) Ordinance 2009, which is currently incl uded under Part VA of the Public Health and 
Municipal Services Ordinance (Cap.132), will be trans ferred to the Food Safety Bill.  No additional 
import control has been imposed through this tran sfer.The measure is solely for addressing public 
health concerns and has nothing to do with the putti ng up of unnecessary trade barrier.  It is in full 
compliance with the WTO SPS requirem ent.  Food recall, together w ith the power to prohibit import 
and supply, are important food safety tools and a re common among overseas food safety legislation. 
 While most overseas authorities already have some form of a rrangement requiring food importers 
and distributors to register with them or obtain a lic ence, this measure is of even greater importance 
in Hong Kong, China which imports 90% of its food .  Accordingly, the Bill will include a mandatory 
requirement for any person who carries on a food importation or distribution business to register 
with DFEH.  The registration requirement aims to assist DFEH  in identifying and contacting a more defined group 
of food traders speedily in a food incident.  The requirement is not applicable to export business in 
Hong Kong, China and is also not applicable to food manufacturers and processors in overseas 
countries.  The Bill provides that DFEH must keep a regis ter of registered food importers and registered food 
distributors and make such available for public in spection.  We encourage overseas food exporters, 
including Korean food exporters to conduct business only with registered importers in Hong Kong, 
China.  However, food products exported to an unreg istered importer will not be subjected to recall 
or destruction, unless they are suspected or fo und to be unsafe for human consumption.   
 We propose to make two sets of regulations on import  control under the Food Safety Bill, namely –  
 
(i) the Imported Game, Meat, Poultry and Poultry Eggs Regulation;  and  WT/TPR/M/241/Add.1 
Page 26  
 
  (ii) the Imported Aquatic Products Regulation 
The import of game, meat and poultry is curren tly regulated under the Imported Game, Meat and 
Poultry Regulation (Cap. 132AK) and the Import and Export (General) Regulations (Cap. 60A).  All 
consignments of frozen or chilled meat or poultry imported into Hong Kong, China must be 
accompanied with an official health certificate whic h certifies that the meat and poultry concerned is 
fit for human consumption, and an  import licence issued by the Food and Environmental Hygiene 
Department (FEHD).    A new regulation will be made under the Food Safet y Bill, modelling on the existing provisions in 
Cap.132AK, to provide for import control for game,  meat and poultry.  The opportunity will also be 
taken to extend the import control to cover poult ry eggs.  Cap.132AK will then be repealed. 
 Another new regulation will be made under the F ood Safety Bill to provide for import control for 
aquatic products, which are in general regar ded as medium to high risk food products. 
 
There will unlikely be any specific import c ontrol measures for processed aquatic products
5 (except 
those of puffer fish) in view of the lower health risk.  The proposal to impose such import control are so lely based on public health grounds and on the 
basis of scientific risk assessment.  Therefore, it is  also in full compliance with the WTO SPS 
requirement. 
  
BRAZIL
 
 
Standards and other technical requirements 
 
Paragraph 59 of the report prepared by the secr etariat mentions a new food labelling scheme on 
nutrient content and nutrition claims. One of its requirements is that information on any nutrient for which a claim is made must be included on the nutriti on label. According to the report, "it appears that 
this new regulation has been burdensome for some businesses".  In light of that, Brazil would like to 
ask if Hong Kong has conducted some kind of imp act assessment regarding this regulation. If 
affirmative, could Hong Kong share the main conclusions of that assessment?   
 
Answer
 
The HKSAR Government commissioned Envir onmental Resources Management (ERM) (the 
consultant), in 2005 to undertake a Regulatory Im pact Assessment (RIA), to study the impact of 
implementing nutrition labelling (NL) in Hong Kong, China.  The consultant estimated in the RIA 
report that in any one year, the Hong Kong, China market has ranging from 14,000 to 
30,000 pre-packaged food products, with a normal produc t turnover of 14%.  The consultant has also 
studied various options for the scheme to require labelling of energy plus different combination of 
core nutrients for pre-packaged food.  Taking the study into account, we have suitably modified the 
nutrition labelling scheme (the Scheme), with a view to minimizing its impact on food choice for 
consumers while facilitating the trade 's compliance with the Scheme. 
 Hong Kong, China has notified the Committee on T echnical Barriers to Trade under WTO.  We 
comply fully with the WTO requirements and consid er that the Scheme will not pose any unnecessary 
trade barrier. 
                                                     
 
5 "Processed aquatic products" means aquatic foodstuffs resulting from the processing of unprocessed 
products, and "processing" means any action that substantially alters the initial product, including heating, 
smoking, curing, maturing, drying, marinating, extraction, extrusion or a combination of those processes.  WT/TPR/M/241/Add.1 
 Page 27 
 
 
   
The Scheme for pre-packaged food under th e Food and Drugs (Compo sition and Labelling) 
(Amendment: Requirements for Nutrition Labelling a nd Nutrition Claim) Regulation 2008 took effect 
on 1 July 2010 after a grace period of about two years.  Hong Kong, China has also implemented a series of measures (e.g. guidance notes, telephone  hotline, workshops/seminars, a Small Volume 
Exemption (SVE) Scheme, flexibility in labelling format , etc) to facilitate compliance with the Scheme 
by the trade, and maintained close communicati on through different channels, including the Business 
Facilitation Advisory Committee and its Retail Task Force, as well as various forums/meetings.  With 
the efforts of the trade, the Scheme has been  implemented smoothly without undue impact on 
consumer choice since 1 July 2010.  The compliance rate of traders is over 99%.   
 
The SVE Scheme mentioned above was introduced for food products with annual sales volume of 
30,000 units or below.  With small volume exempti on, many ethnic food, organic food, or niche food 
products that are mostly importe d or manufactured in small volume would be exempted from the 
nutrition labelling requirements.  In addition, the exem ption will be able to cater for the staging of 
food fair and trade promotion events  held usually for market testing purpose.  The SVE application 
fee is calculated on a full cost recovery basis. 
 
 
SWITZERLAND  
 
Report by the Secretariat 
 
I. ECONOMIC  ENVIRONMENT 
(1)  O VERVIEW OF RECENT ECONOMIC DEVELOPMENTS  
 
Table I.1  of the Secretariat's report suggests that H ong Kong, China's real GDP per capita has risen 
steadily to an estimated US$30,064 in 2009, that is, to a level among the highest in the world. In view 
of this both welcome and favorable  economic development, could the authorities consider in not so 
distant a future to graduate Hong Kong, China in the WTO from the status of a developing country to 
the status of developed country ? If not, what conditi ons other than a high per capita income or a high 
ranking in the UN human development index would need to  be met for such a step to be considered ?   
 
Answer  
It has been a long-standing practice under the GATT and the WTO that a Member's development 
status, whether as a developed or developing economy, is by self-election upon accession.  The only exception is the designation of least-developed count ries for which the WTO follows the practice of 
the United Nations.  The rights and obligations t hat a particular Member adhered to based on the 
development status so elected are mutually bindi ng.  Hong Kong, China does not intend to deviate 
from this accepted practice, nor change th e rights and obligations agreed upon among WTO 
Members. 
 Graduation affects the rights and obligations of the entire WTO membership, and is therefore a highly 
sensitive matter.  As and when the WTO membersh ip agrees on the need to conduct discussions on 
this issue, Hong Kong, China will take part in su ch discussions in our usual constructive manner. 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE (2)
  M EASURES DIRECTLY AFFECTING IMPORTS  
(i)  Customs procedures 
 Paras. 1 (Overview)  and 10 (customs procedures)  of Chapter III of the Secretariat's report note that 
"Import declarations must be made electronically  via three government-appointed service providers." 
Can the authorities of Hong Kong, China indicate whether non-resident importers can act as the WT/TPR/M/241/Add.1 
Page 28  
 
  "declarant" on the import declarations processed by the three government-appointed service 
providers?  Secondly, how does Hong Kong, China monitor these three agencies for possible infringements of competition which could lead to discrimination against certain imports?   
Answer
 
Non-resident importers can act as the "declarant " on the import declarations processed by the 
three overnment-appointed service providers.  Clauses which promote healthy competition and forest all anti-competitive behaviour are written into 
the service agreements between the HKSAR Gov ernment and the service providers.  We have 
strengthened such clauses for the latest contracts starting from 1 January 2010.  The Government of 
the Hong Kong Special Administrative Region will in vestigate into complaints of anti-competitive 
behaviour according to the contracts.  If a co mplaint is substantiated, we would accord the 
corresponding remedies.  The worst consequence is termination of service agreement. 
 
Hong Kong, China is in the process of enacting a new competition law.  The service providers will be 
subject to the competition law when it is enacted. 
 
Para. 11 (customs procedures)  and Table III.1  of the Secretariat's report indicates that import 
declaration charges are set "to cover the services of the C&ED" but also to cover the costs of "the 
Census and Statistics Department for collecting trad e declarations and compiling trade statistics, and 
to promote trade, including activities organized  by the Hong Kong Trade Development Council." 
Could the authorities of Hong Kong, China kindly e xpand on what types of trade promoting activities 
organized by the HK Trade Development Council are financed through these import declaration 
charges?  Secondly, could Hong Kong, China indicat e how it considers that the compilation of trade 
statistics and support for the activities of the HK Trade Development Council correspond to fees charged for "services rendered" to the importer "on or in connection with importation" in the sense of 
GATT article VIII.1(a)?  Switzerland would also be interested in knowing how the fees outlined in 
Table III.1 are considered to be "limited in amount to the approximate cost of services rendered" given that the declaration charge for c onsignments above HK$46,000 contains an ad valorem  
element?    
Answer
 
The import declaration charges are non-protectionist in  nature as evidenced by the fact that exports 
of goods from Hong Kong, China are equally subject to the same decl aration charges.  These charges 
collected are to cover the cost of the declaration system and to fund trade promotion activities of the 
Hong Kong Trade Development Council such as organising business missi ons and international 
forums, etc.  They are not for the protection of th e domestic industry against imports.  The charges do 
not result in any trade restrictive effect on imports because the levy is at an extremely modest level 
which is very close to the approx imate cost of services rendered. 
(ii)  Tariffs  
 
According to paras 16 and 17  of the Secretariat's report, only 43.9% of all tariffs are bound and only 
35.2% in the case of non-agricultural goods. Switzerla nd welcomes the fact that the authorities of 
Hong Kong, China are willing to negotiate an incr ease of bindings under the DDA as this will 
increase transparency and predictability for importe rs as well as exporters. Switzerland would like to 
know whether this means that Hong Kong, Chin a will be ready to bind all its tariffs for 
non-agricutural goods under the DDA as it seems that there are no reasons why this should not be the 
case?   
  WT/TPR/M/241/Add.1 
 Page 29 
 
 
  Answer  
We should look at the scope of our tariff bindi ngs in context.  As tariff concessions are exchanged 
predominantly on the basis of reciprocity, Hong Kong,  China being one of the freest economies in the 
world is left with no other concession for exchange t han scope of binding.  This is acknowledged by 
Members as our present scope of binding is the out come of previous negotiations plus additional 
autonomous binding we made since the conclusion of the Uruguay Round. 
 While 43.9% of Hong Kong, China’s tariff lines a re bound at zero, they already covered 63.8% of our 
imports in terms of 2009 value.  In our view, th is figure shows that our commitment is commercially 
meaningful and provides much better re ference value for tariff negotiations. 
 
We look forward to substantia l reduction and elimination of tar iffs by WTO Members under the Doha 
Development Agenda negotiations.  We will review our  tariff regime in the light of the negotiation 
results and consider binding additional tariff lines and the timing for doing so as appropriate.  We 
hope that tariff reductions and elim inations will be implemented as  soon as possible following the 
conclusion of the negotiations.  Hong Kong, China will continue to participate positively in the DDA 
negotiations. 
 
Para. 16 and footnote 4 : Could the authorities of Hong Kong, China also indicate for which reasons 
it has only partially bound certain tariff lines ? For instance, more specifically, for which reasons are 
the men's or boys' articles under HS6110.1930 bound and the same items for women and girls remain 
still unbound?   
 
Answer
 
Tariffs on imported goods are either bound at zero or unbound in Hong Kong, China's Schedule of 
Concessions.  The existence of partially bound tariff lines is due to the yearly updates of Hong Kong, 
China's tariff lines and descriptions, or the implem entation of the reduction commitments under the 
Information Technology Agreement.  For example, HS 6110 1930 (which was mentioned in footnote 4 to Chapter III of the Secretariat 
Report) is a new tariff line in 2004.  It covers both originally-bound items (men 's or boys' sweaters, 
pullovers, cardigans, vests and similar articles, of  other fine animal hair, other than Kashmir 
(Cashmere) goat, knitted or crocheted) and original ly-unbound items (covering women’s or girls’ 
sweaters, pullovers, cardigans, vests and similar ar ticles, of other fine animal hair, other than 
Kashmir (Cashmere) goat, knitted or crocheted), and thus its binding status is "partially bound". 
 Separately, with the entry into force of the In formation Technology Agreement, Hong Kong, China 
bound some information technology (IT) products at zero in 1997.  As some of the bound IT products 
form only part of an originally -unbound tariff line, the relevant tariff lines became partially bound. 
 Upon the conclusion of the Doha Round negotiations , we will review our tariff regime having regard 
to, among others, the binding stat us of individual tariff lines. 
 
(ix)  Government procurement  
 
Para. 34 :  We took well note of the increase in the share of government procurement to GDP from 
1.9 % in 2006 to 3.9 % in 2009. However, we al so agree with the report that this share remains 
globally rather low. The share under consideration represents about 7 % in OECD countries. Could 
the authorities of Hong Kong, China elaborate on the reasons which explain the fact that the global 
share of government procurement to GDP is so low ?  
 WT/TPR/M/241/Add.1 
Page 30  
 
  Answer
 
The small share of government procurement to GDP should be seen in the context that Hong Kong, 
China has a relatively small public  sector.  Our government aims to keep public expenditure at or 
below 20% of GDP.  In our 2010-11 Budget, it is es timated that public expe nditure for the year will 
amount to 19.8% of GDP.  We note from the Gov ernment Financial Statistics Yearbook published by 
the International Monetary Fund that the total out lays of many advanced economics amount to more 
than 40% of their GDP. 
 With our increased investments in infrastructura l developments, the share of government procurement 
to GDP has increased considerably over the last few years, from 1.91% in 2006 to 3.94% in 2009.  
 
Table III :  We note the continued and severe decline in the purchases of services other than 
construction services by entities of the central  level between 2006 (HKS 4394 mio) and 2009 
(HKS 974 mio). At the same time, the figures show the very substantial increase in the purchases of 
construction services for governmental purposes which is reflected in para. 34.  Could the authorities 
of Hong Kong, China explain the reasons which le d to such a severe and continued reduction in 
purchases of services other than construction servi ces between 2006 and 2009? Which are the main 
services purchased by entities at central and other levels in Hong Kong China ? 
 
Answer
 
The reported decline in the purchases of services ot her than construction services is in fact largely 
caused by the uplift of the statistical threshold and the revised scope of reporting in 2009.  As 
explained in "note a" to Table III.3 and Table III.4, prior to 2009, the statistics covered procurement 
of goods and services of a value exceeding HK$0.5M  and construction services of a value exceeding 
HK$1M.  The two statistical thresholds were adjusted upwards in 2009 to HK$1.43M and HK$4M 
respectively to align with the financial limits fo r awarding contracts that require approval by the 
relevant tender boards.   
 
The government entities of Hong Kong, China pr ocure goods/services on a need basis. The 
nature/types of contracts and value of goods purchased  vary from year to year depending on the actual 
requirements put forward by user departments.  The services (other than construction services) 
purchased by entities in Hong Kong, China mainly in clude (1) Road Transport Services; (2) Building-
cleaning Services; (3) Computer and Related services and (4) Refuse Disposal Services.  
  
(4)  M EASURES AFFECTING PRODUCTION AND TRADE  
(ii)  Non-tax incentives 
(a)  SMEs 
 Para. 87 of the Secretariat's report  indicates that  SMEs represent 98% of business units in the 
HKSAR. Beyond the three existing subsidy schemes (SGS, EMF and SDF) mentioned in para. 88 , 
paras 89 and 90  suggest that the Government introduced recently a series of new measures to further 
enhance its support to SMEs to help them expa nd markets and enhance competitiveness (Chapter IV, 
(4) Manufacturing, para. 37).  Given the importa nce of SMEs in Hong Kong, China's economy and 
their substantial role in foreign trade, how can  the authorities ascertain that such economy-wide 
support measures are compatible with the rules of the Agreement on Subsidies and Countervailing 
Measures and, in particular, with Article 3.1 a), wh ich prohibits export subsidies? What controls have 
the authorities established to make sure that such funding or subsidies are not being misused?   
 
Answer
 
Hong Kong, China is a staunch supporter of f ree trade and attaches great importance to the 
multilateral trading system.  The series of new measu res introduced aim to assist SMEs in rising to 
the challenges in the increasingly globalised and competitive world economy.  The grant/guarantee 
provided by the Government under the schemes is neither specific to particular industries or firms nor  WT/TPR/M/241/Add.1 
 Page 31 
 
 
  contingent upon export performance.  They do not favour certain SMEs or  SMEs of certain industries.  
In general, SMEs registered  and having substantive business op eration in Hong Kong, China are 
eligible to apply for the schemes.  There is no di scrimination against foreign ownership or capital.  
All applications are carefully vetted to ensure compatibility with the schemes' objectives and no 
misuse of funds. 
 
(v)  Corporate Governance 
 
Paras 100 and 101 of the Secretariat's report: Could the authorities of Hong Kong, China indicate 
whether the Companies Ordinance and the Code on Corporate Governance Practices incorporate the 
best practices mentioned in the OECD Principl es of Corporate Governance ? If yes, which ones ? 
Regarding para. 101 :  Could the authorities of Hong Kong, China indicate which would be the key 
objectives of a possible update of the Code on Corpor ate Governance Practices ? Also, with regard to 
partially government-owned enterprises, how does th e government ensure its co-determination ?   
 Answer
 
The Companies Ordinance of Hong Kong, China provid es the legal framework for all companies.  As 
for the Code on Corporate Governance Practices (the  "Code"), it forms part of the Stock Exchange of 
Hong Kong ("SEHK")'s Listing Rules (the "Rules").  The Rules are applicable to all companies listed in Hong Kong, China, including those in which the Government has a financial stake.  The Code 
contains two levels of recommendations: (a) code provisions; and (b) recommended best practices.  A 
listed issuer is expected to comply with, or may c hoose to deviate from the c ode provisions (known as 
"comply or explain").  However, an issuer must explain  if it deviates from any of the code provisions.  
For recommended best practices, issuers are encourage d, but not required, to state whether they have 
adopted them.  
We believe that our Companies Ordinance and the Code are generally in line with the OECD 
principles of corporate governance.  For the Compani es Ordinance, as mentioned in the Secretariat’s 
report, we have been working on a comprehensive  rewrite exercise of our Companies Ordinance 
since 2006.  Enhancing corporate governance is one of the key objectives of the exercise.  The draft 
Companies Bill contains a number of proposals to st rengthen the accountability of directors, improve 
disclosure of company information, strengthen aud itor’s rights, enhance shareholders’ engagement in 
decision-making processes and foster shareholder pr otection.  For example, we propose in the 
Companies Bill to require larger companies to prep are a more comprehensive directors’ report which 
includes an analytical and forwar d-looking business review, introduce more effective rules to deal 
with directors’ conflict of interests, extend the sc ope of the unfair prejudice remedy available to 
members of a company, etc.  We believe that these proposals will further enhance the corporate 
governance framework in Hong Kong, China. 
 As for the Code, the SEHK is in the process of reviewing the Code and some associated Rules.  The 
objectives of the review are to promote good corp orate governance, encourage better accountability 
of issuers and directors and aligning our corporate governance framework with latest international 
best practice.  The review proposes that a number of code provisions be prom oted to mandatory Rules 
because of their importance and that a majority of the proposals involve upgrading the recommended 
best practices to code provisi ons.  The proposal also includes some new code provisions and 
recommended best practices.  The SEHK intends to  publish a consultation paper on the review for 
market comments before the end of this year. 
 
(vi)  Competition policy and consumer protection policy 
(a)  Competition policy 
 Box III.1  of the Secretariat's report indicates that H ong Kong, China's draft cross-sector competition 
law was presented by the authorities to the Legisl ative Council on 14 July 2010.  Could the authorities WT/TPR/M/241/Add.1 
Page 32  
 
  provide some information of the status of this bill in the Legislative Council, and, in particular, when 
it is expected to be passed a nd to enter into force?   
 
Answer
 
A Bills Committee has just begun the scrutiny of the Competition Bill. The latest work plan indicates 
that there will be a minimum of 33 meetings to be  held every two to three weeks until the first half of 
2012. Date for the Bill to come into force would de pend on progress of the scrutiny of the Bill by the 
legislature.  Taking into account the complexity of the Bill and our plan to allow a transitional period 
for setting up of the relevant competition authorities, it is expected that the earliest possible date for 
the major prohibitions and enforcement provisions of the proposed cross-sector competition law to 
come into force is around 2013.  
 
SINGAPORE  
 
Question 1 
 
The WTO Secretariat's report (WT/TPR/S/241, page 16) states that the Closer Economic Partnership 
Arrangement (CEPA) between China and Hong Kong, China covers many areas of liberalization and 
cooperation:  trade in goods, trade in services, a nd trade and investment facilitation, as well as 
cooperation in several sectors.  The two areas  not covered are govern ment procurement and 
competition.  Could Hong Kong, China elaborate on whether there are any plans to include these 
areas in the CEPA in the future?  Answer
 
There has not been discussion at this stage on new areas to be included under CEPA.   
 
Question 2  
 Page 27 of the WTO Secretariat's report lists some of the anti-dumping cases that Hong Kong, China 
is involved in, i.e. the imposition of anti-dumpi ng duties on some of Hong Kong, China's exports by 
India, Turkey, the Russian Federation, and Mexico.  Could Hong Kong, China share more information 
on the status of these cases?   
 
Answer
 
Being a staunch supporter of free trade, it is agai nst Hong Kong, China's established principle to 
resort to unfair trade practice.  Hong Kong, China has never taken any anti-dumping measures 
against other economies.  Moreover, in view of our  open and highly competitive trading environment, 
Hong Kong, China’s companies, mostly made up of  small and medium enterprises, have neither the 
incentive nor the ability to engage in dumping acti vities.  We consider that anti-dumping measures 
imposed on Hong Kong, China products are unjustified and should be removed. 
 
AD Case by Mexico  
The Mexican Secretaria de Economia (Ministry of  Economy) announced the initiation of a fourth 
expiry review of the anti-dumping (AD) order on 12 August 2010 following petitions received from 
domestic producers.  The review is now underway.  In  accordance with relevant AD laws of Mexico, 
the Mexican Ministry of Economy will issue the final  determination of an expiry review within a 
period not exceeding 220 days from the date of publication of the official notice on the initiation of the review. 
 
AD Cases by India
 
For the three cases initiated by Indi a, definitive AD duties are currently in force – CD-Rs at a rate of 
US$0.05 per piece, DVD-R and DVD-RW at a rate of US$66.72 per 1,000 pieces, flax fabrics (woven  WT/TPR/M/241/Add.1 
 Page 33 
 
 
  fabric containing more than 30% of flax content) at a rate being the difference between INR209.72 
(around US$4.5) and the landed value in Indian Rupee (per metre). 
 
AD Case by Turkey  
Turkey has imposed definitive AD duty on imports of tempered glass lids originating in Hong Kong, 
China since 23 May 2010 at a rate of US$0.91 per kilogram for five years.  
AD Case by Russia
 
The Russian Federation has imposed definitive AD duty on imports of bearings originating in, 
inter alia, Hong Kong, China since 21 January 2008 at a rate of 41.5% for five years. 
 
Question 3 
 
Pages viii and 30 (Table III.4) of the WTO Secretaria t's report reflect that most government contracts 
in Hong Kong, China have been awarded through restricted and selective tendering procedures rather 
than open tenders.  Could Hong Kong, China elaborate on the reason for this? 
 
Answer  
While open tendering is the norm, selective and re stricted tendering may be adopted under certain 
circumstances as stated in paragraph 39 of Chapt er III of the Secretariat Report.  Due to their 
technical and financial capability requirements as we ll as their magnitude, works contracts normally 
adopt the selective tendering approach.  This selecti ve tendering approach is equivalent to open 
tendering in that the approved lists, from which tenders are invited, are established through open and 
transparent procedures and tenders received from c ontractors not on the approved list may also be 
considered provided that there is sufficient time to  complete the qualification procedure.  As for 
restricted tendering, it would only be adopted und er exceptional circumstances, e.g., for procurement 
of items that are protected by patent or have to be  compatible with the existing equipment or systems, 
with prior approval from the relevant authority.  In 2009, if we take out the works contracts (132 or 
91%), the number of non-works contracts awarded by selective tendering will just be 13 cases which 
represents around 3% of the overall total of 441 cases (as shown in Table III.4 of the report).  The 
reasons for arranging either restricted or selecti ve tendering procedures rather than open tenders for 
non-works contracts are that the procured items are protected by patent or have to be compatible 
with existing equipment or systems. These items incl ude medicines, spare parts, test kits, accessories 
or consumables for previously pu rchased tools and equipment. 
 
For most of the public work contracts in Hong K ong, China, only contractors on the approved lists 
are allowed to participate in tendering.  The lists cover major categories of public works. Contractors 
with the necessary management, technical and financial capability as well as capable to meet the site 
safety standards, can apply for inclusion in the approved lists.  The purpose of establishing and 
managing the approved list is to ensure that only qualified contractors can tender and undertake 
public works contracts, so that the quality and safety  of public works can meet the required standards.  
In addition, through the listing system, performance of  the contractors in public works contracts will 
be monitored and systematically recorded.  Regulati ng action can also be taken when doubt arises on 
their capability and integrity. 
 
Some public works contracts are very special in natu re.  When contractors on the approved lists do 
not have the necessary expertise, open tenders will be invited for those contracts so that contractors 
with the necessary expertise but not on the approved  lists can also participate in the tendering. 
 
 WT/TPR/M/241/Add.1 
Page 34  
 
  CHINESE TAIPEI  
 
WTO Secretariat Repo rt (WT/TPR/S/241) 
 
I. ECONOMIC ENVIRONMENT (1) O
VERVIEW OF RECENT ECONOMIC DEVELOPMENTS  
 
Land-related policies  
 
(Page 7, paragraphs 23-24)  
As indicated in the Report, the Government has st rengthened the regulation of the sale of first-hand 
private residential properties to enhance transparency.  
Are there more specific policy instru ments, such as evaluation criteria or penalties, used to strengthen 
the regulation? If so, further details would be appreciated. 
 
Answer
 
The HKSAR Government is committed to enhancing th e transparency of the sales and transactions of 
first-hand residential properties.  In the past few years, the Transport and Housing Bureau (THB) has 
implemented various measures to enhan ce the transparency.  These include: 
 
- Enhancing regulation on price lists, sa les brochures and show flats by the 
implementation of "nine new measures and twelve requirements"; 
- Requiring developers to provide in their we bsites and sales offices information on the 
Agreements for Sale and Purchase (ASPs) w ithin 5 working days after the signing of 
the respective Preliminary ASPs.  Transac tions which involve members of their 
Board and their immediate family members,  and cancelled transac tions should also 
be disclosed; 
- Requiring developers to provide the price lis ts in their websites and sales offices at 
least three calendar days before th e commencement of sales; 
- Standardizing the definition of "saleabl e area" and presentation of price lists;  
- Requiring developers to show the informati on on the price per square foot/metre in 
"saleable area" of individual flats in their price lists; and 
- Requiring developers to provide more comprehensive and detailed property 
information in sales brochures.  
The Chief Executive announced in the 2010-11 Policy A ddress in October 2010 that the THB will set 
up a Steering Committee to discuss specific issues on regulating the sale of first-hand flats by 
legislation and put forward practical recommendatio ns within one year.  The Steering Committee has 
been set up in October 2010 and has commenced work.   
 
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES  
(4)  P REFERENTIAL TRADE AGREEMENTS AND ARRANGEMENTS  
(i)  Regional Trade Agreements 
 (Page 18, paragraph 20) 
  WT/TPR/M/241/Add.1 
 Page 35 
 
 
  We note from the Report that a feature of the Closer Economic Partnership Arrangement (EPA) 
between China and Hong Kong, China is the liber alization of services trade through pilot measures 
first introduced in China’s Guangdong Province, servi ng as role models for further liberalization and 
to strengthen the integration of service industries between Hong Kong, China and China's 
Guangdong.   
Our questions are as follows: 
 
(i) What substantive results have these pilot measu res produced and what, if any, have been the 
advantages or disadvantages for Hong Kong, China? 
 
(ii) In addition to Guangdong, is it possible that new provinces or municipalities of China could 
become role models for further liberalizati on in future Supplements to the CEPA, if 
Hong Kong, China so requests? 
 
Answer to (i)
 
Whilst it would be difficult to isolate the economic be nefits arising from indivi dual or pilot measures 
in Guangdong, it is noted that Guangdong is a key location for set up of operations by Hong Kong 
service suppliers (HKSS).  Among the HKSS certificate holders which have reported having set up operations in China under CEPA, over 60% have chosen  to locate their CEPA-related operations in 
Guangdong.  Among the residents of Hong Kong, Chi na who have set up individually owned stores in 
China, the majority of them (80%) have chosen to set up their stores in Guangdong. 
 
According to HKSAR Government's latest asses sment on economic impact of CEPA, during 2007-09, 
CEPA-induced business receipts obtained by operations established by HKSS in the Mainland of 
China amounted to HK$198.5 billion (the percen tage shares of business receipts generated from 
operations in Guangdong was around 30%).  On  the other hand, cumulative business receipts 
obtained by companies in Hong Kong, China due to CEPA from Mainland-related business reached 
HK$52.5 billion.  As at end 2009, due to liberalis ation of trade in services under CEPA, a total of 
40,600 jobs were created in the Mainland of China (the percentage shares of persons engaged related 
to operations in Guangdong was around 30%).  As at  end 2009, due to liberalisation of trade in 
services and Individual Visit Scheme under CEPA, a tota l of 54,700 jobs were created in Hong Kong, 
China.  
CEPA including the Guangdong pilo t measures, together with th e proximity of Guangdong to 
Hong Kong, China, have facilitated the investment  by service suppliers of Hong Kong, China in 
Guangdong and have created job opportunities for resident s in both places.  In the long run, the 
relevant measures can help attract overseas investme nt and reinforce the roles of Hong Kong, China 
as an investment intermediary and a partner of Guang dong to compete jointly in the regional and 
international markets.  These contribute positi vely to the long term economic development of 
Hong Kong, China.  
Answer to (ii)
 
Other than pilot measures for implementation in Gu angdong, CEPA also contains measures (e.g. in 
the sector of tourism) for pilot implementation in  other provinces/cities, including Guangxi, Hunan, 
Fujian, Beijing, etc.  Further pilot measures in diffe rent provinces or cities in the Mainland of China 
can be explored by the two parties under CEPA. 
 
(Page 18, paragraphs 21, 22 & 23 of S/ 251 and Page 12, paragraph 39 of G/251) 
 
Under the CEPA, service suppliers of other WTO Me mbers are entitled to the same treatment granted 
to its own service supplier, provided they have e ngaged in "substantive business operations", which is 
determined by the application of certain stated criteria. WT/TPR/M/241/Add.1 
Page 36  
 
   
We know that Hong Kong, China is a net-services ex porter, and that the service sub-sectors with the 
highest growth rates in recent years have been finance and insurance, reflecting Hong Kong, China's 
position as a financial and trading centre.  As further indicated in the Reports, Hong Kong, China 
service suppliers have to apply for a Hong Kong Serv ice Supplier (HKSS) certificate as a prerequisite 
to applying to China to provide services in the Ma inland with preferential treatment under the CEPA.  
However, at end of May 2010, Hong Kong, Chin a had issued 2,233 HKSS certificates, for which the 
service areas most in demand were transport and logis tics, distribution, advertising and air transport 
services.  In addition, during the period 2007- 09, according to CEPA-induced business receipts 
obtained by HKSS operations established in China,  the four major contributing service areas were 
distribution, transport and logistics, freight forw arding agency, and construction and real estate.  
 
Our questions are therefore as follows:  
(i) Could Hong Kong, China please explain the r easons why the financial services sectors were 
not the main applicants for HKSS certificates or the main contributors to CEPA-induced business receipts? 
 
(ii) Have the criteria applied for determin ing “substantive business operations” met with any 
difficulties in practice for the relevant competen t authorities? Have any complaints been filed 
by applicants on behalf of foreign service suppliers? If so, could HKC please describe the 
main reasons given? And, in the meantime, do the competent authorities plan to revise the 
criteria, which presently appear to cons titute unnecessary trade barriers, in future 
Supplements to the CEPA? 
 
(iii) In view of the fact that almost half of the HKSS certificates have b een issued to companies 
with foreign majority ownership, could Hong Kong, China please describe the distribution of 
these particular certificates across the various service sectors? 
 
Answer
 
(i) The actual number of HKSS certificate hold ers for respective sectors depends upon various 
factors such as the number of operators in t hat particular service sector, potential number of 
beneficiaries for the measure concerned, the business needs and market considerations of 
respective companies, the nature of the measures , etc.  For some liberalization measures in 
the financial services sectors (insurance, banking and securities) such as those relating to 
qualifications of service suppliers who are natural  persons, HKSS certificate is not required.  
The number of HKSS certificates and the business re ceipts of HKSS are therefore not the only 
indicator to reflect the use of CEPA benefits. 
 
(ii) The criteria for determining substantive business operation (SBO) of Hong Kong service 
suppliers (HKSS) in CEPA (which makes refere nce to an enterprise's nature and scope of 
business, years of operation in Hong Kong, payment  of profits tax, business premises in Hong 
Kong and employment of Hong Kong residents)  are objective, transparent and are applied on 
a non-discriminatory basis to foreign and domestic entities.  The system has been operating smoothly for years and facilitated eligible service suppliers to make use of the preferential 
treatment under CEPA. 
 
Notwithstanding this, we will keep the system under review from time to time and will take account of 
the changing demand of the trade.   
(iii) Companies applying for HKSS certificates are not
 required to disclose their sources of 
investment.  The number of HKSS certificates i ssued to companies with foreign majority  WT/TPR/M/241/Add.1 
 Page 37 
 
 
  ownership is compiled on the basis of indi rect information and only serves as a general 
indication.  We are not in the pos ition to provide further breakdown. 
 
IV. TRADE POLICIES BY SECTOR (5) S
ERVICES  
(ii) Financial services 
 
(Page 67, paragraph 47) 
 
As indicated in the Report, to facilitate a sm ooth exit from the full deposit guarantee, Hong Kong, 
China has made legislative amendments to e nhance its Deposit Protection Scheme, including the 
raising of the DPS protection limit from HK$ 100,000 to HK$ 500,000.  
 
What are the other amendments made and measures taken by Hong Kong, China in this regard?   
 
Answer  
The Deposit Protection Scheme (Amendment) Or dinance 2010 (“the Amendment Ordinance”), which 
was enacted in July 2010, amends  the Deposit Protection Scheme Or dinance (Cap. 581) to implement 
the enhancements to the Deposit Protection Scheme  (“DPS”) identified in a review conducted by the 
Hong Kong Deposit Protection Board (“the Board” ) in 2009.  Major enhancements include:  
 
- raising the DPS protection limit from HK$100,000 per depositor per bank to 
HK$500,000 per depositor per bank;  
- widening the coverage of the DPS to cover secured deposits; 
- introducing cost mitigating measures to avoi d the cost of enhancing protection being 
transferred to depositors ; and  
- improving the efficiency of the Board in  calculating and making compensation to 
depositors in a payout.  
These enhancements, which will take effect starting from 1 January 2011, will help facilitate the 
smooth withdrawal of the full deposit guarantee, wh ich was introduced at the height of the global 
financial crisis in late 2008, by the end of 201 0.  Depositors will benefit from receiving better 
protection and faster compensation payment, and an impr oved clarity of the protection status of their 
deposits.  As the amount of protected deposits will increase with the increase in protection limit, the 
amount of contribution payable by banks will also increase.  In order to contain the cost impact on 
banks due to raising the protection limit, the rates fo r charging contribution is cut by 65% in order to 
keep the absolute amount of annual contribution pa yable by banks largely unchanged.  With the 
enhancements to the DPS, Hong Kong, China is well positioned to maintain monetary and financial 
stability at and beyond the expiry of the deposit guarantee. 
 
(iii) Telecommunications 
 
(Page 71, paragraph 70) 
 
Under the CEPA HKSAR, service providers may establish joint ventures in China to provide five types of value-added telecommunications servi ces without geographic restriction, and they may 
distribute telephone service cards in Guangdong Province. 
 WT/TPR/M/241/Add.1 
Page 38  
 
  Are there any statistics showing the number of HK SAR service suppliers that have been permitted to 
establish joint ventures in China, and how they have benefited economically  up to October 2010?  
 
Answer
 
Since the implementation of CEPA in 2003, 39 telecommunications service suppliers have acquired 
the Hong Kong Service Suppliers (HKSS) status, and 7 joint ventures were formed to provide service 
on the Mainland as at the 2nd quarter of 2010. 
 Under the CEPA, HKSS may establish joint ventures in the Mainland of China to provide the 
permitted types of telecommunications services in add ition to those listed in China’s WTO Schedule of 
Commitments.  
Report by Hong Kong, China (WT/TPR/G/241) 
 
II. ECONOMIC AND TRADE ENVIRONMENT 
(A) MACROECONOMIC SITUATION 
(a) Policies in Response to th e Global Financial Crisis 
 
(Page 7, paragraph 10) 
 
HKC has implemented a package of measures to pr ovide support to SMEs in response to the global 
financial crisis.  The introduction of greater flex ibility in the use of loans and extension of the 
guarantee period under the SME Loan Guarantee Sc heme are among the measures designed to help 
SMEs with operating difficulties arising from the crisis. 
 
(i) We would appreciate knowing more about how this scheme has helped the SMEs during the 
crisis, and whether HKC could provide releva nt statistics for the manufacturing and service 
sectors.  
(ii) Furthermore, could HKC please explain the relationship between this scheme and the SpGS, 
which, according to the Report, will be phased out at the end of 2010. 
 
Answer
 
(i) The SME Loan Guarantee Scheme (SGS ) is a loan guarantee scheme whereby the 
Government acts as the guarantor for individual  SMEs to facilitate them in securing loans 
from the participating lending ins titutions.  The tightening of credit in the commercial lending 
market amidst the global financial crisis has presented serious liquidity problems for many 
companies in Hong Kong, China.  As a result,  the HKSAR Government introduced a series of 
enhancement measures to the SGS since Novem ber 2008.  Details of the measures are 
contained in paragraph 89 under Part III of the TPR Report by the WTO Secretariat.  
 
 The enhancement measures were well-received by the trade.  Following the enhancement, the 
number of applications has immediat ely increased two to three fold.   
 
 The SGS was introduced in 2001.  As at e nd October 2010, the total number of applications 
approved under SGS was 22 816, involving a to tal loan amount of HK$32 billion (USD4.1 
billion).  The SGS has benefited some 12 200 SMEs, of which 75% come from the 
manufacturing sector and 25% from the services sector.   
 
(ii)   The Special Loan Guarantee Scheme (SpG S) is a time-limited initiative introduced in 
December 2008 to complement the existing SGS to provide further support to facilitate the 
enterprises of Hong Kong, China in obtaining i mmediate cashflow relief from the commercial 
lending market during the global financial crisis.  The two schemes run in parallel, and SMEs 
may apply under either or both schemes at the same time.  WT/TPR/M/241/Add.1 
 Page 39 
 
 
   
 While both schemes seek to help Hong Kong, China enterprises, partic ularly SMEs, secure 
loans from the commercial lending market th rough the provision of government guarantee, 
they are different in certain parameters, such as eligibility criteria, government guarantee 
ratio, types of loan, etc., as set out in the TPR Report by the WTO Secretariat.   
 
 The economy in Hong Kong, China has s hown signs of recovery and the credit crunch 
problem has been largely relieved since 2010.  The Government consid ers it necessary to let 
the credit market resume its normal operation.  It  has thus been decided that the SpGS would 
cease to receive further applications after the end of  this year.  By then, the SGS will continue 
to render assistance to SMEs in obtaining loans. 
 
III. TRADE POLICY DEVELOPMENT  (C)  REGIONAL TRADE AGREEMENTS (b) Hong Kong, China-New Zealand Cl oser Economic Partnership Agreement 
 
(Page 13, paragraph 45) 
 
HKC and New Zealand signed the CEP Agreement on 29 March, 2010. Aside from tariff elimination 
on all products, the CEP also provides for a set of robust disciplines on domestic regulation. 
 According to Annex III to Chapter 13 (Trade in Services) of the Agreement, the purpose of the 
disciplines is to facilitate trade in services by  ensuring that measures relating to licensing 
requirements and procedures, qualification requireme nts and procedures, and technical standards do 
not constitute unnecessary barriers to trade in services. 
 
(i) We would like to have a better understanding of HKC's main laws and domestic regulations 
relating to trade in services.  
 
(ii) In addition, could HKC please elaborate furt her on the extent to which it currently complies 
with the disciplines? 
 Answer
 
Hong Kong, China is a predominantly service-orie nted economy and its prosperity thrives upon its 
highly competitive services industry.  It is the Go vernment’s long-held policy to maintain a liberal 
and competitive services regime.  I ndeed, our services market is one of the most open in the world. 
 Trade in services cuts across a wide range of services sectors and economic activities.  In Hong 
Kong, China, while some regulatory measures (s uch as company registration or taxation) are 
generic, certain service sectors such as financia l services, telecommunications, transportation etc. are 
subject to specific regulatory regimes.  If Chinese  Taipei is interested in knowing more about the 
regulatory regime of particular sector(s), we woul d be prepared to provide the information on 
specific request.  
 Irrespective of whether they are general or sector  specific, regulatory measures of Hong Kong, China 
are fully consistent with the domestic regulation disciplines stipulated in the Hong Kong, China-New 
Zealand Closer Economic Partnership Agreement, which is to be put into force soon.  Our regulatory 
measures are also in compliance with the rules of the WTO.  In this regard, our qualification 
requirements and procedures, technical standards and licensing requirements  are maintained for 
legitimate policy objectives or prudential reasons .  They are also administered in a reasonable, 
objective, transparent and impartial manner, and do  not constitute unnecessary barriers to trade in 
services.   WT/TPR/M/241/Add.1 
Page 40  
 
  IV. SECTORAL DEVELOPMENTS  
(A) DEVELOPMENTS IN TRADE IN GOODS (b) Reserved Commodities 
 
(Page 15, paragraph 51, G/241) 
 As indicated in the Report, Thailand accounts for 86% of HKC's rice imports by value, followed by 
China (10%).  Since the liberalization of the Ri ce Control Scheme in 2003, the rice trade generally 
operates in a free market environment. Any business may register as an importer of rice. 
 (i) Please could HKC provide us with more de tailed information on the importer registration 
procedure?  
 (ii) Are there any requirements or conditions speci fically relating to country-of-origin for rice? 
 
Answer
 
(i) Hong Kong, China maintains minimum control in respect of import and export of rice that is 
necessary to ensure a stable supply of rice and to keep a reserve stock sufficient for 
consumption by the population for a reasonable p eriod to cater for emergencies or any short 
term shortage of supply.  Under the Rice C ontrol Scheme, any business registered in Hong 
Kong, China under the Business Registrati on Ordinance may apply to register as a 
stockholder of rice in order to import rice for lo cal consumption.  They are required to submit 
an application together with relevant suppor ting document, including a valid Business 
Registration Certificate, the identity proof of the signatory in the application form and other 
document that substantiates the establishmen t of the company, to the Trade and Industry 
Department of Hong Kong, China.  Successful applicants will be issued with a "Certificate of 
Registration as a Stockholder of Rice" to st art operation in accordance with the relevant 
conditions of registration stated in the Certificate. 
(ii) Under the Rice Control Scheme, the rice  trade essentially operates in a free market 
environment where the importation, storage and distribution of rice is planned and executed 
by registered rice stockholders in order to meet the needs of their consumers.  The 
Government does not interfere with the business decision process or the source of import 
which is market-driven. 
 
(F) COMPETITION POLICY  (Page 23, paragraph 98 of G/241 and page 48, paragraph 106 of S/241) 
 
We note from the Report that HKC has introduced th e Competition Bill into the Legislative Council 
in 2010 for scrutiny, and that the proposed compe tition law will adopt a judicial enforcement model. 
(i) Please could HKC advise us of the legislative progress of this law.  
 (ii) In addition, given the fact that SMEs form  the backbone of the HKC economy, they are also 
most likely to be impacted by this law, once it is enacted and enforced. We would therefore 
be interested in knowing whether all SMEs  will be subject to the proposed bill?  
 
(iii) Are any criteria applied to SMEs in this  proposed law? Does it contain any complementary 
measures designed to alleviate the likely adver se effects on the normal operations of SMEs? 
 
Answer to (i)
 
A Bills Committee has just begun the scrutiny of the Competition Bill.   The latest work plan indicates 
that there will be a minimum of 33 meetings to be  held every two to three weeks until the first half of  WT/TPR/M/241/Add.1 
 Page 41 
 
 
  2012.   Date for the passage of the Bill would de pend on progress of the scrutiny of the Bill by the 
legislature.  
Answer to (ii)
 
The Bill aims to prohibit and deter undertakings of  all scale in all sectors from adopting abusive or 
other anti-competitive practices which have the object or  effect of preventing, restricting or distorting 
competition in Hong Kong, China.  An undertakin g is defined as any en tity engaged in economic 
activities, regardless of its legal status or the way in  which it is financed.  In  other words, business 
enterprises of different size, in cluding SMEs, will be subject to the proposed competition law. 
 That said, case laws available in  major overseas jurisdictions reflect that a competition law should be 
meant to catch only conduct which has an "appreciab le effect" on competition, so regulation of SME 
conduct is not normally a priority  for competition authorities.  Mo reover, given their lack of market 
power, SMEs' normal business practices, such as ex changing information and joint purchasing, are 
unlikely to have the effect of significantly p reventing, restricting or distorting competition in 
Hong Kong, China.   
 
Answer to (iii)
 
As mentioned above, whilst the future competition law is meant to combat anti-competitive conduct 
engaged in by undertakings of all scale, regulation of SME conduct will not norma lly be a priority of 
the future competition authorities.  Although we have not proposed any statutory exemption for SMEs 
in the Bill, we believe that according to overseas experience, restrictions on SMEs' normal operations 
would be minimal (if any) and the new law woul d benefit rather than create problems for SMEs. 
 
However, we note SMEs' concerns that the propos ed law may complicate the business environment 
and lift the business operating costs (especially for SMEs).   We trust that certain provisions in the Bill 
already address some of SMEs' concerns.  First, th ere is an express provision in the Bill stipulating 
that the Chief Executive, when appointing members to the Competition Commission, may in particular 
consider persons with experience and expertise in SMEs.  We hope that, through appointing 
Commission members with experience in dealing wi th SMEs matters, the future Commission will be  
able to have due regard to the situation of SMEs when enforcing the law or making important 
decisions, as well as to provide clearer guidance and assistance to SMEs so as to facilitate 
compliance.  Second, the Bill has made it a st atutory requirement for the Commission to draw up 
regulatory guidelines on interpretation and implementati on of the law in consultation with persons it 
considers appropriate.  It can be expected that the guidelines will further address specific concerns 
raised by SMEs, including how the de minimis approach, which is commonly found in other major 
competition regimes, will operate in future enforcement.  We also plan  to allow a transitional period 
between the enactment of the law and the coming in to force of the main prohibitions and enforcement 
provisions to provide some time for the bus iness sector to make any necessary adjustments. 
 
As regards SMEs' concern that larger companies may abuse the statutory framework and use it to 
harass small business operators, we consider such concern as not s ubstantiated by international 
experience.  Moreo ver, the Bill provides that the Commissi on may refuse to handle complaints which 
are trivial, frivolous or lacking in substance.  The Commission must also have reasonable cause to 
suspect that a contravention of any of the competiti on rules has taken place, is taking place or is 
about to take place before exercising its investigative powers.  This should help prevent any abuse of 
the Commission's investigation and complaint mechanism. 
 
 WT/TPR/M/241/Add.1 
Page 42  
 
  CHINA  
 
REPORT BY THE SECRETARIAT 
 
I. ECONOMIC ENVIRONMENT 
 
Paragraph 4, Page 1: 
 "Nonetheless, the Government is expecting to run a deficit of HK$25.2 billion (US$3.2 billion) for 
2010-11, mainly because of accelerated infrastruct ure projects, initiatives to develop the economy, 
and build 'a caring society'."  
Question 1: 
 Could the Delegation of Hong Kong, China please shar e with us how it intends to finance and close 
the deficit?    
Answer
 
As at 31 March 2010, the fiscal reserves balance was HK$520.3 billion (US$66.7 billion).   The 2010-
11 Budget announced in February 2010 forecast a defic it of HK$25.2 billion (US$3.2 billion).  Actual 
deficit for the year, if any, would be financed by drawing down the fiscal reserves.  In the Medium 
Range Forecast released together with the 2010- 11 Budget, the deficit was forecast to decrease 
gradually in the next few years, and a balance was ex pected by 2013-14.  It was anticipated that fiscal 
reserves would be around HK$480 billion (US$61 .5 billion) by end-March 2015, representing 
approximately 22% of GDP and 16 months of government expenditure. 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 
Paragraph 2, Page 22: 
 
"Import licensing procedures remain largely unch anged, although the scope has been extended 
somewhat for public health reasons to cover, in ter alia, proprietary Chinese medicines and certain 
Chinese herbal medicines." 
 
Question 2: 
 
Could Hong Kong, China please elaborate its impor t licensing procedures for proprietary Chinese 
medicines and Chinese herbal medicines?    
Answer
 
 
Import/Export of Chinese Medicines  The applications for import and export licence of pr oprietary Chinese medici nes (pCm) are currently 
handled by the Pharmaceutical Service of the Department of Health.   
From 11 January 2008, applicants have to submit a c opy of the wholesaler licence or manufacturer 
licence in proprietary Chinese medicines or a copy of the transitional certificate in addition to the 
required documents.  The Guideline for Import an d Export of Traditional Chinese medicines can be 
found on Pharmaceutical Service, Department of Health's webpage thro ugh the following link: 
http://www.psdh.gov.hk/eps/eng/html/medgide.jsp   WT/TPR/M/241/Add.1 
 Page 43 
 
 
  Regarding the control on the import/export of Chine se herbal medicines, the applications for import 
and export licence of Chinese herbal medicines are handled by the Chinese Medicine Division of the 
Department of Health.  From 11 January 2008, app lications for import/export of 31 Chinese herbal 
medicines in Schedule 1 and 5 Chinese herbal me dicines in Schedule 2 of Chinese Medicine 
Ordincance (including: Flos Campsis;  processed  Radix Aconiti;  processed Radix Aconiti Kusnezoffii 
Radix Clematidis and Radix Gentianae should be made to the Chinese Medicines Section of the 
Department of Health.  The Guidelines for applicati ons for import/export licence of Chinese herbal 
medicines (applicable only for wholesalers of Ch inese herbal medicines and manufacturer licence of 
proprietary Chinese medicines) can be  viewed through the following link: 
http://www.cmchk.org.hk/pcm/pdf/pcm_import.pdf.   
 
Unless otherwise specified, the import licence is valid for 6 months from the date of issue. 
 
Paragraph 73, Page 39: 
 
"Following the termination of the Agreement on Te xtiles and Clothing on 1 January 2005 and the 
elimination of textile quota, Hong Kong, China h as classified the export markets for textiles and 
clothing products into 'sensitive' and 'non-sensitive' markets."  
Question 3: 
 Could the Delegation of Hong Kong, China please clar ify how it determines whether an export market 
is "sensitive" or "non-sensitive"?    
Answer
 
Markets or places which are more prone to textiles a buses in terms of origin claims are classified as 
"sensitive markets".  All other markets/count ries are classified as "non-sensitive" markets. 
 
ADDITIONAL QUESTIONS FROM CHINA 
 
Question 1:   
Could the Delegation of Hong Kong, China please descr ibe in details what Hong Kong Export Credit 
Insurance Corporation has done in helping the sm all and medium-sized enterprises of Hong Kong, 
China address the risks caused by the financial crisis?    Answer
 
To assist the exporters of Hong Kong, China (which are mostly small and medium enterprises) to 
sustain their business and develop new markets in vi ew of the economic downturn, the Hong Kong 
Export Credit Insurance Corporation (ECIC) has  launched a basket of enhancement measures since 
October 2008.  These measures include – 
 
(a) Higher insurance cover for exports  
ECIC has been as accommodating and flexible as possible to exporters' requests for export credit 
insurance.  Where risks allow,  ECIC provides higher credit limits for exporters under the mechanism 
of applying deductibles for claims and lower-than-usual  indemnity ratios for the insurable exports to 
share out the risks. 
 WT/TPR/M/241/Add.1 
Page 44  
 
  (b) Upgrading the market ratings for emerging markets 
To assist Hong Kong, China exporters to develop emerging markets, ECIC has upgraded the 
country/market ratings of eight emerging markets.
6  With the upgrading, the same market will enjoy a 
higher credit ceiling so more exporters/credit limits may be covered by ECIC.  The premium rates for 
the upgraded markets will also be lowered.  
 
(c) Annual policy fee waiver 
ECIC has waived its annual policy fee7 of HK$1,500 (US$192) for 2009 and 2010. 
 (d) Expediting the processing of small credit limit applications 
ECIC has pledged to process the applications fo r small credit limits (HK$1 million (US$128,205) or 
below) with maximum flexibility and undertaken to  shorten the processing time from 4 days to 2 to 
3 days upon receipt of adequate information.    (e) Free credit assessment service 
ECIC has provided each exporter three free buyer credit assessments un til end September 2010. 
 
Question 2: 
 Could the Delegation of Hong Kong, China please elaborate with the manufacturing industry and 
production centers gradually shifting to Mainland China what further measures Hong Kong, China has adopted in promoting the development and ex port of some high value-added service industries 
including education service, medical service, testing and certification, innovative science and 
technology, cultural and creative industry and environmental-protection industry?  
 Answer
 
 Education service On the internationalisation front, we implemente d in 2008 a basket of measures including doubling 
the non-local student quotas of the public ly-funded programmes to 20%, establishing the 
HK$1 billion HKSAR Government Scholarship Fund , allowing non-local students to take on summer 
jobs and on-campus part-time jobs and enabling n on-local students to stay in Hong Kong, China 
without limitations for 12 months after graduation. 
 
In 2009, the "Hong Kong PhD Fellowship Scheme" was launched.  The scheme aims to attract the 
best and brightest students around the world to pursue their PhD programmes in Hong Kong, China's education institutions.  An annual stipend of  HK$240,000 and a conference and research-related 
travel allowance of HK$10,000 will be provided fo r up to three years.  This prestigious scheme will 
unite top international research postgraduate st udents and Hong Kong, China's world-class research 
institutions.  In the 2010/11 academic year, 106 fellowships were awarded. 
 
On diversification, we have introduced a number of  measures to facilitate the development of 
self-financing post-secondary sector, including: 
 
                                                     
 
6 The markets include the United Arab Emirates, Kuwait, Chile, Braz il, the Czech Republic, Malaysia, 
Uruguay and Morocco. 
7 Policy fee is an annual fee to cover part of the costs of acquiring necessary credit reports for 
processing of credit limit applications.  The policy fee is charged at the beginning of each policy period.  WT/TPR/M/241/Add.1 
 Page 45 
 
 
  (a) Land Grant Scheme to grant sites at nomi nal premium to non-profit-making self-financing 
post-secondary education institutions; 
(b) Start-up Loan Scheme to provide loans to  meet the start-up expenses to self-financing 
post-secondary institutions; 
(c) Quality Enhancement Grant Scheme to fund worthwhile one-off non-works projects that could 
help enhance the quality of teaching and learning of self-financing post-secondary 
programmes; and 
(d) one-off grants to self-financing post-secondary in stitutions to facilitate their development. 
 
We have reserved a site for developing self-financing tertiary education.  The site is estimated to 
provide a gross floor area of more than 100 000 squa re metres.  The institution to be operated at the 
site is expected to provide 8 00 0 self-financing degree places, with around half residential students.  
We will launch an Expression of Interest exercise by  the end of this year to invite development 
proposals from local and overseas in stitutions and education bodies.  
 
Our Chief Executive announced in the 2010-11 Policy Address that we propose establishing a 
HK$2.5 billion Self-financing Post-secondary Educat ion Fund to support the further development of 
the local self-financing post-secondary education sector. 
 
Looking ahead, we will continue to adopt a two-pronged strategy of promoting the parallel 
development of the publicly-funded sector and the self- financing sector.  We will also work with our 
higher education institutions to step up exchange and promotion effo rts overseas to encourage more 
students to regard Hong Kong, China as a preferred d estination for education.  In 2010, we visited a 
number of countries (including Malaysia, Indonesia,  South Korea, Japan and India) together with our 
higher education institutions to showcase the achiev ements of our higher education sector.  We will 
continue our efforts in this area. 
 
Medical service 
We seek to develop our medical services as one of  the six industries crucial to the development of 
Hong Kong, China’s economy.  We will facilitate  private hospital development on hardware and 
software.  On hardware, we have reserved four sites for private hospital development.  As for 
software, we will continue to enhance the traini ng and development of local medical professionals, 
and facilitate exchange of expertise between local a nd overseas medical professionals, with a view to 
further raising the service standards of Hong Kong's healthcare sector. 
 
Testing and certification  
Hong Kong, China has the following advantages in developing the testing and certification industry:  
 (a) a robust accreditation system is already in pl ace to meet the needs of the enterprises;  
(b) the local testing and certification has a high  internal and international reputation and its 
services are accepted globally;  and 
(c) Hong Kong, China is well positioned to act as an independent third par ty to provide quality 
certification and product testing service s for Mainland enterprises. 
 As Hong Kong, China is an international trade, fi nance and business centre sit uated strategically at 
the door of the huge and rapidly growing Mainla nd market, Hong Kong has the potential to develop 
into a major testing and certification centre in the region.   
In September 2009, the Government established th e Hong Kong Council for Testing and Certification 
(HKCTC), an advisory body, to co-ordinate and spea rhead the development of the industry.  Members 
of HKCTC include practitioners from the tes ting and certification industry, business sector, 
professional bodies as well as relevant pub lic bodies and Government departments.  
 WT/TPR/M/241/Add.1 
Page 46  
 
  The Government is now working together with H KCTC to make general improvements to the 
accreditation service and factors of production (e.g . enhance training for practitioners, support 
research and development of new testing methods) to enhance the industry's competitiveness, whilst at 
the same time focusing particular attention to a ssist the industry in exploring business opportunities 
in four selected trades, i.e. Chinese medicine, construction materials, food and jewellery.   
There will be enhanced efforts to promote Hong K ong, China's testing and certification services both 
within and outside Hong Kong, China.  The "Tested  in Hong Kong, Certified in Hong Kong" branding 
will be the theme of promotional activities.  Go vernment will also help the industry to seek wider 
recognition of Hong Kong, China's conformity asse ssment results (i.e. testing reports, inspection 
reports and certificates).  
Innovation and technology 
Innovation and technology are vital for enhancing productivity and competitiveness of an economy 
and sustaining its long term economic growth.  The HKSAR Government strives to create an 
environment in which innovators can generate ne w ideas and entrepreneurs c an turn these ideas into 
new technologies and products that meet the ma rket needs, both locally and internationally.  
 
Our advantages in innovation and technology devel opment include: strong R&D capability, excellent 
infrastructural support, world class universi ties, sound legal system with robust IP 
protection/enforcement regime and close proximity to  the Mainland market and manufacturing base.   
 On the hardware side, the Hong Kong Science Park is established to offer one-stop infrastructural 
support services to technology-based companies and activities. With the success of Phase 1 and 
Phase 2 and full occupancy expected in 2014, Govern ment has already secured HK$4.9 billion to 
proceed with the development of Phase 3 whic h, upon completion in 2016, can accommodate an 
additional 150 companies with aroun d 4,000 R&D related jobs.  
 On the software side, the Innovation and Technology Fund is set up to support applied R&D.  To ensure optimal use of resources and the relevancy of applied R&D activity to industry needs, we have 
set up R&D Centres under the Fund to drive industry oriented R&D in selected technology focus 
areas and to promote technology transfer to the rele vant industries. Since its inception in 1999, the 
Fund has supported over 2,200 projects at a total funding of HK$5.6 billion (US$710 million).   
 To encourage more private sector investment in R& D and their collaboration with universities/public 
research institutes, the Government la unched the "R&D Cash Rebate Scheme" in April, 2010. As at 
end-October 2010, we have received over 140 applicati ons for a total cash rebate of HK$4.87 million 
(US$0.62 million).   
 
The Mainland of China is our hinterland and the largest market for our goods and services.  To 
facilitate the collaboration between the local innovation system and its Mainland counterpart, so that 
we can leverage each other's resources and jointly exploit the oppor tunities in the region, we have 
established close working relationship with the Mainland  of China at all levels, including the central 
government, provincial and municipal authorities.   
 
Cultural and creative industry 
To develop local and overseas cultural market s, we have earmarked an additional recurrent 
expenditure of HK$486 million for the period from  2010/11 to 2014/15 to strengthen the cultural 
software of Hong Kong, China th rough arts programme developmen t, manpower training, promotion 
of arts education, audience building and cultural exchanges.  In July 2010, we also injected HK$1.5 billion into the arts portion of the Arts and Spor t Development Fund, the investment returns of which 
will be used to support projects that are conducive to building a vibrant local arts scene, and to step 
up our support for small and medium arts groups with good potential.  WT/TPR/M/241/Add.1 
 Page 47 
 
 
   
We will continue to promote cultural exchanges with the Mainland of China and the rest of the world, 
and support our arts groups in staging perfor mances, organising exhibitions and participating in 
exchange activities in different economies, thus  showcasing Hong Kong, China's creativity and 
building our cultural brand.  Specific tasks include setting up cultural co-operation frameworks with 
various economies to provide a conducive envir onment for exchanges; and d eveloping brand-building 
arts programmes and major cultural exhibitions jointl y with partners in the Pearl River Delta region. 
 
For the promotion of creative industries, the Create Hong Kong (CreateHK) dedicated office was 
established in 2009 as a one-stop shop for Ho ng Kong, China’s creative industries.  After 
consultation with the industri es, CreateHK promulgated a se ven-pronged strategy to drive 
development of Hong Kong, China's creative industries –  
 
(a) training of local talent; 
(b) supporting the development of start-up companies; 
(c) developing local market; 
(d) expanding overseas and Mainland China market; (e) developing creative clusters; (f) enhancing the atmosphere to promot e creative industries in the community; 
(g) supporting the organization of mega events to  promote Hong Kong, China’s development as 
the creative capital in Asia. 
 
Apart from setting up CreateHK, a HK$300 million C reateSmart Initiative (CSI) was also established 
in June 2009 to provide funding support fo r projects conducive to the development of creative 
industries.  
Environmental industry 
As far as the environmental industry is concerned , Hong Kong, China has been collaborating closely 
with the Mainland of China.  The HKSAR Go vernment and the Shenzhen Municipal Government 
announced the first major technology cooperation project in 2008 under the "Shenzhen-Hong Kong 
Innovation Circle" to establish a Solar Energy Research and Industrial Platform with DuPont, a leading global materials supplier to the photovoltaic industry.  Under the project, Hong Kong, China establishes a Solar Energy Technology Support Cent re in the Hong Kong Science Park to support the 
development of solar energy and related technologi es in Hong Kong and the Pearl River Delta, while 
Shenzhen Municipal Government provides land a nd other facilities to support the downstream 
development and manufacturing of solar energy products.   
 
The Science Park started the development of the G reen Technology cluster in early 2009 to help 
strengthen Hong Kong, China’s edge in adv ancing technologies for renewable energy and 
environmental engineering solutions.  The Green Technology cluster acts as a breeding ground for 
green R&D programmes and green technologies which c an well be exported to other countries.  The 
cluster endeavours to apply the research and developme nt results with a view to building a cleaner 
and greener future for our city and nearby regions. 
 
Recycling cannot be sustained without market outlets for recycled products. The HKSAR Government 
is therefore taking the lead to adopt a green pr ocurement policy and is regularly reviewing the 
specifications so as to incorporate environmen tal friendly features where practicable.  Such policy 
facilitates the development of recycling industry in Hong Kong, China.  For example, the Government 
is taking the lead to use the paving blocks made with recycled glass in all Highways Department's 
road maintenance contracts. This enhances market de mand of this recycled product.  In return, it will 
benefit all the stakeholders of the local recycling tr ade including waste glass bottle collection and 
recycled paving block manufacturing. 
 WT/TPR/M/241/Add.1 
Page 48  
 
  Besides, to promote the development of Hong K ong, China's recycling and environmental industry 
and encourage investment in more advanced t echnologies and value-added recycling processes, 
20-hectare of land has been set aside to provide lo ng-term land at affordable cost for leasing by 
businesses in the recycling and environmental industry. 
 
Question 3: 
 
With Mainland China and the United States, two of the three largest trading partners of Hong Kong, 
China, being the major places of origin and destin ation of Hong Kong, Chin a's transit trade, does 
Hong Kong, China have any plan to collect more detailed statistics on transit trade? 
 Answer
 
Transit goods refer to goods which are consigned fr om a place outside Hong Kong, China to another 
place outside Hong Kong, China and remain on the same vessel, aircraft or vehicle of conveyance 
while passing through Hong Kong, Ch ina’s ports.  At present, statisti cs of goods on transit are not 
compiled by Hong Kong, China and there is no plan to compile such statistics. 
 
 
TURKEY  
 
Report by the WTO Secr etariat (WT/TPR/S/241) 
 
ECONOMIC ENVIRONMENT, para.4, pp.1 
 
The Secretariat's Report points out that "the G overnment is expecting to run a deficit of 
HK$25,2 billion for 2010-2011…"  
 
Given that Hong Kong, China has a narrow ta x base with government revenues depending on 
sunstantially on volative sources of revenues; c ould Hong Kong, China elaborate on the possible 
sources for the financing of the expected deficit?   
 
Answer  
As at 31 March 2010, the fiscal reserves balance was HK$520.3 billion (US$66.7 billion).   The 
2010-11 Budget announced in February 2010 forecast a deficit of HK$25.2 billi on (US$3.2 billion).  
Actual deficit for the year, if any , would be financed by drawing down the fiscal reserves.  In the 
Medium Range Forecast released together with the 2010-11 Budget, the deficit was forecast to 
decrease gradually in the next few years, and a balan ce was expected by 2013-14.  It was anticipated 
that fiscal reserves would be around HK$480 bi llion (US$61.5 billion) by end-March 2015, 
representing approximately 22% of GDP and 16 months of government expenditure.  
TRADE POLICY REGIME, Preferential Trade Agreements, para.16, p.17 
 
Could Hong Kong, China explain the main principles of the rules of origins applied under CEPA?    
 
Answer
 
According to Annex 2 to the "CEPA", goods whic h are entitled to zero tariff under CEPA will have 
the origin determined in accordance with the principles set out below: 
 
(a) goods wholly obtained in one side are regar ded as originating in that side; or 
(b) goods not wholly obtained in one side are consid ered as originating in that side only if they 
have undergone substantial transformation in that side.  
  WT/TPR/M/241/Add.1 
 Page 49 
 
 
  The terms "goods wholly obtained in that side" an d "substantial transformation" is available at 
http://www.tid.gov.hk/english/cepa/files/annex2.pdf. 
 
TRADE POLICY REGIME, Foreign Inv estment Regime, para.27, p.20 
 
The Secretariat's Report points out that the HKSAR provided 217 hectares of land to three industrial 
estates, at cost. 
 
Could Hong Kong, China confirm whether the cost  was determined at the market prices? Could 
Hong Kong, China also explain if the estat es benefit from any incentive or …….kolayl ık for the 
payment?   
 
Answer  
The Hong Kong Science and Technology Parks Cor poration (HKSTPC) is a statutory organisation 
with a specific mission to promote innovation and technology for Hong Kong, China's overall 
economic benefit. The Industrial Estates (IE) are operated with a view to contributing towards 
broadening the industrial base and upgrading technology levels in Hong Kong, China.  The three IEs have been developed by the Hong Kong Industrial Estates Corporation (HKIEC) which 
became part of HKSTPC from May 2001.  The HKIEC developed the IEs with its own resources and 
government loans. Consistent with the non-profit making status of the HKIEC, the established 
guidelines to determine the land premiums on IE ha ve been to incorporate the initial full development 
cost but adjusted for inflation in subsequent years.  The HKSTPC regularly appoints professional 
consultants to make recommendations for the land p remium of IE, taking into consideration the 
recovery of the development costs fo r IE and the market situation.   There have been increases and 
decreases in the land premium, in lin e with inflation over the years.  The last adjustment of the land 
premium was made in September 2008, taking into a ccount the latest market situation.  The HKSTPC 
has continued to keep the market sit uation and land premium under review. 
 The current land premium (with effect from 12 September 2008) is as follows: 
 US$ per sq meter 
Tai Po IE 308 
Yuen Long IE 244 
Tseung Kwan O IE Inland sites:  301 
 Water-front sites:  372 
 
IEs have been developed to provide affordable la nd for industries both in the manufacturing and 
service sectors, to facilitate the overall developm ent of Hong Kong, China’s economy. Companies 
admitted to IEs must be able to fulfill the strict criteria and subject to strict admission procedures.  The admission criteria include (a) the project ca nnot be accommodated in ordinary multi-storey 
industrial or commercial buildings; (b) its opera tion is not classified as  offensive trade under 
Government regulations; and (c) it is not engaging pr imarily in storage and warehousing. Companies 
with heavy investment and new and improved tec hnology are favoured over others.  There is no 
restriction on local or foreign ownership of com panies admitted.  Admission to the IEs is competitive 
and is determined, following these criteria,  by a Committee of the HKSTPC Board. 
 
The land is made available from HKSTPC to the industry by leases which expire in June 2047.  The 
lessee shall only use the site fo r the purpose specified in the lease and shall not assign mortgage 
charge demise underlet or part with the possession  of the lot or any part thereof without prior 
approval from HKSTPC.  WT/TPR/M/241/Add.1 
Page 50  
 
   
TRADE POLICY DEVELOPMENTS, Regional Trade Agreements, para. 39, p.13   
 
Could Hong Kong, China provide an update on the status of the FTA negotiations with the EFTA?   
 
Does Hong Kong, China have an intention to sign a Free Trade Agreement with the countries other 
than China, New Zealand and EFTA in the near futu re, and if so, could you indicate which countries 
those are?    
Answer
 
The free trade agreement (FTA) negotiations w ith EFTA have been progressing steadily.  Three 
rounds of formal talks have been completed and the four th round will be held by the end of 2010.  It is 
our aim to conclude the negotiations as soon as possible.  Hong Kong, China has been exploring with our trading partners on the possibility of commencing 
FTA negotiations to safeguard and advance our economic and trade interests.  We have an open mind 
on exploring FTAs with other economies so long as they are consistent with the WTO principles and 
provisions, and could contribute to  multilateral trade liberalizations. 
 
TRADE POLICIES BY SECT ORS, para. 79, p.73 
 Could Hong Kong, China explain the changes the ne w proposed legislation, the CA Bill, will bring 
about?    
Answer
 
Our proposal to establish the Communications Author ity (CA) follows our approach of reviewing the 
regulatory regimes under a staged approach.  In th e first stage, we will set up a unified regulator 
through the CA Bill to assume the powers of the two existing regulators, namely the Telecommunications Authority and the Broadcasting Authority.  Under this stage, no fundamental 
changes are proposed to the prevailing regulato ry regimes of the telecommuncations and the 
broadcasting sectors.  In the second stage, we w ill review and rationalise the prevailing legislation, 
including the Telecommunications Ordinance (TO) and the Broadcasting Ordinance (BO).   
 
Thus, the CA Bill is an enabling legislation to pr ovide for the establishment of the CA and the Office 
of the CA, its executive arm, t ogether with savings and transitional  provisions and the necessary 
consequential amendments to change reference s to the former authorities to the CA.   
 
 
CANADA  
 
Report by the Government of Hong Kong, China (WT/TPR/G/241) 
 Part II. Economic and Trade Environment: (A) Macroeconomic Situation, paragraph 15, page 8 
 The Government's report states that 'legislativ e measures as well as expanding the scope of green 
procurement will be undertaken to  make HKC a greener city'. 
Could Hong Kong, China please explain the legislative measures and the expansion of the scope of green procurement that will be undertak en to make HKC a greener city?   
 
Answer
 
The HKSAR Government is committed to promoti ng green procurement.  This can protect the 
environment and set a role model for the business s ector, lending momentum to the development of 
environmental industries in Hong Kong, China.  W ith regard to stores procurement, the Government  WT/TPR/M/241/Add.1 
 Page 51 
 
 
  has been expanding its green procurement list.  At  present we have developed green specifications for 
over 100 products commonly used by government departments, and will actively apply them in 
procurement procedures.  Separately, the Government  has also been promoting the use of recycled 
materials in public works projects.  For instance,  since October 2010, the Highways Department in 
Hong Kong, China has required its contractors to use paving blocks made of recycled glass in their 
road maintenance contracts.  We have also furth er devised guidelines for government departments to 
procure greener services.  Such guidelines have been particularly drawn up for vehicle hiring and  
cleansing services contracts. 
 
Report by the Secretariat (WT/TPR/S/241) 
 
Summary. Paragraph 13, Page 51  
 
The report notes that 'public procurement in Hong Kong, China is relatively small, reflecting the 
commitment to ‘big market, small government'. Howe ver, most contracts have been awarded through 
restricted and selective tendering procedures rather than more transparent open tenders’ 
 
Could Hong Kong, China elaborate on what basis most contracts have been awarded through restricted and selective tendering procedures?    
Answer
 
While open tendering is the norm, selective and re stricted tendering may be adopted under certain 
circumstances as stated in paragraph 39 of Chapt er III of the Secretariat Report.  Due to their 
technical and financial capability requirements as we ll as their magnitude, works contracts normally 
adopt the selective tendering approach.  This selecti ve tendering approach is equivalent to open 
tendering in that the approved lists, from which tenders are invited, are established through open and 
transparent procedures and tenders received from c ontractors not on the approved list may also be 
considered provided that there is sufficient time to complete the qualification procedure. As for 
restricted tendering, it would only be adopted und er exceptional circumstances, e.g., for procurement 
of items that are protected by patent or have to be  compatible with the existing equipment or systems, 
with prior approval from the relevant authority.  In 2009, if we take out the works contracts (132 or 
91%), the number of non-works contracts awarded by selective tendering will just be 13 cases which 
represents around 3% of the overall total of 441 cases (as shown in Table III.4 of the report).  The 
reasons for arranging either restricted or selecti ve tendering procedures rather than open tenders for 
non-works contracts are that the procured items are protected by patent or have to be compatible 
with existing equipment or systems. These items incl ude medicines, spare parts, test kits, accessories 
or consumables for previously purc hased tools and equipment.  
 
For most of the public work contracts in Hong K ong, China, only contractors on the approved lists 
are allowed to participate in tendering.  The lists cover major categories of public works.  
Contractors with the necessary management, techni cal and financial capability as well as capable to 
meet the site safety standards, can apply for in clusion in the approved lists.  The purpose of 
establishing and managing the approved list is to ensure that only qualified contractors can tender 
and undertake public works contracts, so that the quality and safety of public works can meet the 
required standards.  In addition, through the listing s ystem, performance of the contractors in public 
works contracts will be monitored and systematically  recorded. Regulating acti on can also be taken 
when doubt arises on their capability and integrity. 
 
Some public works contracts are very special in natu re.  When contractors on the approved lists do 
not have the necessary expertise, open tenders will be invited for those contracts so that contractors 
with the necessary expertise but not on the approved  lists can also participate in the tendering. 
 
 WT/TPR/M/241/Add.1 
Page 52  
 
  COSTA RICA  
 
I. ECONOMIC ENVIRONMENT 
(1) O VERVIEW OF RECENT ECONOMIC DEVELOPMENTS  
 
1. Paragraph 3 on page 1 of the Report by the Secretariat refers to a number of government 
measures taken to support the local economy in the light  of the global financial crisis.  It is mentioned 
that "Overall, the stimulus and relief measures introduced by the Government in 2008-2009 and 
2009-2010 amounted to HK$87.6 billion, equivalent to 5.2% of GDP (…)".  In what areas were the 
largest shares of these resources invested and what role did this play in bringing about Hong Kong, 
China's relatively quick economic recovery?  
 
Answer  
Hong Kong, China is among the first to introduce fi scal stimulus/relief packages. Before including the 
estimated loan default expenditure arising from lo an guarantees to small and medium enterprises, the 
stimulus and relief measures introduced by th e Government in 2008- 2009 and 2009-2010 amounted 
to HK$87.6 billion. Of the sum,  HK$59 billion involves revenue  concessions and HK$28.6 billion 
additional government expenditure.  
 
To consolidate economic recovery and to provide re lief, further measures were introduced in 2010-11 
increasing the package since the 2008-09 budget to nearly HK$110 billion (US$14 billion), equivalent to 6.6% of the 2009 GDP.  Of th e HK$110 billion, about two-thirds involve revenue 
concessions and the remaining one-third additional expenditure.  These, together with other 
government initiatives (including the construction of infrastructure projects), are estimated to have 
raised GDP by about 2 percentage points in 2 009 alone and to boost GDP in 2010 by around 
1.3 percentage points. The stimulus and relief meas ures introduced since 2008-09  mainly fall into the 
following categories – 
 
Supporting enterprises to preserve jobs 
− Launched a time-limited Special Loan G uarantee Scheme to provide HK$100 billion 
(equivalent to US$12.8 billion) liquidity to  small and medium enterprises. The Scheme 
helps businesses secure commercial loans from  financial institutions to tide over the 
immediate cash flow problem.  As at end- September this year, around HK$96.9 billion 
of loan was guaranteed under these schemes,  and these together have helped secure 
the jobs of over 330 000 people. 
− Hong Kong Export Credit Insurance Corpor ation provides higher cover for exports.  
− Waiving business registration fees. 
 
Providing jobs and training opportunities 
− Implementing infrastructure projects, creation of temporary positions, expediting 
minor works and launching other programmes. 
− Providing internship opportunities to new graduates and employment assistance. 
 
Providing relief to the public 
− A series of revenue concessions and expenditu re measures to provide relief, e.g. 
waiving rates and taxes, paying rent for public housing tenants, extra subsidies for low 
income groups receiving Government ’s financial assistance etc. 
 
The Government's speedy policy resp onses under the strategy of "stabilising the financial system, 
supporting enterprises and preserving employment" ha ve been effective in stabilising the economy 
and helped consolidate the recovery.  The econom y has exhibited much resilience in countering the 
global financial crisis of 2008-09.  Indeed, the economy has recovered since the second quarter of  WT/TPR/M/241/Add.1 
 Page 53 
 
 
  2009, and by now the level of GDP has already su rpassed the pre-crisis peak.  The unemployment 
rate has come down notably from the peak of 5.5% in mid-2009 to 4.2% in August-October 2010. 
 We are mindful that an appropriate exit strategy is important to ensure sustainable growth and to 
avoid undue influence on the market.  As the economic  recovery has become in creasingly entrenched 
and local credit conditions have returned to normal,  for example, the application period for the 
Special Loan Guarantee Scheme will cease after December 2010. 
 
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 
(5) F
OREIGN INVESTMENT REGIME  
 
2. Paragraph 27 on page 20 notes the existence of three Government-owned industrial estates 
from where "manufacturing and services companies with new or improved technology and processes, which cannot be accommodated in ordinary multi-st orey industrial or commercial buildings" may 
operate.  It also states that, "Apart from providing the land at cost, there are no special tax incentives 
for companies operating in industrial estates".  In this respect: 
 
(a) Are the investments or activities of comp anies operating in industrial estates in 
Hong Kong, China conditional upon certa in requirements being met by these 
companies?   
(b) What differences are there between compani es of this type accommodated in ordinary 
multi-storey industrial or commercial build ings and those located in industrial 
estates?  Are the investments of both types of company subject to the same 
conditions?   
Answer
 
The Hong Kong Science and Technology Parks Cor poration (HKSTPC) is a statutory organisation 
with a specific mission to promote innovati on and technology for Hong Kong, China’s overall 
economic benefit. The Industrial Estates (IE) are operated with a view to contributing towards 
broadening the industrial base and upgrading technology levels in Hong Kong, China.   The IEs have been developed to pr ovide affordable land for industr ies both in the manufacturing and 
service sectors. Consistent with the non-profit maki ng status of the Corporation, the established 
guidelines to determine the land premiums on IEs ha ve been to incorporate the full development cost 
initially and adjusted for infla tion in subsequent years. 
 Companies admitted to IEs must be able to fulfill th e strict criteria and subject to strict admission 
procedures. The admission criteria include (a) th e project cannot be accommodated in ordinary 
multi-storey industrial or commercial buildings; (b) its  operation is not classified as offensive trade 
under Government regulations; and (c) it is not en gaging primarily in storage and warehousing. 
Companies with heavy investment and new and improved  technology are favoured over others. There 
is no restriction on local or foreign ownership of companies admitted. Admission to the IEs is 
competitive and is determined, following these cr iteria, by a Committee of the HKSTPC Board. 
 
IE land is made available from HKSTPC to th e industry by leases which expire in June 2047. The 
lessee shall only use the site fo r the purpose specified in the lease and shall not assign mortgage 
charge demise underlet or part with the possession  of the lot or any part thereof without prior 
approval from HKSTPC. 
 
The above criteria and requirements have been set for companies admitted into IEs so that there is no 
competition with private developers, offering ordinary multi-storey industrial and commercial 
buildings. WT/TPR/M/241/Add.1 
Page 54  
 
   
There are in general no special legislative and regulatory requirements for the admission and 
establishment of foreign investments in Hong Kong, China and all companies are treated equally 
irrespective of their choice of office location.  Companies located in ordinary multi-storey industrial 
or commercial buildings or industrial estates may be  subject to certain specific requirements, e.g. fire 
safety precaution measures, or de pending on their type of business, licenses to comply with certain 
conditions before they can operate in the premises.  
3. Paragraph 28 on page 20 mentions the commi tment undertaken by Hong Kong, China and the 
People's Republic of China within the framework of the Closer Economic Partnership Arrangement 
(CEPA) to "notify and publicize their respective polic ies and regulations on external trade and foreign 
investment promotion".  Are Hong Kong, China's policies and regulations on external trade and 
foreign investment promotion published on any official or unofficial website so that they can be consulted by interested parties?  
Answer
 
Information and regulations of relevance to traders and investors in Hong Kong, China are 
promulgated by various government bureaux/departments from time to time.  The website of the Trade 
and Industry Department promulgates essential info rmation relating to trade and industry of 
Hong Kong, China.  InvestHK has provided info rmation highlighting the enduring advantages of 
Hong Kong, China as an international business hub, the procedures for setting up businesses in 
Hong Kong, China and the facilitation services it offers in its website (http://www.investhk.gov.hk) for 
general information of companies and potential in vestors.  Other relevant government bureaux and 
departments, e.g. the Economic and Trade Offices of Hong Kong, China, In novation and Technology 
Centre, CreateHK,  and other organisations, e. g. HK Trade Development Council, Hong Kong 
Tourism Board and the Hong Kong Science Park ma y also publicise their respective policies and 
regulations relating to external trade or foreign investment on their official websites. 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) O VERVIEW  
 
4. Paragraph 5 on page 22 states that "The  HKSAR Government remains committed to 
maintaining a low and simple tax regime".  Despite its low tax ra tes, Hong Kong, China has various 
tax incentives, including for intellectual-propert y-related expenditures.  Please describe the tax 
incentives applied.  
 
Answer  
Generally, all expenses excluding expenditures of capita l nature, to the extent to which they have been 
incurred by the taxpayer in the production of char geable profits, are allowed as deductions. Within 
the bounds of neutrality and level playing field of our  tax system, we are providing tax concessions to 
all individuals and companies, irrespective of their resident status, which are chargeable to profits 
tax in Hong Kong, China.  These include:  
 
(i) Immediate write off allowed for capital expe nditure on plant and machinery specially related 
to manufacturing, and on computer hardware and software. 
(ii) Capital expenditure on refurbishment of business premises allowed to be written off over five 
years of assessment.  WT/TPR/M/241/Add.1 
 Page 55 
 
 
  (iii) Immediate 100% deduction granted for expend iture incurred in research and development, 
technical education, subject to certain rules. 
(iv) Expenditure for registration of a trade mark, design or patent is deductible. Moreover, 
immediate write off allowed for capital expenditure on the purchase of patent rights and rights of know-how used in Hong Kong, China.  
(v) Tax concessions for gains derived from qualified debt instruments. 
(vi) Concessionary profits tax rate for offs hore business of reinsurance companies. 
(vii) Exemption from payment of tax on interest de rived from any deposit placed in Hong Kong, 
China with an authorised institution (not app licable to interest received by or accrued to a 
financial institution). 
(viii) Exemption from tax for offshore funds in respect  of profits derived from transactions in 
securities, futures contracts, foreign exchange cont racts, etc. in Hong Kong, China, which are 
carried out by corporations and authorized fi nancial institutions licensed or registered under 
the Securities and Futures Ordinance.  The non- resident entity must not carry on any other 
business in Hong Kong, China. 
(ix) With effect from year of assessment 2008/09, a ccelerated deduction for capital expenditure on 
specified environmental protection facilities.  For machinery or plant, 100% deduction will 
be allowed for the capital expe nditure incurred.  For installations forming part of a building 
or structure, 20% deduction will be allowe d for each year in fi ve consecutive years. 
(x) With effect from year of assessment 2010/11 , 100% deduction will be allowed for capital 
expenditure incurred on specified en vironment-friendly vehicles. 
Deprecation allowances over a prescribed period are pr ovided for capital expe nditure incurred in the 
construction of industrial/commercial buildings and structures, as well as in machinery and plant not 
covered in (i) above. 
 
(2) M
EASURES DIRECTLY AFFECTING IMPORTS  
 
5. Paragraph 35 under sec tion (ix) (Government procurement) on page 28 refers to the coverage 
of the WTO Agreement on Government Procurement (GPA).  Is the government procurement market 
of Hong Kong, China open to foreign suppliers, or only to GPA signatory countries in respect of public contracts covered by this Agreement?  
 
Answer
 
The government procurement market of Hong Kong, Ch ina is open not only to GPA signatory Parties 
but to all foreign suppliers.  We are committed to  providing equal opportunities for both domestic and 
foreign suppliers in our government procurement.  
6. Paragraph 43 under subsection (a) (S tandards and technical regulations) of 
section (x) (Standards and other technical require ments) on page 31 states that, "Hong Kong, China 
does not have an official standards authority or stan dardization body".  Since there is no official body 
in charge of technical regulations in Hong Kong, China are regulations drawn up in a decentralized 
manner?  Who is responsible for ensuring that t echnical regulations and standards are drawn up in 
accordance with the provisions of the WTO Ag reement on Technical Barriers to Trade?  
 WT/TPR/M/241/Add.1 
Page 56  
 
  Answer
 
Hong Kong, China does not have a central standards body developing and issuing domestic standard.  
Our regulatory authorities are empowered under relevant regulations to specify standards and requirements under their respective purview.  
When developing technical regulations, the regulat ory agencies in Hong Ko ng, China would adopt 
international and/or regional/national standards if they are deemed applicable and relevant to the objectives of the regulatory measure per se and local circumstances.  Regulatory authorities also carry out consultation exercise to solicit views from relevant government departments, in particular 
the Trade and Industry Department, which is res ponsible for the implementation of the WTO 
Agreements, to ensure that technical regulations  being drawn up are consistent with the WTO 
Agreement on Technical Barriers to Trade. 
 
7. Paragraph 47 under s ubsection (b) (Testing and certificati on) of section (x) (Standards and 
other technical requirements) on page 31 refers to  the organization that provides accreditation services 
to laboratories, certification bodies and inspection bodies, the accreditation schemes it operates, and 
the international bodies of which it is a member.  
(a) What treatment does Hong Kong, China a fford to products imported from countries 
that are signatory members of the Multila teral Recognition Arrangement within the 
framework of the International Accredita tion Forum (IAF) and the International 
Laboratory Accreditation Cooperation (ILAC)?  
(b) For which products and with which countr ies does Hong Kong, China have bilateral 
recognition agreements for conformity assessment procedures?  
(c) What type of conformity assessment pro cedure is applied by Hong Kong, China to 
verify compliance with technical regulations  and standards?  Are conformity marks 
used for products?  
(d) What procedure is followed to establis h a bilateral recognition agreement for 
conformity assessment procedures?  
Answer to 7(a)-(d)
 
In Hong Kong, China, most products are cont rolled through market surveillance and mandatory 
conformity assessments are seldom  required.  Therefore, there is little  need to negotiate bilateral 
mutual recognition agreements for conformity asses sment with Hong Kong, China to access the local 
market.  Where there is a need for negotiating bila teral recognition agreements with other economies, 
e.g. for access to foreign markets, Hong Kong, China will as far as applicable make use of 
internationally accepted practice and mutual recogni tion arrangements between accreditation bodies.  
For example, for the multilatera l recognition agreement for teleco mmunications equipment under 
Asia-Pacific Economic Cooperation, acceptance of c onformity assessment results is based on mutual 
recognition arrangements between accreditation bodies. 
 
Subsection (c) (Sanitary and phytosanitary regulatio ns) of section (x) (Standards and other technical 
requirements) on pages 32 to 36 describes the measu res applied by Hong Kong, China to imports of 
products that are subject to sanitary and phytosanitary regulations. 
 
(a) Is there any charge for obtaining information on sanitary and phytosanitary 
requirements, including details of  the relevant legislation?   WT/TPR/M/241/Add.1 
 Page 57 
 
 
  Answer  
There is not any charge for obtaining informat ion on sanitary and phytosanitary requirements, 
including details of the relevant legislation.  E nquiries can be made through email, fax or telephone. 
 
(b) Is an import licence required for all pr oducts that are subject to sanitary or 
phytosanitary measures?  How much does this licence cost?  Is this cost equivalent to 
the cost of the service provided and is it the same for all products requiring such a 
licence?  
Answer  
Sanitary controls on imported food are imposed sole ly on public health grounds and on the basis of 
risk assessment.  Risk assessment is conducted usi ng best available scientific evidence to provide 
input to support risk-management decisions.  Under the Import and Export Ordinance (Cap. 60), import of chilled/frozen meat and poultry is 
subject to import licensing control.  At pre sent, an import licence is required for importing 
chilled/frozen meat and or poultry by an import er for each consignment and the import licence is 
issued without any charge.  
 
(c) Does Hong Kong, China use the sanitary or phytosanitary protocol mechanism to 
establish the requirements?  If so, what is the procedure for establishing the protocols 
and in what legislation can they be found?  
Answer
 
As mentioned in the above, sanitary controls on im ported food are imposed solely on public health 
grounds and on the basis of risk assessment.      Currently, certain high-risk or perishable importe d food items (milk, milk beverages, frozen 
confections, game, chilled meat, and poultry) are go verned by subsidiary legislation to the Public 
Health and Municipal Services Ordinance, which requires,  inter alia, that imports be accompanied by 
a health certificate from a competent authority in th e country of origin.  Imports of these food items 
also require prior approval from the Food and Envi ronmental Hygiene Departm ent (FEHD).  Details 
are set out below –   
(1) For importation of Game, Meat and Poultry 
 The importation of game, meat and poultry into H ong Kong, China, is governed by the Imported 
Game, Meat and Poultry Regulations (Cap. 132AK).  The details of the regulation are at:  http://www.cfs.gov.hk/english/food_leg/food_leg_list.html#ig 
 
2. For importation of Milk and Frozen Confections  Import of milk (including milk beverage and crea m) for sale is regulated under Milk Regulation 
(Cap. 132AQ) whereas frozen confections are governed under Frozen Confections Regulation 
(Cap. 132AC).  The details of the regulation are at :  
http://www.cfs.gov.hk/english/food_leg/food_leg_list.html#ig  
(4) M
EASURES AFFECTING PRODUCTION AND TRADE  
 
9. Section (vii) (Intellectual property rights) on pages 50 to 54 refers to Hong Kong, China's 
legislative framework for protecting intellectual pr operty rights.  What types of amendment were 
made to the Patents Ordinance in 2007 for the purpose of implementing the Protocol on TRIPS and Public Health?  Please describe how Hong Kong, China made the amendment operative. WT/TPR/M/241/Add.1 
Page 58  
 
   
Answer
 
To implement the Protocol on TRIPS and Public He alth, amendments were introduced to the Patents 
Ordinance in 2007 ("Amendment Ordinance") to allo w for the grant of compulsory licences for the 
import or export of pharmaceutical  products in specific circumst ances.  The Amendment Ordinance 
took effect on 22 February 2008.  The effect of the Amendment Ordinance is summarized below.   
 
Import of Pharmaceutical Products  
 
Under the Amendment Ordinance, the Chief Execu tive-in-Council may declare a period of extreme 
urgency in Hong Kong, China by way of notice in the Gazette if it is considered necessary or 
expedient in the public interest to do so or to add ress any actual or threatened public health problem 
in Hong Kong, China.  For determining the end date of the period of the extreme urgency, he is also 
required to keep the public health prob lem under review from time to time.  
 
During such a declared period of extreme urgency,  the Director of Health is empowered, if he 
considers that Hong Kong, China has insufficient  or no manufacturing capacity to make certain 
pharmaceutical product to contain the public health problem in question, to grant a non-exclusive 
compulsory licence to any person to import, use, put on market, or stock the pharmaceutical product 
or do any other act which would otherwise amount  to an infringement of the patent concerned, 
without the consent of the proprietor of the paten t.  The Director of Health has to, as soon as 
practicable, notify the proprietor of the patent of  the grant of the import compulsory licence and 
advertise in the specified official journal of th e grant of the licence and its terms and conditions. 
 
In line with the requirements of the Protocol and the TRIPS Agreement, the Amendment Ordinance 
has stipulated that the import compulsory licence  would be subject to the following conditions – 
 
(a) the entire quantity of the pharmaceutical  product imported under the licence should 
only be used in Hong Kong, China and not for export to other places; 
(b) the pharmaceutical product should be cl early identified, through specific labeling 
or marking, as being imported pursuant to such licensing system;  
(c) the licence is not assignable except with such part of the business of the assignor 
that enjoys the use of the patent under the compulsory licence;  and 
(d) other terms and conditions as the Direct or of Health thinks fit having regard to the 
public health needs in Hong Kong, China in  the period of extreme urgency that has 
been declared. 
 
The Director of Health has power to termi nate an import compulsory licence where there is 
contravention of any term or condition of the licence.   
 
Under the Amendment Ordinance, an obligation to pay the proprietor of the patent for the grant of an 
import compulsory licence only arises where the propr ietor of the patent can show that remuneration 
has not been paid in the exporting member fo r the production and export of the pharmaceutical 
product to Hong Kong, China and all legal remedies to recover payment of the remuneration in the 
exporting member have been exhausted.  Paymen t will be borne by the Hong Kong, China 
Government.  The amount of remuneration shall be agreed between the Director of Health and the 
proprietor of the patent.  Where an agreement cannot be reached, the amount of remuneration can be 
determined by the court.  The court is required to take into account all factors relevant to the 
circumstances, including the economic value to H ong Kong, China of the use of the pharmaceutical 
product and humanitarian or non-economic factors relevant to the grant of the licence.  The Amendment Ordinance has provided for the disposal of remaining stock upon the termination of the period of extreme urgency.  The licensee is required to take re asonable steps to recall such stock  WT/TPR/M/241/Add.1 
 Page 59 
 
 
  and either surrender them to the Government or dispose of them in such a way as may be agreed with 
the proprietor of the patent.  The Government w ill pay the licensee the price of such surrendered 
stock at cost, and is required to dispose of the surren dered stock in such a wa y as may be agreed with 
the proprietor of the patent or destro y them if agreement cannot be reached. 
 
Any person aggrieved by the grant of an import co mpulsory licence, the terms or conditions imposed 
on the licensee, the apportionment of remuneration or the termination of an import compulsory  
licence can apply to the court for review. 
 
Export of Pharmaceutical Products  
 
The Amendment Ordinance empowers the Director of Health to grant a compulsory licence for the 
making and export of a pharmaceutical product to be supplied to a WTO Member recognized as a 
least-developed country or a WTO Member that has gi ven notice to the TRIPS Council that it intends 
to import pharmaceutical products under the syst em.  Where the importing WTO Member does not 
declare that it is under a national emergency or other circumstances of extreme urgency, the 
applicant for an export compulsory licence has to make reasonable efforts to obtain an authorization from the proprietor of the patent on reasonable co mmercial terms and conditions before applying for 
the licence.  The application would only be c onsidered if the applicant has failed to obtain the 
authorization within 28 days.  
The grant of the export compulsory licence would be subject to the terms and conditions stipulated in 
the Amendment Ordinance, including – 
 
(a) terms relating to the quantity of the ph armaceutical product that  can be produced 
and sold for export; 
(b) the pharmaceutical product should be cl early identified, through specific labelling 
or marking, as being produced pursuant to such licensing system;  
(c) the posting on a dedicated WTO website of information relating to the amount of 
the pharmaceutical product that will be exported to the importing Member and the 
labelling or marking used for identifying the product; and  
(d) such other terms and conditions as the Director of Health thinks fit. 
 
The Director of Health has power to termi nate an export compulsory licence where there is 
contravention of any term or condition of the licen ce or where any information, document or evidence 
specified in or accompanying the application for the compulsory licence is  false, incorrect or 
incomplete in any material particular.   
 
The remuneration payable by the licensee of an export compulsory licence is to be determined by the Director of Health on a case-by-case basis.  Any person aggrieved by the grant of an export co mpulsory licence, the terms or conditions imposed 
on the licensee, the appropriate amount of remuneration payable to the proprietor of the patent or the 
termination of an export compulsory licence can apply to the court for review.  In determining the 
appropriate amount of remuneration payable to the propr ietor of the patent, the court has to take into 
account all relevant factors, including the economic  value to the importing Member of the use of the 
pharmaceutical product and humanita rian or non-economic factors relevant to the grant of the 
licence. 
 WT/TPR/M/241/Add.1 
Page 60  
 
  IV. TRADE POLICIES BY SECTOR 
(2) A
GRICULTURE AND FISHERIES  
 
10. Paragraph 12 under section (i) (Overview) on page 56 describes developments in agricultural 
production in Hong Kong, China.  It states that since Hong Kong, China's last Trade Policy Review, 
the value of agricultural production has declined by more than half (from HK$1.2 billion in 2006 to 
HK$558 million in 2009), largely reflecting the impa ct of the incentive schemes to abandon livestock 
production.  Are incentives provided to abandon lives tock production in favour of another productive 
activity?   
11. Please describe in greater detail how this scheme was developed, how much time was 
scheduled for its implementation, the public polic ies recommended, and other aspects relevant to the 
scheme.  
Answer to (10) and (11)
 
Both the 2006 surrender scheme for pig farmers and the 2008 buyout scheme for the live poultry trade 
were introduced due to public health consideratio n.  The surrender scheme for pig farmers was to 
reduce the number of pig farms in Hong Kong, Ch ina thereby reducing associated public health and 
environmental pollution problems.  The purpose of the buyout scheme for the live poultry trade was to 
assist those who wished to leave the trade due to their anticipated difficulties in operating their 
businesses under the constraint of no overnight stocking of live poultry at the retail level.  The latter 
restriction was imposed by the Gove rnment for the purpose of protecting public health by minimising 
the risk of transmission of avian influenza from poultry to human.  Neither scheme was provided for the purpose of favouring another productive activity.  
Further details of the two surrenders schemes are av ailable in paragraphs 10 and 11 under section (i) 
(Overview) on page 56 and Table IV.1 on page 57 of the Secretariat Report. 
 
 
JAPAN
 
 
The Secretariat Report (WT/TPR/S/241) 
 
III. TRADE POLICY BY MEASURE  
(4) M EASURES AFFECTING PRODUCTION AND TRADE  
(vi) Competition and consumer protection policy 
(a) Competition Policy 
 
(Question 1: Page 48, paragraph 106) 
 
According to the Secretariat' s report, the Hong Kong Special Administrative Region (HKSAR) 
government presented a draft of the cross-sector competition law to the Legislative Council in July 2010. Please provide the expected timelin e for adopting and implementing this bill.  
 
The Secretariat's report also inform us that there are provisions in the bill which allow the 
Competition Commission ‘to decide whether an agreem ent or conduct is excluded or exempt from the 
rules on grounds that the agreement enhances overa ll economic efficiency; the undertaking concerned 
is entrusted with the operation of services of genera l economic interest; or the agreement is made to 
comply with a legal requirement.’ Could you tell us which sector or industry is expected to fall under this exemption clause?   
  WT/TPR/M/241/Add.1 
 Page 61 
 
 
  Answer  
A Bills Committee has just begun the scrutiny of the Competition Bill.  The latest work plan indicates 
that there will be a minimum of 33 meetings to be  held every two to three weeks until the first half of 
2012.   Date for the Bill to come into force would depend on progress of the scrutiny of the Bill by the 
legislature.   Taking into account the complexity of the Bill and our plan to allow a transitional period 
for the establishment of relevant competition authoriti es, it is expected that the earliest possible date 
for the major prohibitions and enforcement provisio ns of the proposed cross-sector competition law 
to come into force is around 2013.  
The exemption mechanism under the Competition Bill  follows practices in other overseas competition 
jurisdictions and is meant to apply to all sectors.   It is expected that the Commission will make its 
exemption-related decisions on a case-by-case bas is, taking into account the specific facts and 
rationale for the agreement or conduct concerned as  well as the relevant market circumstances.  
Reference will also be made to the abundant sou rces of case laws and guidelines available in other 
major competition jurisdictions.  We have no inten tion to confine the scope of your mentioned 
exemption clauses to any particular sector or industry.  
(vii) Intellectual property rights 
(b) Enforcement 
 
(Question 2: Page 53, paragraph 113)  
With regard to enforcement of intellectual propert y right, despite various efforts made to strengthen 
enforcement through the amendments of the existing legislation, the presence of pirated products and 
counterfeit goods have been still observed. What ar e the HKSAR Government's priorities in enforcing 
the policy against these pirated pr oducts and counterfeit goods?    
 Answer
 
The HKSAR Government attaches grea t importance to the protection of intellectual property rights 
(IPR).  We allocate substantial resources on enforcem ent.  The Hong Kong Customs takes all forms of 
pirating and counterfeiting activities seriously.  Its enforcement strategies include: focused and 
repeated raids at known black spots; proactive in terception of infringing goods at the boundary; 
development of intelligence on the supply and distribu tion of infringing goods; close cooperation with 
the rights owners and other local, Mainland China and overseas law enforcement agencies; intensive 
enforcement action to track down syndicates; and con fiscation of crime proceeds as well as seeking 
stiffer sentences/penalties to provide a greater de terrence to organized pirating and counterfeiting 
activities.  
 
Specifically, the Hong Kong Customs makes rigorous raids on a regular basis against pirating and 
counterfeiting activities at all levels: manufacturing,  import and export, distribution and retailing.  
 The strong dedicated force comprising around 250 o fficers in the Intellectual Property Investigation 
Bureau aside, the Customs also deploys another 150- member raiding squad in the Special Task Force 
to carry out intensive, territory-wide raids agai nst known black spots where pirated and counterfeit 
goods are sold.  The unrelenting efforts of the Customs over the years have now put the piracy and counterfeiting 
problem under control.  The number of pirated op tical disc (POD) retail outlets, for instance, has 
dropped drastically from about 1 000 in 1998 to only a few in 2010.  The remaining POD outlets 
operate in a stealthy manner.  Th ey display genuine optical discs for sale as camouflage and keep a 
stock of PODs secretly for sale to known custom ers.  In addition, a small number of mobile hawkers 
are still found selling PODs over the territory.  To  avoid detection by Customs, they shift their 
hawking locations from time to time and operate in small hours. WT/TPR/M/241/Add.1 
Page 62  
 
   
Counterfeiting activities are similarly placed under control.  There is no longer any manufacturing 
operation in Hong Kong, China.  In the local market,  only low-level sales activities of a limited scale 
are found.  For instance, some hawkers are now ope rating for short time intervals and on irregular 
hours, while others may resort to displaying m erely photographs or catalogues of counterfeit goods 
on the stalls to evade Customs action, or mainta in a very low stock level there to minimise financial 
losses resulting from Customs raids.  Nonetheless, we will spare no efforts in stifling such illicit trade.  
The Hong Kong Customs will keep staging repeated raids against counterfeit traders and their backroom activities. 
 
Apart from robust enforcement against piracy a nd counterfeiting, the HKSAR Government will 
continue to educate the public, enhance awaren ess, and promote a culture of respect in the 
community for IPR. 
 
IV. TRADE POLICIES BY SECTOR  
(5) S
ERVICES  
(iv) Transport 
(a) Maritime transport 
 
(Question 3: Page 75,76, paragraph 87) 
 
According the Secretariat Report, HKSAR service s uppliers benefit from preferential access to the 
market for maritime transport services in China under the Closer Economic Partnership Arrangement with China (CEPA). Hong Kong registered ships also  benefit from "preferential dues" in Mainland 
ports under a memorandum signed with the Mainland authorities. Please explain in concrete terms 
what are the "preferential dues". Please also indicat e whether there are prospects for expansion of the 
application of the “preferential dues” to ot her foreign-flag vessels in the future.   
 
Answer
 
All foreign ships (including Hong Kong registered sh ips) have to pay Port Dues when calling at the 
Mainland ports.  The Port Dues are levied by the Mainland Port Authority based on the tonnage of 
the ship and the length of the period of stay at the port.  Such port dues are also known as "tonnage 
dues".  After the signing of the MOU between the HKSAR Government and the Mainland Authorities 
in December 1999, Hong Kong registered ships calli ng at Mainland ports are entitled (depending on 
the tonnage of the ship and period of stay in the port)  to the preferential rates of the Port Dues up to a 
reduction of a maximum of 29%.   
 In recent years, the Mainland Authorities have also  signed similar agreements with 69 countries 
(including Japan) which allowed their flagged ships to  enjoy similar preferentia l rate when they visit 
Mainland ports.  It is up to the Mainland Authoriti es to decide whether this preferential rate can be 
extended to other foreign flagged ships in future. 
 
 EUROPEAN UNION 
 
 
I. ECONOMIC ENVIRONMENT 
 
1. Could Hong Kong, China inform what measures – if any – has it taken to ensure that goods 
destined for export are produced in full respect of the fundamental rights at work (as embodied by the 
ILO's 2008 Declaration on Social Justice for a Fair Globalisation and the 8 core ILO Conventions)?    WT/TPR/M/241/Add.1 
 Page 63 
 
 
  Answer  
Hong Kong, China has all along been paying full respect to the fundamental rights at work in all 
areas of activity.  HKC applies ILO core Conventi ons relating to fundamental rights at work through 
legislative and administrative measures.  The awareness of the rights and benefits of stakeholders is raised through vigorous enforcement of relevant le gislation and implementation of promotional 
activities.  Hong Kong, China would continue to respect  in full all aspects of the fundamental rights at 
work irrespective of whether it has applied a specific core Convention. 
 
2. Could Hong Kong, China explain how it ensures that its labour laws are respected in the 
informal sector?   
Answer
 
Hong Kong, China does not differentiate the inform al sector from the overall economic activities in 
formulating and implementing its la bour policies and laws. Employees of  all sectors, irrespective of 
the size of establishments they work for a re equally protected by labour laws.  
 
The Labour Department (LD) of Hong Kong, China spa res no effort to protect the statutory rights of 
workers in various sectors through a combination of promotion, workplace inspection, criminal 
investigation and prosecution.  Apart from territory -wide and sector-specific campaigns to raise the 
awareness of the public on their labour rights,  Labour Inspectors of LD conduct proactive and 
surprise inspections to establishments of differen t sizes in various industries across the territory. 
Workers are interviewed on-the-spot and establishmen ts are checked on their compliance with labour 
laws. Workers are encouraged to  lodge complaints through user-friendly channels including the 
hotline of LD, emails and fax. All suspected o ffences are promptly investigated and criminal 
prosecution action is taken when  there is sufficient evidence. 
 
3. Could Hong Kong, China elaborate whether its labour laws apply in the same way in free 
zones and free economic zones as for enterprises locat ed outside these zones?  If not, why not?   
Answer  
If "free zones" and "free economic zones" refer to area s with differential taxati on treatment, there are 
no such areas in Hong Kong, China . Hong Kong, China does not differentiate among area s within its borders as, within Hong Kong, 
China's jurisdiction, labour laws are applied to all employers alike. 
 
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 
(4) P
REFERENTIAL TRADE AGREEMENTS AND ARRANGEMENTS  
 
WTO Secretariat's report, pages 15-19 
Government's report, pages 12-14   
4. Could Hong Kong, China elaborate on the extent to which, and how, social and labour issues 
are addressed within each of the preferential agreem ents referred to in the Secretariat's and the 
Government's reports?   
Answer
 
It is Hong Kong, China’s principled position that  trade agreements should focus on trade issues.  
While Hong Kong, China is committed to our inter national obligations undertaken in various fora 
including those on social and labour issues, we consider that preferential trade agreements are not 
the appropriate channels to deal w ith elaborate provisions on social and labour issues.  It would be 
most effective if the social and labour issues a re handled in their respective professional fora.   
 WT/TPR/M/241/Add.1 
Page 64  
 
  That said, under our Closer Economic Partnership  Agreement with New Zealand, Hong Kong, China 
and New Zealand undertook to, among other things, enhance communication and cooperation on labour and environmental issues. 
 
(5) F
OREIGN INVESTMENT REGIME  
 
WTO Secretariat's report, page 20-21, para-s 26 – 33   
5. Could Hong Kong, China confirm that economic ac tivity undertaken in relation to a new or 
existing investment respects Hong Kong, China's labour  laws and the fundamental rights at work (as 
embodied by the ILO's 2008 Declaration on Social Jus tice for a Fair Globalisation and the 8 core ILO 
Conventions)?   
Answer
  
Hong Kong, China has all along been paying full respect to the fundamental rights at work in all 
areas of activity.   Hong Kong, China applies ILO core Conventions relating to fundamental rights at 
work through legislative and administrative measur es.  The awareness of the rights and benefits of 
stakeholders is raised through vigorous enforcemen t of relevant legislation and implementation of 
promotional activities.  When violations against la bour laws are detected, criminal prosecution would 
be taken out against offenders.  Hong Kong, China woul d continue to respect in full all aspects of the 
fundamental rights at work irrespective of whet her it has applied a specific core Convention. 
 
6. How does Hong Kong, China ensure that its  labour laws are in fact respected? 
Answer  
Hong Kong, China accords top priority to safe guard the statutory rights and interests of workers 
through adopting a multi-pronged strate gy of promotion, workplace inspection, criminal investigation 
and prosecution to ensure that its labour laws are respected and complied with by employers and 
establishments of all industries.   
 To enhance public understanding of the labour laws , Labour Department (LD) of Hong Kong, China 
from time to time launches mass publicity campai gns through TV, radio and newspapers to drive 
home topical messages of employers’ and workers’ int erests. Targeted promotional activities such as 
talks, seminars and exhibitions taking into account the characteristics of individual industries are 
also organised.  Moreover, a full spectrum of publ ications on labour rights are published for free 
distribution to the public via popular outlets and the Internet.  In furtherance of promotional efforts, Labour In spectors of LD conduct inspections to workplaces of 
different sectors to check employers’ co mpliance with the relevant labour legislation.  Intelligence is 
collected and targeted enforcemen t programmes are launched to uncover breaches of the labour 
laws.  User-friendly complaint channels includi ng fax, email and tele phone hotline have been 
established to facilitate employees who suspect that th ey have been deprived of their statutory benefits 
to lodge complaints. All compla ints registered are promptly and thoroughly investigated and criminal 
prosecution action is taken when  there is sufficient evidence. 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE (2) 
MEASURES DIRECTLY AFFECTING IMPORTS  
(X) Standards and other technical requirements 
(d) Labelling requirements  for food and nutrition 
WTO Secretariat's report, page 36, para.59 
  WT/TPR/M/241/Add.1 
 Page 65 
 
 
  According to the Secretariat's report, a new nutrition labelling scheme entered into force on 
1 July 2010;  the Secretariat's report notes that "[…] this new regulation has been burdensome for 
some businesses […]".  7. Hong Kong, China's new nutritional labelling sch eme has raised some concerns among the 
food industry of a number of WTO Members. The EU understands that Hong Kong, China will 
review the scheme next year as regards 'new-to-mark et products'.  If the review were to find that there 
is a significant reduction in the variety of goods in the market, would Hong Kong, China consider 
relaxing the requirements, in one way or another, for new-to-market products, in order to remedy the 
situation, including through the possible adoption of international practices so as to provide Hong 
Kong, China consumers additional choice and better quality?   
 
Answer
 
The Nutrition Labelling Scheme (the Scheme) fo r prepackaged food under the Food and Drugs 
(Composition and Labelling) (Amendment: Requirem ents for Nutrition Labelling and Nutrition 
Claim) Regulation 2008 took effect on 1 July 2010 after a grace period of about two years.  The 
Scheme is in line with international standards.  In formulating the Scheme, we have taken into 
consideration the principles adopted by the Codex Alimentarius Commission (Codex), local health 
and disease patterns, overseas regimes, impact on the food tr ade and its implications on food choice.     
 The Scheme aims to assist consumers in making informed food choices, to regulate misleading or 
deceptive labels and nutrition claims, and to enc ourage food producers to apply sound nutrition 
principles in the formulation of foods.   In drawing up the Scheme, the HKSAR Government is  mindful of the need to minimize its impact on 
food choice for our consumers and to facilitate the trade’s compliance with the Scheme.  
 
We have notified the Committee on Technical Barriers to  Trade under WTO.  We comply fully with 
the WTO requirements and consider that our Sche me will not pose any unnecessary trade barrier.   
 Hong Kong, China has adopted a number of trade fa cilitation measures to enab le traders to comply 
with the new requirements under th e Scheme, including formation of a working group with the trade 
to address various compliance issues, facilitating the provision of laboratory support, workshops, 
web-based technical information and tools (e.g . guidance notes, frequently asked questions and 
Nutrition Label Calculator), telephone enquiry service.   
 
In particular, the Scheme has included a Small Vo lume Exemption (SVE) Scheme for food products 
with annual sales volume of 30 000 units or below.  With small volume exemption, many ethnic food, 
organic food, or niche food products that are mo stly imported or manufactured in small volume 
would be exempted from the nutrition labelling requirem ents.  In addition, we will be able to cater for 
the staging of food fair and trade promotion events held usually for market testing purpose.  The SVE 
application fee is calculated on a full cost recovery basis.  
We note that the SVE scheme is well utilized by  the trade.  We have already approved over 
30,000 applications of which 46% relate to J apanese products, 11% relate to U.S. products, 9% 
relate to UK products, with products from It aly and France taking up 4% and 3% respectively. 
 With the efforts of the food trade, the Scheme has  been implemented smoothly without undue impact 
on consumer choice since 1 July 2010.  The compliance rate of traders is over 99%.  As in previous 
years, three major food fai rs were held successfully in mid-Augus t with a steady number of exhibitors 
bringing in new food products savoured  by an increased number of visitors.   
 WT/TPR/M/241/Add.1 
Page 66  
 
  To address some of the trade's concern that th e Scheme may pose unnecessary  barriers to introducing 
new products, we will review the impact of the Scheme on “new-to-market” product one year after 
commencement of the legislation.  We will decide  on the way forward after we have completed the 
review next year. 
 
(4) M
EASURES AFFECTING PRODUCTION AND TRADE  
(vi) Competition and consumer protection policy 
(a) Competition policy 
WTO Secretariat's report, pages 48-50, para-s 104-106 and Box III.1 
 The Secretariat's report informs that after many ro unds of public consultation, Hong Kong, China has 
prepared and introduced the Competition Bill.   8. The EU welcomes the recent tabling of the dr aft Competition Bill in keeping with the need 
for competition rules of general application, also to safeguard the benefits from liberalised markets 
and to ensure effective competition on a level play ing field for all economic operators. Could Hong 
Kong, China confirm that the passage and implementa tion of a generally applicable competition law 
remains a priority for the Hong Kong, China and that  any exemptions or exclusion will be kept to 
those strictly necessary?   
9. Could Hong Kong, China confirm that it remains committed to the passage and 
implementation of a Bill with sanctions of an adeq uate deterrent effect reflecting the seriousness and 
gravity of the competition violation in question?    
Answer to 8 & 9
 
We remain committed to introducing a cross-sector competition law in Hong Kong, China.  A Bills 
Committee has just begun the scrutiny of the Competition Bill.  We w ill work closely with the Bills 
Committee on the early passage of the Bill.   
 The exemption mechanism under the Competition Bill  follows practices in other overseas competition 
jurisdictions.  It is expected that the future Competition Commission will make its exemption-related 
decisions on a case-by-case basis, taking into account the specific facts and rationale for the 
agreement or conduct concerned as well as the releva nt market circumstances.  Reference will also be 
made to the abundant sources of case laws and guidelines available in other major competition 
jurisdictions.    
As to the proposed exemption of statutory bodies and their activities except those specified by the 
Chief Executive in Council by way of regulations aft er enactment of the Bill, we note that this is 
similar to the arrangement under Singapore competiti on legislation.  We consider that activities of 
many statutory bodies are non-economic and regulato ry in nature or involve provision of essential 
public services.  Having regard to cases in other ju risdictions, such activities would effectively be 
excluded from the application of the competition law.  In the interest of legal certainty, we propose 
that exemption should be given to these statutory bod ies and their activities to ensure that the efficient 
implementation of public policies as well as meas ures which are required to react quickly to problems 
in the community would not be affected.   
(b) Consumer protection  
WTO Secretariat's report, page 50, para. 108 
 
The Secretariat's report informs that "Enforcement of the consumer protection legislation is ensured 
mainly by the Consumer Council, and the Custom s and Excise Department.  The Consumer Council  WT/TPR/M/241/Add.1 
 Page 67 
 
 
  provides wide-ranging services to consumers, and ra ises matters for general discussion and action. 
[…]".   10. Could Hong Kong, China elaborate on whether it will consider strengthening its regulatory 
structure on consumer protection given the sharp in crease in complaints received by the Consumer 
Council over the last decade (from around 17 ,000 in 1999-2000 to ove r 46,000 in 2008-09
8), and on 
grounds of public interests?   
Answer  
The HKSAR Government is committed to protecting the legitimate rights of consumers in Hong Kong, 
China.  In view of the emergence of unfair tr ade practices which undermine consumer interests, the 
Government has completed a review of existing legi slation, with the policy objective of enhancing 
legislative protection for consumers from such pr actices.  It has recommended a package of proposals 
to better tackle the practices of misleading tr ade descriptions, misleading omissions and bait-and-
switch, aggressive practices and the practice of accep ting payment without the intention or ability to 
supply contracted products.  A public consultation on the proposals just ended on 31 October 2010.  
The Government is examining public submissions.  Th e target is to introduce implementing legislation 
into the legislature by mid-2011.  
(vii) Intellectual property rights 
 WTO Secretariat's report, pages 50-51, para. 110 and pages 52-53, table III.10 - Copyright 
 
According to the Secretariat's report Hong Kong, Ch ina is reviewing the legislative framework for 
copyright protection in the digital environment. It  contemplates introducing a right of communication 
covering all modes of electronic transmission for copyrights, a statutory limitation of the liability 
regime for online services providers in dealing with online piracy, and additional factors for the Court 
to consider when awarding additional damages. It also envisages introducing criminal sanctions 
against unauthorized communication of copyright works to the public, if the communication is for business profit, or where it affects prejudicially the copyright owners.  
 
11. Could Hong Kong, China explain the scope of the proposed right of communication covering 
all modes of electronic transmission for copyrights? 
Answer
 
The proposed right of communication is intended to  be technology neutral which will cover all modes 
of electronic transmission, including certain existin g exclusive rights under the Copyright Ordinance, 
i.e.  
 
 (a) the broadcasting of the work;   (b) the inclusion of the work in cable programme service;  and   (c) the making available of the work to th e public, by wire and wireless means, in such a 
way that members of the public in Hong Kong, China or elsewhere may access the 
work from a place and at a time individually chosen by them, such as the making available of works through the Internet.   
 
It will also encompass any other kinds of electronic transmission that may develop in future as a 
result of advances in technology.  
 
                                                     
 
8 Data obtained from the website of the Hong Kong Consumer Council http://www.consumer.org.hk/ 
website/ws_en/profile/mission/mission.html WT/TPR/M/241/Add.1 
Page 68  
 
  The new proposed right of communication will be available to all kinds of works protected by 
copyright under the Copyright Ordinance in Hong Kong, China, namely:- 
 
 (a) literary works;  (b) dramatic works;  (c) artistic works; 
 (d) musical works; 
 (e) sound recordings  (f) broadcasts; 
 (g) cable programmes; 
 (h) films inclusive of their sound tracks; and  (i) typographical arrangement of published ed itions of literary, dramatic or musical 
works. 
 
12. Could Hong Kong, China explain the scope of th e proposed statutory limitation of the liability 
regime for online services providers in dealing with online piracy?  
Answer
 
The proposed statutory limitation of liability reg ime for online service providers (OSPs) aims to 
provide incentives (and legal certainty) for OSPs to  cooperate with the right owners in the fight 
against online piracy. The proposed statutory fr amework will give OSPs the assurance that 
compliance with certain conditions (e.g. they do not receive a financial benefit directly attributable to 
the infringement; take reasonable steps to deal with  the infringement when being notified of the 
infringing activities etc.) would qualify them for lim itation of liability (mainly pecuniary liability) for 
copyright infringements occurring on their service pla tforms.  There will also be a Code of Practice 
which sets out the conduct expected of OSPs when notified of infringing activities occurring on their 
service platforms.  OSPs who observe the Code woul d be deemed to have also complied with the 
conditions.  The Code will cover measures in cluding the "Notice and Notice" and "Notice and 
Takedown" systems now practised in the UK and US.9 
 
The limitation of liability regime will be available to  any OSP who, by means of electronics equipment 
and /or network, provides or operates facilities for any online services, including but not limited to 
the following :  
(i) offers transmission, routing, or provision of connection for or access to digital online 
communications, between or among points spec ified by a user, of material of the user's 
choosing; 
(ii) hosts material that can be accessed by a user; 
(iii) stores material in his system or network te mporarily as an automatic response to the request 
of another person without modifying the material; 
(iv) refers or links users to an online location  by using information location tools; or 
(v) provides application-based services such as social networking systems to users. 
 WTO Secretariat's report, page 51, para. 111 and pages 52-53, table III.10 - Patents 
 
13. Local marketing of infringing copies of patented  pharmaceuticals remain legitimate due to a 
systemic loophole of the registration of pharmaceuticals in Hong Kong, China, which allows 
                                                     
 
9 Under a "Notice and Notice" system, OSPs are requir ed to forward to users or  subscribers notices of 
claimed infringements that they recei ve from the right holders.  Under a "Notice and Takedown" system, OSPs 
are required, upon receipt of a notice from the copyright owner concerned, to  (a) take down or disable access to 
materials identified to be infringing;  and (b) where applicable, notify the alleged infringer who makes the 
materials available.  WT/TPR/M/241/Add.1 
 Page 69 
 
 
  infringing copies to be registered. Hence the distribu tion of infringing products is made possible. Only 
civil remedies are available to patent holders but the high legal costs incurred for seeking civil 
remedies are not justified given the small size of the market. 
Apart from the information on registered pharmaceutical products made known though the 
"Compendium of Pharmaceutical Products", could Hong Kong, China describe the rules in place (or 
contemplated) to prevent patent disputes in case a marketing authorization for pharmaceutical 
products is granted before the expiry of the patent over such products?   
 
Answer  
The patent protection system and the drug registration system are two separate systems in Hong 
Kong, China each serving different purposes.  The former provides protection for technical 
innovation by granting the inventor a patent for his invention.  The latter assu res safety, efficacy and 
quality of drugs in the local market.   Our patent protection system under the Patents Ordinan ce (Cap. 514) (PO) is in full compliance with 
the requirements under the TRIPS Agreement of WTO,  which does not require the linkage of patent 
considerations with registration of drugs.  An effective patent confers rights on its proprietor to 
prevent third parties from, among other things, maki ng, putting on the market, using, importing or 
stocking patented products without their consent.  Any marketing and distribution of patent infringing 
pharmaceuticals is illegitimate in Hong Kong, China.  Patent owners may institute civil proceedings 
in courts against infringers and seek remedies, incl uding an injunction restraining the infringers from 
any of the abovementioned patent infringing acts; an order requiri ng the infringer to surrender or 
destroy any patent-infringing products; damages in resp ect of the infringement; an account of the 
profits derived by the infringer from the infringe ment; and a declaration that the patent is valid and 
has been infringed by the infringer.  
Separately, in order to enhance th e cost-effectiveness of any practi ce and procedure in relation to the 
civil proceedings before courts and to facilitate settle ment of disputes, the Civil Justice Reform has 
come into effect on 2 April 2009 in Hong Kong, China.  That eases the pursuit of civil actions, 
including actions in relation to patents.  The rights of patent owners to civil remedies are not  affected by the registration of the relevant drug 
with the Pharmacy and Poisons Board (PPB).  Under the Pharmacy and Poisons Ordinance (Cap. 
138) (PPO), all drugs are required to be registered  before sale in Hong Kong, China.  The PPB will 
grant approval for registration of drugs which comp ly with the scientific criteria of safety, efficacy 
and quality.  The purpose of the registration requiremen t is to protect public health and drug safety.  
It does not deprive patent owners of any protection under the PO.   
 
We consider that the linkage of patent consid erations with registration of drugs could cause 
unnecessary delay in the process of drug registration and hence affect the availability of drugs.  As 
there is already a well-established patent prot ection system in Hong Kong, China, the drug 
registration system should focus on the safety, efficac y and quality aspects.  That said, we are keeping 
track of overseas developments in drug registrati on and would consider reviewing the existing system 
as and when appropriate. 
 
14. In case such rules do not exist, could Hong Kong, China explain how it prevents patent 
disputes?   
Answer
 
In order to prevent patent disputes, when approvin g applications for drug registration, PPB would 
remind the applicants in writing that the registration is only evidence of the product having met the WT/TPR/M/241/Add.1 
Page 70  
 
  requirements as to its safety, efficacy and quality and carries no implications on intellectual property 
issues.  To ensure patent holders have access to drug regi stration information, the information on all 
registered pharmaceutical products  are made known through the “Compendium of Pharmaceutical 
Products”.  The above information has been uploade d onto the Department of Health’s website since 
October 2001 to facilitate protection of patent right s by the patent holders.  A rapid search function 
was introduced on the website in March 2003.  WTO Secretariat's report, pages 52-53, table III.10 - Trademarks 
 
The EU would like to state that the copy-name comp anies remains as a concern to many international 
companies. Legal action for trademark infringement  appears unavailable since the shell companies 
have no substantive commercial activity in Hong Kong, China. Chinese courts and administrative 
authorities have no jurisdiction to order a Hong Kong, China company to change its name. The 
Companies Ordinance is now under review to redres s the problem. However, the rewrite exercise will 
last for a few more years, while IP holders need quick, short-term solutions.  
 15. Could Hong Kong, China describe which measures it has taken to address the long standing 
concerns of companies whose names are being copi ed and the risk posed to consumers by such 
misleading practices? 
Answer
 
To address the concerns from the business commun ity, especially trademark/brand name owners, we 
have amended our Companies Ordinance to strengthe n our company name registration system with a 
view to enhancing enforcement against possible ab uses by the “copy-name companies”.  An owner of 
a trademark or trade name may, in a legal action for trademark infringement or passing off against 
such a company, obtain a court order to direct the company to change its name.  The Registrar of 
Companies is empowered to act pursuant to the co urt order to direct the company to change its 
names.  If the company fails to co mply with the Registrar’s direction,  the Registrar may substitute the 
company’s name with its registration number.  Th e same power to substitute the name of a company 
is also given to the Registrar where a company fa ils to comply with a direction to change its name 
that is too like that of another company on the register.  Where the Registrar has replaced a 
company’s name with its registration number, th e new name will appear on the register instantly.  
The legislative amendments will come into operation on 10 December 2010.   
 Further, if a company fails to comply with the Re gistrar’s direction to change name, the company and 
every officer in default will be liable to prosecu tion and subject to a maximum penalty of HK$100,000 
and a daily default fine of HK$700.  An officer in def ault is also liable to imprisonment of up to six 
months.  In cases where the Registrar has reasona ble cause to believe that the company is not 
carrying on business or in operation, the company may be struck off the register.   Administratively, if 
a company fails to comply with the direction to change name within the specified period, its name will 
be published.  A warning statement has also been inserted in the Certificates of Incorporation of 
companies stating that the registration of a com pany name does not confer trade mark and/or other 
intellectual property rights over the name.  
 We believe that the measures mentioned above wi ll effectively address the problem of "copy-name 
companies". 
 16. Could Hong Kong, China inform about the state of play of the review of the Companies 
Ordinance (CO) with a view to solvin g the issue of copy -name companies? 
17. Could Hong Kong, China inform about the expected duration of the review process?  WT/TPR/M/241/Add.1 
 Page 71 
 
 
  Answer to Question 16 & 17  
The review of the Companies Ordi nance in respect of "copy-name co mpanies" has been completed.  
Please see the answer to Q15. 
 
WTO Secretariat's report, pages 52-53, table III.10 - Designs  
 
According to the Secretariat's re port, unregistered industrial desi gns are protected in Hong Kong, 
China under the Copyright Ordinance, for articles produced from the original design drawing. The 
term of protection is 15 years from the first marketing of the article.  
18. Could Hong Kong, China explain how the protecti on regime for unregistered industrial design 
works in practice?  
Answer
 
In practice, artistic works which have been exploit ed by an industrial process by the making of 
articles may be registered under the Registered Desi gns Ordinance.  Registered designs may enjoy 
monopolistic protection, upon renewal of registration every 5 years, to a total period of 25 years from 
the filing date of the application for registration.    Industrial designs which have not been registered or  are not registrable under the Registered Designs 
Ordinance may be protected under s.87 of the Cop yright Ordinance for a period of 15 years from the 
end of the calendar year in which such articles are fir st marketed (i.e. when they are being sold or let 
for hire or offered or exposed for sale or hire) if such articles incorporate designs derived from 
artistic works which have been exploited, by or with the licence of the copyright owners, by-  
  (a) making through an industrial process artic les incorporating copies of the artistic 
works;  and 
 (b) marketing such articles, in Hong Kong, China or elsewhere. 
 The regime ensures commensurate legal protection for registered, unregistered, and unregistrable 
industrial designs respectively. 
 
19. Could Hong Kong, China describe the scope of protection for unregistered industrial designs?  
Answer
 
Under the provisions of the Copyright Ordinance,  artistic works which have been exploited by the 
making of articles by an industrial process are regi strable as designs under the Registered Designs 
Ordinance for a maximum term of 25 years.   
 Where, however, such artistic work s are not so registered, or whe re they are not registrable under the 
Registered Designs Ordinance, they nevertheless enjoy protection as unregistered industrial designs 
for 15 years from the end of the calendar year in which the articles incorporating the unregistered 
design are first marketed.   
 
Whereas a registered design confers monopolistic rights, an unregistered industrial design right confers protection against infringement in  the same fashion as copyright.   
 
The unregistered industrial design right is avail able to artistic works incorporated in industrial 
articles which have been marketed in  Hong Kong, China or elsewhere. 
 WT/TPR/M/241/Add.1 
Page 72  
 
  WTO Secretariat's report, pages 52-53, table III.10 - geographical indications (GIs) 
 
According to the Secretariat's report, the protection of geographical indications in Hong Kong, China is the same as for registered trademarks but GIs can only be registered as collective or certification 
trademarks.  The report also states that "[The use of a false geographical indication applied to goods 
in a fashion calculated to mislead consumers may be a criminal offense under the Trade Descriptions 
Ordinance]".  20. Could Hong Kong, China give information a bout the number of geographical indications 
already protected under the Trademark La w and the number of applications?  
Answer
 
In Hong Kong, China, geographical indications (GIs) would be registered as collective or 
certification trademarks.  As there is no specific cate gory for registration of GIs under the trademark 
law, we are unable to provide the exact number of registered GIs and the number of applications.  
Nevertheless, based on the trademark records of th e Trade Marks Registry of Hong Kong, China, we 
have attempted to identify the number of trademarks which appear to consist of or contain GIs : 
 
Registered 
certification marks 
which appear to 
consist of or contain GIs Registered collective 
marks which appear to 
consist of or contain 
GIs Applications for 
registration of 
certification trade 
marks which appear to consist of or contain 
GIs Applications for 
registration of 
collective trade marks 
which appear to consist of or contain 
GIs 
28 3 16 5 
 
21. Could Hong Kong, China indicate the number of geographical indications registered by 
foreigners?   
Answer  
Trade mark owners are not required to  declare their nationality when registering their trade marks in 
Hong Kong, China.  Yet, the addresses of the regist ered owners of all the 28 registered certification 
trademarks and the 3 registered collective trade marks mentioned above are overseas addresses. 
 
(b) Enforcement 
 
WTO Secretariat's report, page 53, para. 113 and pages53-54, table III.11  
 The Secretariat's report states that "[IPR enforcem ent appears to have been further strengthened 
during the review period.[…]".    22. The piracy problem is largely under control due to enhanced IPR legislative changes and 
stricter enforcement. However, legal costs are high and time consuming. In practice, even big corporations would avoid taking the case to court be fore other possible remedies are exhausted. The 
infringing parties are usually small in size or are shell companies which do not own any assets.  
As civil remedies are considered costly and time- consuming, could Hong Kong, China explain which 
initiatives it intends to take to make civil enforcement measures more effective?   
  WT/TPR/M/241/Add.1 
 Page 73 
 
 
  Answer  
To facilitate the proof of subsistence and ownership  of copyright proceedings (civil and criminal), 
section 121 of the Copyright Ordinance provides that  an affidavit which purports to have been made 
by or on behalf of the copyright owner of a work, wh ich states that copyright subsists in the work by 
providing the name and place of domicile or residence of the author of the work; date and place that 
the work was first created; the name of the copyright  owner and exhibiting a true copy of the work to 
the affidavit; or states that the copyright work has b een registered with a Copyright Register shall, in 
the absence of evidence to the contrary, be prim a facie evidence of subsistence and ownership of 
copyright.  Such a presumption of ownership of copyright will facilitate copyright owners in 
establishing their cases of copyright infringement in court proceedings. 
 
In cases of overwhelmingly strong evidence agains t the defendants, the plaintiffs may apply for 
summary judgments against the defendants and obtain much quicker determination of the dispute than going through a full trial.   
Also, to facilitate copyright owners in provin g the extent of damages su ffered in cases of online 
copyright piracy, legislative amendments have been  proposed to add extra factors for the court’s 
consideration in awarding additional da mages for copyright infringement. 
 On a broader scale, to enhance th e cost-effectiveness of litigation practice and procedures in relation 
to proceedings before the Court, Hong Kong, Chin a has implemented a Civil Justice Reform (CJR) 
since April 2009. It helps ensure that a case is dea lt with as expeditiously as  is reasonably practicable 
by way of better case management by the parti es and the Court.  CJR also promotes a sense of 
reasonable proportion and procedural economy in th e conduct of proceedings and facilitates the 
settlement of disputes between the parties.  A su mmary assessment of litigatio n costs has also been 
introduced which substantially reduces the costs and tim e involved in traditional taxation procedures.  
 
The Court also has the duty as part of active case management to encourage pa rties to use alternative 
dispute resolution such as mediation for dispute se ttlement which lowers litigation costs.  The HKSAR 
Government will put in further efforts to promote and facilitate the wider and sustainable use of mediation.  
The change in litigation culture and litigation proce dures by way of the CJR serves to enhance the 
cost-effectiveness of civil litigation and to expedite the enforcement of civil remedies. 
 
WTO Secretariat's report, page 53, para. 115 and pages53-54, table III.11  
 
The Secretariat's report introduces enforcement act ivities of the Customs and Excise Department 
(C&ED).   With regard to customs enforcement, the tranship ment or transit of infringing products through Hong 
Kong, China to the EU remains a key issue. Hong Kong, China continues to be one of the major 
provenances of goods suspected of infringing IPR in tercepted at the EU borders. The percentage 
increased to 1,40% of all articles intercepted in 2009 (1,37% in 2008). The huge volume of re-export 
trade between China and Hong Kong, China makes fr equent goods interception difficult in practice. 
 23. Could Hong Kong, China indicate which measures it has taken or intends to take to better 
control transit or transhipment of goods suspected of infringing IPR through its territory? WT/TPR/M/241/Add.1 
Page 74  
 
  Answer
 
 
Border Interception and Intelligence-led Operations  
 
The HKSAR Government attaches grea t importance to the protection of IPR.  We take all forms of 
pirating and counterfeiting activities seriously and allo cate substantial resources to curb the flow of 
infringing goods across the boundary. The 400 officers  dedicated to combating IPR offences aside, 
the Hong Kong Customs has some 3,300 officers who ma intain full vigilance at all times at various 
control points to intercept contrabands, incl uding counterfeit and pira ted goods, through the 
intelligence-based selection of suspicious baggage , cargo, vehicles and vessels for examination.  
Customs officers also conduct anti-counterfeit insp ections at cargo loading areas where goods are 
transhipped via Hong Kong, China.  These inspec tions are also intelligence-led for enhancing 
operational effectiveness. Based on intelligence and risk assessment on cross-boundary cargo, the 
Hong Kong Customs has made significant seizures of infringing goods im ported, exported and 
transhipped through Hong Kong, China. 
 
Cooperation with the Mainland of China  
 
We recognize the need for joint efforts with our Mainland counterparts in the fight against cross-
boundary IPR infringement activities.  The Hong Ko ng Customs maintains close liaison with the IPR 
enforcement agencies in Guangdong.  The two sid es cooperate on the enforcement front and would 
exchange intelligence from time to time.  Parallel enforcement operations are conducted regularly on 
both sides to step up enforcement at control points to guard against the inflow of infringing goods.  
Such parallel operations help maximize the deterrent effect.   
 The Guangdong/Hong Kong Expert Group on the Protection of Intellectual Property Rights (Expert 
Group) was established in August 2003 to enhance coop eration on various aspects of IPR protection, 
including combating cross-boundary IPR infringeme nt.  The Expert Group provides an effective 
platform for the administrative/enforcement age ncies of Hong Kong, China and Guangdong to share 
experience and exchange intelligence against cross-boun dary infringing activities through training, 
seminars and the established point-to-point liaison mechanism with Guangdong Provincial Public 
Security Department, Copyright Bureau of  Guangdong Province and Guangdong Provincial 
Administration for Industry and Commerce.  
International Cooperation
 
 
The Hong Kong Customs has all along maintained  close liaison with the Regional Intelligence 
Liaison Office of the World Customs Organization in the Asia Pacific Region as well as other 
regional and international organizations, e.g. Asia  Pacific Economic Coopera tion (APEC).  Through 
these contacts and the worldwide network of th e Customs community, the Hong Kong Customs 
exchanges intelligence with the o verseas law enforcement counterparts to suppress cross-boundary 
infringing activities.  
To strengthen bilateral Customs cooperation agai nst cross-boundary offences, including pirating and 
counterfeiting activities, as at November 2010, the Hong Kong Customs has entered into Customs 
cooperative instruments with 17 Customs Administrations since 1991. 
 
Other Measures
 
 
The Hong Kong Customs maintains an effective strate gic partnership with the IPR industry to obtain 
first hand intelligence to curb counterfeit trade and suppress the import, export and transhipment of 
pirating and counterfeit goods.  Reward schemes as sponsored by the IPR industry are administered 
to encourage reports of IPR crimes, including ille gal movement of infringing articles through the  WT/TPR/M/241/Add.1 
 Page 75 
 
 
  borders. We will be pleased to enhance cooperati on with our trading partners in exploring ways to 
address the problem more effectively. 
 
24. Could Hong Kong, China indicate the part of customs controls carried out on request/ex 
officio? 
Answer  
The Hong Kong Customs protects intellectual property rights through combating related crimes at the 
border and in all districts of Hong Kong, China.  It is entrusted with ex officio power to seize infringing goods.  It maintains vigilance and in stigates vigorous enforcement through intelligence-led 
investigations and repeated raids conducted at di fferent levels: manufacturing, import and export, 
distribution and retailing.  Apart from acting on  complaints from IPR holders, the Hong Kong 
Customs also takes proactive actions to deal with  the pirating and counterfeiting activities in Hong 
Kong, China.  We comply fully with the requiremen ts of the TRIPS Agreement, including those related 
to border measures. Procedures ar e adopted to enable a right holder, who has valid grounds for 
suspecting the importation of counterfeit or pirate d goods, to file application to the High Court for 
suspending of the release of goods by the Customs.  
25. Could Hong Kong, China indicate the part of cust oms controls carried out on transhipment or 
transit/import/export? 
Answer
 
Hong Kong, China attaches great importance to protecting and facilitatin g legitimate trade and 
industry and to uphold the trading integrity. The Hong Kong Customs acts as the front-line agency to 
prevent importation, exportation and transhipment of any  articles which are prohibited by the Laws of 
Hong Kong.  The Hong Kong Customs adopts intelli gence-led and risk management strategy on cargo 
selection to identify suspicious import/export/trans hipment cargoes for examination. To expedite 
cargo clearance, the Hong Kong Customs employs non-intrusive instruments in cargo examination, 
and there are several electronic cargo clearance systems to facilitate traders engaged in air, land and 
sea business to submit advance cargo information. 
 
IV. TRADE POLICIES BY SECTOR  
(2) AGRICULTURE AND FISHERIES  
(ii) Fisheries 
WTO Secretariat's report, pages 58-59, para-s 18-21 
 
The Secretariat's report describes the activities unde rtaken by Hong Kong, China, to promote the 
sustainable development of the fisheries industry.  
 
26. Could Hong Kong, China explain how it ensures that vessels listed on its shipping register do 
not engage in illegal unreported and unregulated fishing?   
Answer  
Local fishing vessels are certificated and licensed  under the Merchant Shipping (Local Vessels) 
Ordinance, Cap 548.  Fishing activities conducted in Hong Kong waters have to comply with 
"Fisheries Protection Ordinance" (Cap. 171) and its related regulations (Cap. 171A and 171B) e.g. the use of explosives, toxic substances, class of  apparatus listed in Cap. 171B are prohibited under 
the Ordinance. Any person who contravenes any of the provision shall be guilty of an offence. 
 
27. Could Hong Kong, China explain how it ensures that vessels listed on its shipping register 
respect relevant environmental la ws and regulations, as well as the relevant multilateral environmental 
agreements?  WT/TPR/M/241/Add.1 
Page 76  
 
  Answer
 
All registered cargo ships and passenger ships shall co mply with the regulations as stipulated under 
various annexes of International Convention For The Prevention Of Pollution From Ships 
(MARPOL). The "Merchant shipping (prevention and cont rol of pollution) Ordinance" (Cap. 413) is 
also introduced in Hong Kong, China monitoring vessels registered in Hong Kong, China and 
certified local vessels.  
 (5) S
ERVICES  
(ii) Financial services 
(a) Banking and finance  
WTO Secretariat's report, page 64, para. 43 
 
According to the Secretariat's report, "[The Govern ment attaches great importance to the development 
of offshore renmimbi (RMB) business in the HKSAR , as a step towards better integration of its 
financial system with China. […]".   
 
28. The EU welcomes the development of H ong Kong, China as an RMB offshore centre, 
including for RMB trade settlements.  Given the pos ition of China in international trade transactions, 
enabling settlements in RMB will have multiple bene fits.  The financial services industry in Hong 
Kong, China is characterised by a significant number of the EU financial servi ce providers.  Could the 
Hong Kong, China confirm that the EU financial in stitutions established in Hong Kong, China will be 
able to participate in the full range of RMB-rela ted business on an equal footing with their Chinese 
counterparts? 
Answer  
All financial institutions (holding relevant business license) in Hong Kong, China can participate in 
RMB-related business in accordance with the sa me set of applicable rules and requirements, 
irrespective of their place of inco rporation or country of origin. 
 
29. Could Hong Kong, China confirm that it will make all applicable rules and regulations 
pertaining to such services publicly availabl e in a complete and transparent manner? 
Answer  
The applicable rules and requirements in respect of  RMB-related business that are issued by 
authorities of Hong Kong, China are publicly available.   
 
(iii) Telecommunications  
 WTO Secretariat's report, page 73, para. 79 
 According to the Secretariat's report “As a result of increasing convergence between 
telecommunications and broadcasting services the G overnment decided to review the associated 
regulatory regimes. As the first step, in line with  the practices of other advanced economies, it has 
proposed establishment of a unified regulator fo r the two sectors, the Communications Authority 
(CA), by merging the Telecommunications Authority (TA) and the Broadcasting Authority (BA).”  
 
30. Could Hong Kong, China provide further information on the current status of the proposed 
merging of the regulators of the telecommunications sector and broadcasting sector?   
Answer
 
The HKSAR Government introduced the Communications Authority (CA) Bill, the enabling legislation 
to establish the CA, into the legislature in June 2010.    WT/TPR/M/241/Add.1 
 Page 77 
 
 
   
The CA Bill provides for the establishment of the CA and the Office of the CA, its executive arm, 
together with savings and transitional provisions  and the necessary consequential amendments 
mainly to change references to the former author ities (namely the Telecommunications Authority and 
the Broadcasting Authority) to the CA. 
 
 CHILE
 
 
(a) Standards and technical regulations 
 
43. Hong Kong, China does not have an official standards authority or standardization body.  The Innovation and Technology Commission (ITC) of the HKSAR Government is the enquiry point under the WTO TBT Agreement.  The ITC participates in  international and regi onal activities related to 
standards and conformity assessment, including those of ISO and the PASC (Pacific Area Standards 
Congress). 
  Is it therefore to be understood that standard s and technical regulations are drawn up by each 
relevant regulatory body or ministry?   
Answer
 
Hong Kong, China does not have a central standards body developing and issuing domestic standard.  
Our regulatory authorities are empowered under relevant regulations to specify standards and requirements under their respective purview. 
 
 Does the designated enquiry point also play a coordinating role among the various actors at 
national level?  
 
Answer
 
The enquiry point of Hong Kong, China is main ly responsible for passing TBT notifications from 
regulatory authorities to the WTO Secretariat, and receives enquiries from WTO Members regarding 
TBT matters.  It does not play a coordinating role in developing standards a nd technical regulations. 
 
44. Standards, including mandatory ones (i.e. t echnical regulations), are imposed for safety, 
health, and environmental reasons and, according to the authorities, are based mainly on international 
standards and/or prevailing overseas standards.  Th ere were no changes to the procedure for adopting 
technical regulations and conformity assessment pr ocedures during the review period.  Generally, 
Hong Kong, China's notifications to the WTO allow about 60 days for comments. 
  Is it possible to know what percentage of a ll technical regulations are based on international 
standards?   
Answer
 
Hong Kong, China does not have a central st andards body developing and issuing "Hong Kong 
standards".  As an export-oriented  economy, it is essential that our goods meet the standards of our 
major overseas markets.  Where standa rds have to be applied in Hong Kong, China for health, safety 
or environmental reasons, our regulatory agencies in general adopt available international standards 
and where not available or not applicable, adopt p revailing overseas standards, to avoid the position 
where setting the standards dictates market development or becomes a means of protecting certain 
sectors of the economy.  In many cases, int ernational standards and prevailing overseas standards 
may be applied equally.  Regulatory agencies in H ong Kong, China do not normally keep stock of a 
percentage of international standards utilised as compared to other national or regional standards 
utilised in Hong Kong, China. WT/TPR/M/241/Add.1 
Page 78  
 
   
 Where technical regulations are not aligned with international standards, which sectors do 
they relate to for the most part?   
Answer
 
Regulatory agencies in Hong Kong, China do not  normally keep stock of a percentage of 
international standards utilised as compared to other national or regional standards utilised in 
Hong Kong, China.  Hence the requested information is not available. 
 
 What, in general terms, is the procedure for drawing up a technical regulation?  For 
example, is there any coordination with the priv ate sector and other regulators, what sort of 
time-frames are involved, etc.?   
Answer
 
When developing technical regulations, the regulat ory agencies in Hong Ko ng, China would adopt 
international and/or regional/national standards if they are deemed applicable and relevant to the 
objectives of the regulatory measu re per se and local circumstances. 
 Consultation procedure varies from case to case depe nding on the nature of the issue concerned.  It 
may involve consultation with the major domestic  stakeholders (including the trade, professional 
bodies, trade associations, government agencies, government advisory and statutory bodies, other 
non-governmental organizations and the legislators) , consultation with regional and international 
trading partners via the network of consulates in Hong Kong, China, notification to the relevant and 
authoritative international organizations (e.g. WTO Committee on Technical Barriers to Trade) and 
posting of consultation document s on Government's website for public access.  These parties’ views 
will be taken into account before finalizing the tec hnical regulations.  The time-frame for consultation 
varies according to individual technical regulation.  
 What is the procedure following notification?  Are enquiries and/or replies presented during 
the consultation period published?   
Answer
 
After submitting notification to the WTO Committee on Technical Barriers to Trade as appropriate, a 
period of at least 60 days will be provided for Members' comments.  Where  written enquiries are 
received from WTO Members, written replies will be fu rnished as soon as possible to the Members 
concerned.  Since there is no mandatory requi rement under the WTO Agreement on Technical 
Barriers to Trade to publish comments or repli es pursuant to a TBT notification submitted, these 
documents are normally not publicly available.  
45. A number of amendments have been made to  laws/regulations on standards or certification 
procedures/requirements since 2006 (Table AIII. 4).  Between 2006 and 2010, Hong Kong, China 
submitted 16 notifications to the TBT Committee (up to  15 April 2010).  These notifications concern, 
inter alia , labelling requirements for food, and mandatory  energy efficiency labelling requirements 
(on room air conditioners, refrigerating appliances, compact fluorescent lamps, washing machines, 
and dehumidifiers).  Concerns we re raised by the EU in the TBT Committee on Hong Kong, China's 
technical regulations regarding the proposed mandato ry energy efficiency labelling scheme.  The EU 
has claimed that the scheme would require EU manuf acturers to have their products tested in an 
external laboratory accredited by the HKSAR authoriti es, or by a facility in a country with which 
Hong Kong, China had concluded an MRA.  The EU therefore considered this measure to be more 
trade restrictive than necessary to achieve its target .  According to the HKSAR authorities, the scheme 
does not require mandatory third party certification fo r test results of the products concerned, and the 
testing standards adopted are international standards.   WT/TPR/M/241/Add.1 
 Page 79 
 
 
   Do the 16 notifications mentioned concern only new draft technical regulations or do they 
include the amendments?    
Answer
 
Between 2006 and 2010 (up to 15 April 2010), Hong  Kong, China submitted 16 notifications to the 
WTO Committee on Technical Barriers to Trade .  Five of these notifications are addendum to 
previously notified notifications c ontaining changes in the status  of a notified TBT measure. 
 
 Is the specific trade concern ra ised by the EU the only one to have been brought before the 
WTO TBT Committee during this period?   
 
Answer  
Yes, during the period under review, the specific trade concern raised by the EU regarding the 
mandatory energy efficiency labelling scheme (m entioned in paragraph 45 under Chapter III, 
Secretariat Report, WT/TPR/S/241) was the only one  involving Hong Kong, Ch ina brought before the 
WTO Committee on Technical Barriers to Trade.  
(b) Testing and certification 
 
47. The Hong Kong Accreditation Service (H KAS), under the ITC, provides accreditation 
services to laboratories, certification bodies, and inspection bodies.  The HKAS operates 
three accreditation schemes:  the Hong Kong Laboratory Accreditation Scheme (HOKLAS), the 
Hong Kong Certification Body Accreditation Scheme  (HKCAS), and the Hong Kong Inspection Body 
Accreditation Scheme (HKIAS).  The HKAS is a me mber of the International Accreditation Forum 
(IAF), the International Laboratory Accreditati on Cooperation (ILAC), the Pacific Accreditation 
Cooperation (PAC), and the Asia Pacific Laboratory Accreditation Cooperation (APLAC).  It is also a 
signatory to the multilateral mutual recognition arra ngements of these agreements;  up to April 2010, 
HKAS had concluded 71 MRAs with 56 economies.  The testing and certification services industry is 
one of the six industries where the Government believes there is great potential for development (Chapter IV(5)(vi)).   Which sectors do the mutual recognition arra ngements mainly concern?  With which 
countries are the largest sh are of these arrangements? 
 
Answer
 
The mutual recognition arrangements (MRA) a re in the voluntary sector and are between 
accreditation bodies rather than between government s. They do not bind governments and is a 
condition for accessing the Hong Kong, China market .  The MRA under ILAC covers accreditation of 
laboratories for testing and calibration.  The I AF and PAC arrangements cover accreditation bodies 
for quality management system.  The MRA under APLAC covers accreditation of laboratory for 
testing, calibration and medical testing, and accreditation of inspection bodies.  Under these 
arrangements, HKAS currently has more than 70 mutual recognition partners in 60 economies.  
Details are given in the HKAS website of www.hkas.gov.hk.   
 How are conformity assessment procedures conducte d?  For example, do they involve issuing 
a declaration of conformity or third-party certification? 
 
Answer
 
In Hong Kong, China, most products are cont rolled through market surveillance and mandatory 
conformity assessment, declaration of conformity  or third-party certification is rarely required.  
Where mandatory conformity assessments are required  for safety, health and environmental reasons, 
Hong Kong, China will accept confor mity assessment results issu ed by competent conformity WT/TPR/M/241/Add.1 
Page 80  
 
  assessment bodies in other economies, for example, those accredited by a ccreditation bodies which 
have concluded mutual recognitio n arrangements with HKAS.  
  
PAKISTAN
 
 
1. The Secretariat Report (para 14) states that the global financial crisis has prompted the 
decision "to revisit the Government's role in pr omoting economic development."  Could Hong Kong, 
China explain its strategy as to how it plans to re visit the Government's role in promoting economic 
development?  
Answer  
Amidst the global financial crisis struck in late  2008, the Government established the Task Force on 
Economic Challenges (TFEC), chaired by the Chief E xecutive.  Ten individuals from different sectors 
joined TFEC as members.  In the earlier me etings, TFEC concentrated on formulating some 
immediate measures to stabilise the economy and to boost employment.  TFEC then turned its focus 
on Hong Kong, China's medium and long-term economic  growth prospects.  In this context, TFEC 
recommended the development of six industries where Hong Kong, China enjoys clear advantages 
(The six industries are education services, medical services, testing and certification, environmental industries, innovation and technology, and cultu ral and creative industries).  The Government 
accepted the TFEC recommendations and is gradually  implementing the relevant measures.  The 
Government’s strategy is to remo ve barriers to these industries and help them tap into new markets.  
This is a long-term strategy to steer Hong Ko ng, China towards a diversified and high value-added 
economy.   
 2. Para 17 of the Secretariat Report (Trade Policies and Practices by Measure) states that the 
authorities are willing to negotiate an increase of  bindings under the Doha Development Agenda. 
Could Hong Kong, China explain, preferably in quantitative terms, as to what extent it is willing to negotiate the stated increase and in what timeframe?   
Answer
 
Hong Kong, China looks forward to substantial reduc tion and elimination of tariffs by WTO Members 
under the DDA negotiations.  We support a simple Sw iss formula with two ambitious coefficients to 
effectively tackle tariff peaks, high tariffs and tar iff escalation.  We also support voluntary sectoral 
initiatives to achieve tariff elimination/harmoniza tion over and above what the formula modality 
would achieve.  
Nevertheless, the different components of the non-agr icultural market access (NAMA) deal could not 
be considered in isolation.  The overall balance a cross formulas and flexibilities, sectorals, non-tariff 
barriers, country-specific flexibilities and preference ero sion has to be considered.  As the NAMA 
negotiations are still on-going, it is difficult at this stage to predic t the overall situation (including 
binding coverage) of Hong Kong, China’s tariff re gime after implementation of the negotiation 
results, and to consider binding additional tariff lines and the timing for doing so. 
 
3. Hong Kong, China has no laws or regulations  governing anti-dumping, countervailing, or 
safeguard measures, nor has it ever applied such measures. However, at the same time Hong Kong, 
China is subject to several AD measures from othe r Members. How does Hong Kong, China visualize 
its response to this situation, and does it have a ny plans of enacting/invoking trade remedy laws?   
Answer
 
Hong Kong, China is not an anti-dumping user.  While  we respect that some Members may resort to 
WTO trade remedy measures, we believe that Members should introduce/maintain such measures  WT/TPR/M/241/Add.1 
 Page 81 
 
 
  only in fully justified conditions and in compliance with WTO rules.   Hong Kong, China has no plan 
of enacting trade remedy laws. 
 
 
NEW ZEALAND  
 
REPORT BY HONG KONG, CHINA 
 II ECONOMIC AND TRADE ENVIRONMENT (A) MACROECONOMIC SITUATION 
(e) Outlook  
WT/TPR/G/241, page 9, para 18  The report mentions deepening economic relations wi th mainland China and specific developments in 
relation to the Pearl River Delta, such as integrat ed transport infrastructure.  Can Hong Kong 
elaborate on the policy of Pearl River Delta integra tion, including the time frame and what Pearl River 
Delta integration means practically for H ong Kong-based traders and service providers?  
 
Answer
 
Since 1978, China's economic reform and open-d oor policies have created new opportunities for 
Hong Kong, China-based traders and service prov iders.  Since then, Hong Kong, China has 
participated extensively in the economic development of Mainland of China.  Hong Kong, China acts 
as a ‘gateway to the world’ for Mainland busin esses. Hong Kong, China has international know-how 
and experience, and provides Mainland companies with  access to market intellig ence, while we also 
share linguistic and cultural affinity with the Main land.  Mainland companies can take advantage of 
our first-class business infrastructure, free flow of goods and information, liquid capital markets and 
strong regulatory environment.  With the Mainland 's "Going Out" policy, enterprises can leverage 
Hong Kong, China’s well-established legal system, international diversity, professional institutions, 
world-class reputation and high calibre of market pl ayers.  Hong Kong, China is the largest external 
investor in Mainland, accounting for US$396 billion at end-2009 – 41% of Mainland's total realised 
direct investment.  Particularly in the Pearl River Delta (PRD) region – there are now over 
100,000 Hong Kong, China enterprises operati ng in the PRD region, employing over 
10 million people.    Along with the relocation of Hong Kong, China's manufacturing sector in the Pearl River Delta (PRD), Hong Kong, China has developed into a service hub over the past three decades, aiming at 
providing business services to the PRD and other regions.  In particular, four key industries of 
Hong Kong, China, namely, trading and logis tics, finance, tourism, producer and professional 
services have been benefiting from the integrati on with the PRD, based on their comparative 
advantages.  
 
− Trading and logistics services accounted for 25.9% of Hong Kong, China’s GDP in 
2008, the largest sector in Hong Kong, Ch ina economy.  Hong Kong, China is an 
important entrepot of the Mainland.  In 200 9, re-exports of Mainland-originated goods 
through Hong Kong, China to the rest of th e world and Hong Kong, China's re-exports 
to the Mainland accounted for 90.4% of H ong Kong, China's total value of re-exports. 
Among these trade flows, around 70-80% are either to or from the PRD. 
 
− Financial services recorded the fastest growth  among major industries in Hong Kong, 
China in the last decade, with the share of GDP rising from 9.8% in 1998 to 16.1% in 2008.  As a major manufacturing base of the Mainland, the PRD generates strong WT/TPR/M/241/Add.1 
Page 82  
 
  demand for Hong Kong, China’s financial services.  By the end of September 2010, a 
total of 87 Guangdong-based companies have been listed in Hong Kong Exchanges and Clearing Ltd.  Moreover, 13 Hong Kong, China’s commercial banks have set up 270 branches in the Mainland, with most of them located in the PRD. 
 
− Inbound tourism grew by 13.4% per annum in terms of value added over the five years 
from 2004 to 2008.  The main impetus of growth  came from visitors from the Mainland 
of China, benefited from "Individual Visit Scheme" under the Mainland and 
Hong Kong Closer Economic Partnership Arrangement.  Around 60% of Hong Kong, 
China’s inbound visitors came from the Mainland, reaching 18.0 million in 2009. 
Among these visitors from the Mainland, 76 % are from the Guangdong province.  
 
− Many types of producer and professional  services in Hong Kong, China expanded 
rapidly in the past decades. The rapi d expansion of producer and professional services 
in Hong Kong, China is clo sely linked to the expansion of  the manufacturing activities 
of Hong Kong, China enterprises off-shore, particularly in the PRD. Given the close 
economic relations between Hong Kong, Ch ina and the PRD, there is no doubt that 
further integration with the PRD would prov ide greater scope for service provision by 
Hong Kong, China service providers in the four  key industries, as well as the other 
service sectors on the way forward. 
 
(C) MONETARY POLICY 
 
WT/TPR/G/241, page 9, para 23  The report notes HKC's objective to maintain currency st ability, defined in terms of the exchange rate 
against the U.S. dollar, at around HK$7.80 to US$1.  Given the decline in the U.S. dollar this is 
leading to more stimulatory economic conditions in  the Hong Kong economy.  What challenges is this 
creating for monetary policy and does HKC have any plans to review this rate or change this 
definition of stability in the future?    
Answer
 
The HKSAR Government is fully committed to ma intaining the Linked Exchange Rate System 
("LERS"), and has no intention of changing the LERS.   The LERS is the cornerstone of Hong Kong, 
China's monetary and financial stability, and it has b een well tested through economic cycles.  Given 
the open and externally-oriented nature of Hong  Kong, China's economy and its status as an 
international financial centre, maintaining exchange rate stability against the U.S. dollar remains the 
most appropriate monetary policy for Hong Kong, China. 
 The easy monetary conditions of Hong Kong, China, wh ich is caused by capital inflows, low interest 
rates and a weaker US dollar, have increased the ri sk of asset price bubble.  Under the currency 
board system, there is no room for the use of moneta ry policies to address asset price pressure.  As 
the banking supervisor, the Hong Kong Monetary Aut hority has introduced prudential measures, such 
as tighter underwriting standards for residential mort gage loans, to strengthen the resilience of the 
banking system and the broader economy to asset price volatilities.   
 
III  TRADE POLICY DEVELOPMENT 
(C) REGIONAL TRADE AGREEMENTS 
(a) Mainland and Hong Kong Closer Econ omic Partnership Arrangement (CEPA) 
 
WT/TPR/G/241, page 13, para 40   WT/TPR/M/241/Add.1 
 Page 83 
 
 
  The report notes that the CEPA has been expanded periodically, and currently includes 
seven supplements.  Are there plans for further negot iations between the parties to further expand the 
scope and content of the agreement?    
Answer
 
CEPA provides that the two sides will broaden and  enrich the content of the CEPA through 
continuous and further reciprocal liberalisation be tween them.  We will continue to explore further 
development of CEPA where appropriate.  
 
 
IV  SECTORAL DEVELOPMENTS 
(A) DEVELOPMENTS IN TRADE IN GOODS (d) Wine and Related Business 
 
WT/TPR/G/241, page 16, para 56 
 
The report notes the growth in wine trading in HKC following HKC’s exemption on wine, beer and 
all other alcoholic beverages with  an alcoholic strength not more than 30%.  Does HKC have any 
plans to expand this exemption to other alcoholic beverages of alcoholic strength greater than 30%? 
 
Answer
 
The objective of eliminating excise duty on wine, b eer and all other alcoholic beverages except spirits 
was to further develop Hong Kong, China's wine tr ading and distribution businesses and create more 
employment opportunities.  For public health reas on, it is considered necessary to maintain a 
reasonably high duty level for spirits to discourage excessive drinking.    
WT/TPR/G/241, page 16, para 57  
The report notes growth in wine auctions since the wine duty exemption.  How else will wine-related 
business grow as HKC develops as a regional wine hub?  What measures has it taken to facilitate 
entry of wine into mainland China?   
Answer
 
Riding on growing demand for wine across Asia (particularly in the Mainland of China), market 
response since our elimination of wine duties in Fe bruary 2008 has been positive.  Many wine-related 
companies have set up or expanded their businesses in Hong Kong, China, covering areas including 
trading, storage, retailing and so on.  Benefits ha ve also been brought to related economic activities 
such as tourism, catering and hospitality , exhibitions as well as brand promotion. 
 
To help the traders tap the business opportunities in the region, we have also been pursuing 
supportive measures, covering customs facilitation,  trade and investment promotion, manpower 
training and education, wine st orage certification scheme, combating counterfeits and so on.  We 
have also signed wine promotion co-operati on agreements with more than 10 wine-producing 
countries/regions. 
 
Wine-related promotional events in Hong Kong, China become important.  The Hong Kong Trade 
Development Council has organized International Wine & Spirits Fair since 2008, with growing size 
each year.  The number of exh ibitors reached 680 this year.  The Hong Kong Tourism Board 
organized its inaugural Wine and Dine Festival in 2009, with as many as 110,000 visitors this year.  
Hong Kong, China stands ready to provide a platfo rm to help showcase quality wines and gourmet to 
Asian consumers, including the millions of Mainl and tourists and other travellers who visit Hong 
Kong, China each year.  
 WT/TPR/M/241/Add.1 
Page 84  
 
  REPORT BY THE SECRETARIAT 
 
III TRADE POLICIES AND PRACTICES BY MEASURE 
(2) M
EASURES DIRECTLY AFFECTING IMPORTS  
(x) Standards and other technical requirements  
WT/TPR/S/241, page 36, para 59 
 
The report notes that the introduction of nutritiona l labelling requirements has been burdensome for 
some businesses.  Has Hong Kong seen other impacts such as the attrition and de-listing of products 
thereby reducing the range of food products available in Hong Kong?  
 
Answer
 
The Nutrition Labelling Scheme (the Scheme) fo r prepackaged food under the Food and Drugs 
(Composition and Labelling) (Amendment: Requirem ents for Nutrition Labelling and Nutrition 
Claim) Regulation 2008 took effect on 1 July 2010 after a grace period of about two years. 
 The Scheme is in line with international standards.  In formulating the Scheme, we have taken into 
consideration the principles adopted by the Codex Alimentarius Commission (Codex), local health 
and disease patterns, overseas regimes, impact on the f ood trade and its implicat ions on food choice. 
 
The Scheme aims to assist consumers in making informed food choices, to regulate misleading or deceptive labels and nutrition claims, and to enc ourage food producers to apply sound nutrition 
principles in the formulation of foods.  
In particular, the Scheme has included a Small Vo lume Exemption (SVE) Scheme for food products 
with annual sales volume of 30 000 units or below.  With small volume exemption, many ethnic food, 
organic food, or niche food products that are mo stly imported or manufactured in small volume 
would be exempted from the nutrition labelling requirem ents.  In addition, we will be able to cater for 
the staging of food fair and trade promotion events held usually for market testing purpose.  The SVE 
application fee is calculated on a full cost recovery basis. 
 
We note that the SVE scheme is well utilized by the trade.  We have already approved over 30 000 
applications of which 47% relate to Japanese products, 10% relate to US products, 9% relate to UK 
products, with products from New Ze aland taking up 2% of the applications. 
 
Based on our observations and the feedback obtained fr om our trade contacts, there has been no 
undue impact on consumer choices. This is further s upported by the fact that three major food fairs 
were held successfully in mid-August 2010 with a steady number of exhibitors bringing in a large 
number of new prepackaged food products. 
 
IV  TRADE POLICIES BY SECTOR 
(5)
  S ERVICES  
(vi)  Development of new industries 
 
WT/TPR/S/241, page 86, para 136  
 
The report notes that the Film Development Fund a nd Film Guarantee Fund support film projects and 
help films obtain loans.  Can these film funds be accessed by foreign film producers with their HKC 
film industry partners for the co-production of films?   WT/TPR/M/241/Add.1 
 Page 85 
 
 
  Answer  
One of the eligibility criteria for the Film Development Fund (FDF) and the Film Guarantee Fund 
(FGF) is that the applicant must be a film pr oduction company formed and registered under the 
Companies Ordinance (Cap.32).  Provided that other relevant eligibility criteria are met, foreign film 
producers can access these film funds by pairing up with their film industry partners in Hong Kong, 
China for co-production of films, whereby the latter can assume the role as applicants and the former 
as financiers.  Details about the FDF and FGF can be found at www.createhk.gov.hk. 
  
THAILAND
 
 
THE REPORT BY THE SECRETARIAT (WT/TPR/S/241)  
 
IV. TRADE POLICIES BY SECTOR  (2) A
GRICULTURE AND FISHERIES  
(ii) Rice  
Page 57, Paragraph 13 
 
13. With the liberalization of the Rice Control Scheme in 2003, the HKSAR Government no 
longer maintains quantitative restrictions on rice im ports.  However, imports and exports remain 
subject to licensing requirements, and there is a compulsory reserve-stock requirement for rice 
imports for local consumption.  Any business may register as a stockholder to import rice for the 
Hong Kong, China market.  While import transac tions are based on comme rcial considerations, 
stockholders are required to make undertakings re garding import volumes on a quarterly basis, and 
are required to import those quantities within the period concerned (import undertaking arrangement).   
 
- Could Hong Kong, China please explain more on the aspects of the Rice Control Scheme 
such as import licensing requirements, a compulsory reserve-stock requirement for rice imports for 
local consumption, and import undertaking arrangeme nt (import volumes on a quarterly basis and the 
period concerned for importing rice)?   
Answer
 
Under the Reserved Comm odities Ordinance (Cap. 296) the HK SAR Government operates the Rice 
Control Scheme (RCS) to ensure a stable supply of  rice and to keep a rese rve stock sufficient for 
consumption by the population for a reasonable period to cater for emergencies or any short term shortage of supply.  Key control arrangements of the RCS are as follows 
 
(i) Import Licensing Requirements:  
Licensing requirements for rice is an integral part of  the Rice Control Scheme, which is essential in 
monitoring the supply and stock of rice, in particul ar the fulfilment of the reserve stock requirement 
by registered rice stockholders, th ereby maintaining a stable supply of rice for local consumption.  In 
general, all imports of rice into Hong Kong, Chi na must be covered by import licences.  Applications 
for import licence have to be lodged with the Trade  and Industry Department of Hong Kong, China.  
Normally, the processing of an import licence app lication is completed in one working day. 
(ii) Reserve Stock 
A reserve stock at a level sufficient for consumpti on for about 15 days by the local population of Hong 
Kong, China is maintained at all times to cater for em ergencies or any short term  shortage of supply.  WT/TPR/M/241/Add.1 
Page 86  
 
  It is jointly kept by all registered stockholders principally in proportion to their respective import 
quantity out of the total imports of Hong Kong, China in the import period.  A registered rice stockholder is required to maintain his required level of reserve stock at all times. 
 
(iii) Import Undertaking 
To ensure a stable supply of rice, each registered rice stockholder shall before the commencement of 
each import period (i.e. on a quarterly basis) give an  undertaking to import a specific quantity of rice 
(exclusive of his reserve stock) for that import peri od.  A stockholder is required to import in full, 
within the import period concerned, the exact quantity t hat he has so undertaken to import.  He may, 
however, apply for approval to revise his undertaken import quantity once during each import period, 
by no more than 5% of the quantity he has originally undertaken. 
 
Page 57, Paragraph 14  
 
14. Under the Reserved Commodities Ordinance (Cap 296), the Government continues to 
maintain a reserve-stock requirement of about  13,500 tonnes, adequate for about 15 days' 
consumption, with the objective of ensuring a stable supply of rice and mitigating public concerns in 
case of unexpected shortages.  The reserve stoc ks are shared among all registered importers 
proportionate to their import volumes.  Violations  of the law are liable to penalties of HK$100,000 
and imprisonment of two years.  Under the subsidiary legislation,  the HKSAR Government has the 
authority in case of an emergency or  a short-term shortage of supply, inter alia , to direct stockholders 
to release reserve stocks to the market or import mo re rice (on top of the im port undertakings), and to 
fix maximum wholesale prices.  
- Could Hong Kong, China please explain more  on the sharing of reserve stocks among 
registered importers?   
 
Answer
 
The current reserve stock level of rice of Hong Kong, Ch ina is sufficient for 15 days’ consumption by 
the local population.  This stock is jointly kept by all registered st ockholders principally in proportion 
to their respective import quantity out of the total impor ts of Hong Kong, China in the import period.  
A stockholder is required to maintain his required level of reserve stock at all times. 
 
- Could Hong Kong, China please give some ex amples regarding the actions which can be 
deemed violations of the law?   Answer
 
Rice is scheduled as a reserved commodity under th e Reserved Commodities Ordinance (Cap. 296).  
Any person who contravenes provisions in the Reserved Commodities Ordinance and its subsidiary 
regulations commits an offence and is liable on c onviction to a maximum penalty of HK$100,000 and 
imprisonment for two years. The control measures instituted under the Rice Control Scheme (RCS) 
are based on the Ordinance and its subsidiary regulations.    
Some of the major violations under the RCS are set out below: 
  (a) import into / export from Hong Kong, China any rice without an import / export 
licence issued by the Director-General of Trade and Industry; 
 (b) failure by a registered stockholder of  rice to maintain at all times during his 
registration the quantity of reserve stock of  rice specified in his "Certificate of 
Registration as a Stockholder of Rice". 
 
  WT/TPR/M/241/Add.1 
 Page 87 
 
 
  ADDITIONAL QUESTIONS FROM THAILAND  
 
The Report by the Secretariat (WT/TPR/S/241)  
 
III. TRADE POLICIES AND PRACTICES BY MEASURE  
(2) M EASURES AFFECTING PRODUCTION AND TRADE  
(vii) Intellectual property rights 
(a) Legislation 
 
Page 50-51, Paragraph 110   
 
110. A number of amendments were made to the Copyright Ordinance in 2007 and 2009 
(Table AIII.7);  and in December 2006, the Governme nt released a consultation document to review 
the legislative framework for copy right protection in the digital environment.  After considering 
opinions received from the public, the Government issu ed its preliminary proposals in April 2008.  In 
November 2009, the Government issued revised proposals, introducing, inter alia , a right of 
communication covering all modes of electronic tran smission for copyrights, a statutory limitation of 
the liability regime for online services providers in dealing with online piracy, and additional factors 
for the Court to consider when awarding additi onal damages.  It also introduced proposals for 
criminal sanctions against unauthorized communica tion of copyright works to the public, if the 
communication is for business profit, or where it affects prejudicially the copyright owners.  The 
Government is currently engaged in further discu ssions with the public to build consensus on the 
details of the revised proposals, with a view to submitting the amendment legislation to the 
Legislative Council in the 2010-11 legislative session.    
- Paragraph 110 states that Hong Kong, China is  currently engaged in discussion with the 
public to build consensus on the details of the amendment of the Copyright Ordinance.  Since 
Thailand is currently also undertaking a process to amend our Copyright Act, could Hong Kong, 
China further elaborate for our benefit on the am endment and the public hearing process as well as the 
time frame envisaged for the amendment to be implemented?  Answer
 
To meet the challenges posed by advances in  technology, the HKSAR Government issued a 
consultation document in December 2006 to seek public  views on whether and if so how our copyright 
protection regime should be strengthened in the digital era.  
 
The consultation document is available to a ll members of the public through different channels 
including the Internet.  The public consultation exercise ended in April 2007. We received over 600 
submissions.  Having regard to the views received,  the HKSAR Government released in April 2008 a 
package of preliminary proposals for further public engagement. We held two public forums in July 
2008 and received over 60 submissions at the end of  the public consultation period in August 2008.  
 
Having examined the views received and taken referen ce of the experience and practices in overseas 
jurisdictions, we issued a set of refined proposal s in November 2009.  We held two public forums 
in August 2010 to provide a platform for the co mmunity to exchange views on our refined legislative 
proposals.  Our schedule is to introduce an amendment bill to our legislature in 2011. 
 
Throughout this process, we have undertaken a mu lti-pronged approach to engage our legislature, 
stakeholders and members of the public.  After i ssuing the preliminary and refined proposals, we 
briefed the Panel on Commerce and Industry of our  legislature on the details and discussed our 
proposals with members of the Panel as well as st akeholders who had been invited to attend these 
meetings.  In addition, we have consulted stake holders through a tripartite forum and other individual 
meetings.  The Tripartite Forum comprises represent atives of right-holders in the content industry WT/TPR/M/241/Add.1 
Page 88  
 
  (e.g. Motion Picture Association), online service pr oviders (e.g. Internet Professionals Association), 
and user groups (e.g. Concern Group of the Educati on Sector on Copyright Law).  To engage the 
wider public, we have also placed newspaper advertisements, put up banners on government 
websites, issued press releases, or ganised large scale public forums, et c.  In addition, the public have 
expressed their views directly through written subm issions by emails and letters.  We have also 
closely monitored views and comments on the proposals expressed through the media and on the 
Internet.  This process is still ongoing. 
 
Details of the refined proposals are set out below. 
 
First, we have proposed to introduce a right of co mmunication for copyright owner which is intended 
to be technology neutral and cover all modes of  electronic transmission, including certain existing 
exclusive rights under the Copyright Ordinance, i.e.    (a) the broadcasting of the work;  
 (b) the inclusion of the work in cable programme service;  and  
 (c) the making available of the work to th e public, by wire and wireless means, in such a 
way that members of the public in Hong Kong, China or elsewhere may access the 
work from a place and at a time individually chosen by them, such as the making available of works through the Internet.   
 
It will also encompass any other kinds of electronic transmission that may develop in future as a 
result of advances in technology.  
 
The new proposed right of communication will be available to all kinds of works protected by 
copyright under the Copyright Ordinance in Hong Kong, China namely – 
 
 (a) literary works;  (b) dramatic works;  (c) artistic works;  (d) musical works;  (e) sound recordings; 
 (f) broadcasts; 
 (g) cable programmes;  (h) films inclusive of their sound tracks; and  (i) typographical arrangement of published ed itions of literary, dramatic or musical 
works. 
 
Consequently, we have also proposed to intr oduce criminal sanctions against unauthorized 
communication of copyright works initiated by any person who –    (a) engages in a trade or business that consis ts of communicating copyright works to the 
public through electronic transmissions, without  authorization, in the course of a 
trade or business that consists of comm unicating works to the public for profit or 
reward (be it profit or reward obtained (i) di rectly from subscribers e.g. in the form 
of a fee, or (ii) indirectly through ad vertisements e.g. revenue generated from 
advertisements placed on a website from  which unauthorized communication could 
be obtained);  or   
 (b) communicates infringing copies to the p ublic otherwise than for trade or business to 
such extent as to affect prej udicially the copyright owner. 
 Second, there is a proposed statutory limitation of  the liability regime for online services providers 
(OSPs) in dealing with online piracy.  The propo sed amendments aim to provide incentives (and legal  WT/TPR/M/241/Add.1 
 Page 89 
 
 
  certainty) for OSPs to cooperate with the right s owners in the fight against online piracy. The 
proposed statutory framework will give OSPs the as surance that compliance with certain conditions 
(e.g. they do not receive a financial benefit directly attributable to the infringement; take reasonable 
steps to deal with the infringement when being no tified of the infringing activities, etc.) would qualify 
them for limitation of liability (mainly pecunia ry liability) for copyright infringements occurring on 
their service platforms.  There will also be a Code of Practice which sets out the conduct expected of 
OSPs when notified of infringing activities occurri ng on their service platforms.  OSPs who observe 
the Code would be deemed to have also complied with the conditions.  The Code will cover measures 
including the "Notice and Notice" and "Notice and Takedown" systems now practised in the UK and US.
10 
 
The limitation of liability regime will be available to  any OSP who, by means of electronics equipment 
and /or network, provides or operates facilities for any online services, including but not limited to 
the following – 
 
 (a) offers transmission, routing, or provisio n of connection for or access to digital online 
communications, between or among points sp ecified by a user, of material of the 
user's choosing; 
 (b) hosts material that can be accessed by a user;  (c) stores material in his system or networ k temporarily as an automatic response to the 
request of another person without modifying the material; 
 (d) refers or links users to an online location by using info rmation location tools;  or 
 (e) provides application-based services such as social networking systems to users. 
 Third, recognizing the practical difficulties encountered  by the rights owners, particularly in online 
piracy cases, to prove and quantify their actual loss when seeking an award of damages, we will 
propose legislative amendments to give more guidan ce to the Court for awarding additional damages 
in an infringement claim (e.g. the possible widespre ad circulation of infringing copies as a result of 
the infringement) in addition to factors already mentioned in our Copyright Ordinance (i.e. the 
flagrancy of the infringement; any benefit accruing to the defendant by reason of the infringement; 
and the completeness, accuracy and reliability of th e defendant’s business accounts and records).  All 
proposed and existing factors in the legislation rem ain to be non-exhaustive, i.e. the Court may still 
take into account all the circumstances as appropr iate when determining whether additional damages 
ought to be awarded, and if so, the quantum of su ch damages.  The objective is to facilitate a 
copyright owner in an appropriate case to obtai n an award of damages plus additional damages in a 
total amount that is more commensurate with th e prejudice, injury and/or loss suffered by him. 
 
Fourthly, we have proposed to introduce a me dia shifting exception limited to sound recordings. 
Under the recommended exception, the owner of a non-infringing copy of a sound recording may 
make one copy of that recording in each device he la wfully owns for his personal and domestic use.   
It should be noted that other types of copyright works (such as films or public ations) are not included 
in this exception.  
Finally, we have proposed to introduce an exception for temporary reproduction of copyright works 
by OSPs, which was transient  or incidental in nature and technically required for the transmission 
process to function efficiently.  
                                                     
 
10 Under a "Notice and Notice" system, OSPs are requir ed to forward to users or subscribers notices of 
claimed infringements that they recei ve from the right holders.  Under a "Notice and Takedown" system, OSPs 
are required, upon receipt of a notice from the copyright owner concerned, to  (a) take down or disable access to 
materials identified to be infringing;  and (b) where applicable, notify the alleged infringer who makes the 
materials available. WT/TPR/M/241/Add.1 
Page 90  
 
  More details on the legislative proposals can be found at: http://www.legco.gov.hk/yr09-10/ 
english/panels/ci/papers/ci1117cb1-341-8-e.pdf. 
 
 
COLOMBIA
 
 
Report by the Secretariat (WT/TPR/S/241) 
 
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 
(2) G ENERAL INSTITUTIONAL , LEGAL AND POLICY FRAMEWORK  
 
 According to paragraph 2 of the Report by the Secretariat, "Hong Kong, China became a 
Special Administrative Region of the People's Republic  of China (HKSAR) on 1 July 1997.  Under its 
'mini-constitution', the Basic Law, the HKSAR enjo ys a high degree of autonomy in economic, trade, 
and monetary matters in accordance with the principl e of 'one country, two systems'.  This includes 
the free movement of goods and capital, a free port, and separate customs terri tory.  Under the Basic 
Law, Hong Kong, China has autonomy to conclude and implement RTAs with foreign states (both 
WTO and non-WTO Members).  Multilateral agreemen ts entered into by the Central People's 
Government of China can be applied to th e HKSAR.  At end-June 2010, approximately 
240 multilateral agreements were applicable to the HKSAR, covering a broad range of matters, 
including customs, civil aviation, shipping, health, and intellectual property." 
  In view of the free movement of goods and cap ital, a free port, a separ ate customs territory 
and Hong Kong, China's autonomy to conclude and im plement regional trade agreements with foreign 
States (both WTO and non-WTO Members), coul d Hong Kong please explain how the multilateral 
agreements concluded by the Central Government of  the People's Republic of China can apply to the 
Special Administrative Region of Hong Kong? Ca n Hong Kong export goods produced in China with 
Hong Kong origin?   
Answer
 
Under Article 153(1) of the Basic Law, application to the HKSAR of multilateral agreements to which 
the People’s Republic of China is a party shall be  decided by the Central People's Government, in 
accordance with the circumstan ces and needs of the HKSAR, and after seeking the views of the 
HKSAR Government.   
 
Hong Kong, China maintains a origin certificati on system in which goods claiming to be of 
Hong Kong origin must be the natural products of  Hong Kong, China which have been wholly grown 
or mined in Hong Kong, China or produced in Ho ng Kong, China from domestic materials, or the 
products have undergone manufacturing processes  in Hong Kong, China that have changed 
permanently and substantially the shape, nature, fo rm or utility of the bas ic materials used in 
manufacture.  Goods produced in places outside Hong Kong, China, including the Mainland of 
China, do not satisfy the above criteria and therefore cannot be exported as hav ing Hong Kong origin 
status. 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(2) M EASURES DIRECTLY AFFECTING IMPORTS  
(i) Customs procedures 
 
 Paragraph 14 of the Report by the Secretar iat states that "[t]he HKSAR Government is 
considering introducing an 'authori zed economic operator (AEO)' framewo rk to facilitate trade.  The 
C&ED is implementing an AEO pilot programme, star ting in June 2010, tentatively for 12 months.  
The AEO programme is a voluntary certification sc heme open to all local companies involved in 
international supply chain activities."  WT/TPR/M/241/Add.1 
 Page 91 
 
 
   
 Hong Kong, China, then, is implementing an AEO pilot programme starting in June 2010.  
What is your experience in implementing this schem e?  Have you thought of r ecognizing the AEOs of 
other countries?  If so, what measures would be considered?  
 
Answer  
Hong Kong Customs launched the AEO Pilot Progra mme in June 2010 to test the AEO accreditation 
mechanism for twelve months.  Prior to the roll- out of the Pilot, Hong Kong Customs had consulted 
the trade and made reference to th e best practices of other Customs administrations in devising the 
programme framework.  The Pilot offers two tiers of AEO with a view to coping with the local trading 
environment.  The measures adopted in the Pilo t are in compliance with the standards under the 
WCO SAFE Framework of Standard.   Dedicated teams have been set up and trained to process 
applications, including on-site validation with the app licants.  The Pilot has been running smoothly so 
far, and we have seen growing support from the trad ers in the supply chain.  Upon completion of the 
Pilot, Hong Kong Customs will conduct a review and plan the way forward in regard to the full 
implementation of the AEO programme, including th e feasibility of mutual recognition of AEOs with 
other Customs administrations. 
 
(vi) Contingency measures 
 
 According to paragraph 26 of the Report by  the Secretariat, "Hong Kong, China has no laws 
or regulations governing anti-dumping,  countervailing, or safeguard measures, nor has it ever applied 
such measures."  
 If a particular domestic industry requests an i nvestigation with a view to applying such 
measures, what legislation would appl y?  Continental Chinese legislation? 
 
Answer
 
Being a staunch supporter of free trade, Hong Ko ng, China has never initiated any trade remedies 
and we do not see the need to resort to such meas ures.  Therefore we have no domestic laws or 
regulations on anti-dumping, countervailing and safeguard measures.  Neither has Hong Kong, 
China established a designated authority to initiate and conduct relevant investigations.   
 (3) M
EASURES DIRECTLY AFFECTING EXPORTS  
(iv) Export prohibitions, licensing, and restrictions (c) Export controls on textiles and clothing 
  According to paragraph 72 of the Report by the Secretariat, "Hong Kong, China maintains a 
textiles control system to ensure origin complian ce of textiles products claiming HKSAR origin so as 
to strengthen the confidence of its trading partners .  Under the Import and Export Ordinance and its 
subsidiary regulations, all imports  and exports of textiles and cl othing products, unless exempted, 
require import or export licences, or notifications."  
 When Hong Kong, China says that it maintains a control system on exports of textiles to 
ensure that textiles products claiming Hong Kong, Chin a origin do in fact originate in Hong Kong, 
China, what does this control consist of, and what  kind of cooperation is there with the customs 
authorities of other countries that need to carry out this type of verification?   
Answer
 
The Textiles Control System is a law-based system.  It is built upon an import/export licensing system 
and an origin certification system.  Vigorous enforce ment is taken to forestall origin abuses and any 
textiles malpractices where appropriate.  WT/TPR/M/241/Add.1 
Page 92  
 
  Under the laws of Hong Kong, all textiles export from and import into Hong Kong, China (other than 
a few exempted items
11) are required to be covered by valid licen ces or textiles notifications lodged by 
textiles traders registered under the Textiles Trader Registration Scheme  (TTRS).  Different licensing 
requirements apply to textiles exports/imports involv ing "sensitive" and "non-sensitive" markets.  The 
current textiles control arrangements are summarized below: 
 
 (a) all textiles imports from and exports to th e Mainland of China, and exports to the US 
(classified as involving “sensitive markets” ), shall be covered by either consignment-
specific import/export licences, or notific ations lodged by registered traders under 
TTRS; 
 (b) all other textiles imports and exports (c lassified as involving "non-sensitive markets") 
shall be covered by either consignment specific import/export licences, or comprehensive import/export licences conven iently available for covering multiple 
shipments in a year; and 
 (c) manufacturers producing cut-and-sewn garme nts intended for export to the US are 
required to lodge Production Notification (PN)  on the day of or within three working 
days prior to the commencement of the ma jor assembly work in Hong Kong, China.  
The PN arrangement enables the conduct of real time checks to ensure that the origin 
conferring processes are carried out in Hong Kong, China as claimed. 
 
Another centrepiece of our textiles control system is a credible and sound origin certification system.  
It ensures origin compliance of textiles (and other products) claiming Hong Kong origin and 
facilitates their customs clearance overseas.  Our certification of orig in system follows internationally 
accepted practices.  Only registered manufacturers with verified manufacturing capacity to perform 
the origin-conferring processes may apply for Certificates of Hong Kong Origin. 
 
Hong Kong, China’s textiles control system is vigorously enforced by the Customs and Excise 
Department through an in tegrated, targeted and factory-ba sed approach.  A multi-tiered checking 
system is in place under which key enforcement actions include c onsignment/production checks, pre-
registration factory inspections and thereafter p eriodic re-inspections, as well as blitz checks at 
boundary control points, etc.  If certain fact ories are found engaging in export activities not 
commensurate with their production capacity, intens ive checking or investigation will be conducted 
against them.  The Customs and Excise Department also works in cooperation with the Customs 
authorities of other countries through exchange of inte lligence in verifying the origin of suspected 
textiles and clothing shipments exported under the cover of a Hong Kong export licence, notification, 
and/or a Certificate of Hong Kong Origin.  The prim ary objectives of the enforcement actions are to 
uphold the integrity of the textiles control system, as well as to prevent any violation of origin 
compliance and any circumvention of licensing controls on textiles products.  
(4) M
EASURES AFFECTING PRODUCTION AND TRADE  
(i) Taxation and tax incentives 
  According to paragraph 79 of the Report by the S ecretariat, "[p]rofits tax and salaries tax are 
the two major direct taxes in Hong Kong, China.  All business taxpayers (irrespective of their resident 
status) are subject to the same corporation or uninc orporated business tax rate fo r profits arising in or 
derived from Hong Kong, China.  In 2009-2010, two st atutory profits tax rates apply:  profits of 
corporations are taxed at 16.5%, and profits of unincorporated businesses at the standard rate of 
                                                     
 
11 Exempted items are woven or knitted fabric swatches and sample yarn imported by air and not 
exceeding 0.8m2 in size in respect of fabric swatches and 1.2 kilograms in weight in respect of each type of 
yarn; textiles articles of reasonable quantity that are impor ted or exported by an individual for his personal use 
or as a bona fide gift to another individual; and textiles ar ticles of reasonable quantity to be used by the crew or 
passengers of a vessel, aircraft, or vehicle.  WT/TPR/M/241/Add.1 
 Page 93 
 
 
  15 per cent.  Both rates were lowered by 1 percentage point in 2008-2009; according to the 
authorities, this cost the Government HK$4.4 billion a year."   To what extent has the productive sector tax incentive policy implemented by Hong Kong, China stimulated foreign direct investment in the region?  
 
Answer
 
Hong Kong, China maintains a very simple tax regim e with low tax rates, in which only specified 
types of income, namely business profits, salaries income and property income , earned territorially 
within Hong Kong, China are taxable.  The simple  tax regime, combined with exceptionally low tax 
rates, makes Hong Kong, China an attrac tive place for foreign investments.   
 According to the World Investment Report 2010 rel eased by the United Nations Conference on Trade 
and Development, Hong Kong, China was the fourth largest foreign direct investment (FDI) recipient 
in the world in 2009 and the second in Asia after the Mainland of China.  This reflects Hong Kong, China’s enduring appeal as a preferred destination for FDI. 
 
 Paragraph 85 of the Secretariat Report states th at "[t]he Government also uses tax incentives 
in an attempt to affect the allocation of resour ces in the economy, which is inconsistent with the 
principle of tax neutrality.  According to the au thorities, the tax incentives in specified areas are 
within the bounds of neutrality of the tax system , to enable Hong Kong, China to compete in the 
region on a level playing field.  For example, si nce 2008-2009, a 100% profits  tax deduction has been 
allowed in the first year of purchase for capital expe nditure on environmental protection machinery or 
plant, to encourage the use of su ch machinery or plant.  In th e 2010-2011 Budget, the Government 
proposed to accelerate the tax deductions for capital expenditure on environm ent-friendly commercial 
vehicles by allowing enterprises to have a 100% profits tax write off in the first year of purchase, with 
a view to encouraging the purchase of electric, hybrid, or other environment-friendly vehicles for business use.  Under the current tax arrangement, capital expenditure incurr ed by enterprises to 
purchase patent rights and industrial know-how is deductible under profits  tax.  The Government also 
proposed in the 2010-2011 Budget to extend the deducti on to cover registered trademarks, copyrights, 
and registered designs, so as to promote the wi der application of intellectual property and the 
development of creative industries."   Have tax incentives been granted to pr omote any productive sectors in particular? 
 
Answer
 
Most of the tax incentives (immediate write-off or  depreciation allowances as appropriate) currently 
provided by Hong Kong, China are for all compani es / individuals regardless of their business nature 
or resident status, thus helping promote the ov erall economic development of Hong Kong, China.  
Such tax incentives include those for– 
 
 (a) machinery or plant;  (b) computer hardware and software;   (c) refurbishment of business premise;  
 (d) specific environmental protection facilities; and  
 (e) purchase of patent rights and rights to know-how.   
Among the above, immediate write-off is allowe d for capital expenditure on plant and machinery 
specially related to manufacturing, and on computer hardware and software. 
  What has been the impact of the tax incentiv es on the purchase of patent rights and industrial 
know-how as regards the promotion of business sector innovation at the SME level?   WT/TPR/M/241/Add.1 
Page 94  
 
  Answer
 
The purpose of providing tax incentives on the purch ase of patent rights and industrial know-how is 
to encourage technology upgrade of all businesses.   All businesses, including SMEs, benefit from 
these tax incentives.   
 Is improved productivity taken into account when applying the tax incentives?  Answer
 
The granting of depreciation allowances or writing off on certain capital expenditure is to encourage 
the businesses to upgrade productions, protect en vironment or enhance pr oductivity by making 
capital investment. 
 
 Is the impact of the tax incentives on productive sector development measured?  
Answer
 
Hong Kong, China does not have the relevant information.  
(ii) Non-tax incentives 
(a) Small and medium-sized enterprises 
  Paragraph 88 of the Report by the Secretariat states that "[t]he Government has been 
facilitating the development of SMEs mainly throu gh three funding schemes administered by TID:  
the SME Loan Guarantee Scheme (SGS), the SM E Export Marketing Fund (EMF), and the SME 
Development Fund (SDF), together with a number of other supporting schemes". 
  What SME competitiveness-enhanced activitie s have been financed through the SME 
Development Fund?  
 
Answer
 
The SDF provides financial support to non-profit- distributing organizations, such as trade and 
industrial organizations, professional bodies and research  institutions, to implement projects which 
aim at enhancing the competitiveness of SM Es in general or in specific sectors. 
 
Since the SDF was launched in 2001 and up to en d-November 2010, it has approved 154 projects, 
involving a total Government grant of HK$168.7 million (USD 21.63 million).  Some examples are: 
projects to raise awareness of SMEs in spec ific sectors about upcoming/existing international 
standards and regulations; surveys, studies and reports  on the economic or industrial development of 
specific regions, markets or sectors; trainings, seminars and workshops to enhance SMEs’ skills and 
knowledge in specific areas; production of guide lines to help SMEs enhan ce efficiency and improve 
productivity, etc. 
 
 Does the Department of Trade and Industry have a mechanism for measuring the impact 
(cost/benefit) of the projects implemente d throughout the SME Development Fund? 
 
Answer  
TID closely monitors the implementation of the projects approved under SDF.  The applicants are 
required to submit progress reports during the project  period and final reports after the projects are 
completed.  Staff of TID will participate in some of the project activities to monitor the response and 
outcome.  The applicants also need to submit post- project evaluation reports  which should include 
quantitative results such as number of participan ts, adoption of the project results by the SME 
beneficiaries etc.  TID will then evaluate the e ffectiveness of the projects based on the reports 
submitted by the applicants, the quality of project deliverables, and the participants’ evaluations and 
feedback.    WT/TPR/M/241/Add.1 
 Page 95 
 
 
   
 According to paragraph 88 of the Secretariat Report, "[t]he Government has been facilitating 
the development of SMEs mainly through three funding schemes administered by the Trade and 
Industry Department (TID): the SME Loan Guar antee Scheme (SGS), the SME Export Marketing 
Fund (EMF), and the SME Development Fund (SDF), together with a number of other supporting 
schemes". 
  Are there any programmes that target the promotion of business partnerships?  What criteria do they use to determine the sector  and the enterprises involved? 
 
 What methodologies are being developed to  implement business partnership processes? 
 
Answer
 
TID does not have any programme that serves to pr omote business partnership specifically.  Yet many 
of the support measures provided by TID may serve to promote business partnership through the 
provision of networking and m eeting opportunities.  For example , the advisory and consultation 
services provided by Support and Consultation Cent re for SMEs give the SMEs an opportunity to 
meet with experts and experienced entrepreneurs in different area s.  For the SDF, TID also 
encourages the applicants to work in collaboration with other supporting or trade organisations to 
enhance the project coverage. 
  How is institutional coordination between th e entities managing the SME support instruments 
conducted?   
Answer
 
Many Government departmen ts and support organisations, in cluding TID, Innovation and 
Technology Commission, Create Hong Kong Offi ce, Hong Kong Trade Deve lopment Council, Hong 
Kong Export Credit Insurance Corporation, Hong Ko ng Science and Technology Parks Corporation, 
Hong Kong Productivity Council etc, are provid ing SME support measures and services in different 
areas.  All these departments and support organi sations are overseen by the policy bureau, the 
Commerce and Economic Development Bureau, whic h is responsible for formulating policies and 
coordination of the SME support measures among different parties under its purview. 
 
 What private sector incentives have been de veloped to enhance the competitiveness of the 
SMEs? 
 
Answer  
Many support measures implem ented by the HKSAR Governme nt involves private sector 
participation.  For example, the two loan guarant ee schemes under TID aim to provide incentives to 
the lending institutions in the private sector in granting loans to SMEs through the provision of 
government guarantee. 
 
(b) Innovation and technology 
 
 According to paragraph 92 of the Report by th e Secretariat, "[t]he Innovation and Technology 
Commission (ITC) was set up with the mission of sp earheading Hong Kong, China's drive to become 
a world-class, knowledge-based economy.  It formul ates and implements policies and measures to 
promote innovation and technology; operates a pplied R&D funding schemes; supports technology 
transfer and application; promotes technol ogical entrepreneurship; provides technological 
infrastructure … "   How do the business and academic circles pa rticipate in the Innovation and Technology 
Commission?  WT/TPR/M/241/Add.1 
Page 96  
 
   
Answer
 
Information on the Innovation and Technology Commission can be found at the link: http://www.itc.gov.hk/en/welcome.htm  
The business and academic sectors are central to the development of innovation and technology.  The 
Innovation and Technology Commission strives to fo ster the development through the provision of 
hardware and software support.    On the hardware side, the Hong Kong Science Park is established to offer one-stop infrastructural 
support services to technology-based companies and activities.  There are currently more than 300 
companies located in the Science Park.  With th e success of Phase 1 and Phase 2 and full occupancy 
expected in 2014, the development of Phase 3 is now underway.  Upon completion in 2016, the new 
phase can accommodate an additional 150 companies with around 4 000 research and development 
(R&D) related jobs.   
On the software side, the Innovation and Technology Fund is set up to support applied R&D.  To 
ensure optimal use of resources and the relevancy of applied R&D activity to industry needs, R&D 
Centres were set up under the Fund to drive indust ry oriented R&D in selected technology focus 
areas and to promote technology transfer to the relevant industries.   To encourage more private sector investment in R& D and their collaboration with universities/public 
research institutes, the Government launched the "R&D Cash Rebate Scheme" in April 2010.  
Companies can enjoy cash rebate equivalent to 10% of their R&D investment.  
 
 Paragraph 93 of the Secretariat Report states that " … R&D centres were set up in 2006 to promote applied R&D in six technology areas: au tomotive parts and accessories; information and 
communication technologies; logistics and supply-chain-management enabling technologies; 
nanotechnology and advanced materials; textiles and clothing; and Chinese medicines."   What were the criteria used to determine the sectors listed in the document (automotive parts 
and accessories; information and technologies; lo gistics and supply chain management-enabling 
technologies; nanotechnology and advanced material s; textiles and clothing; and Chinese medicine) 
and what were the criteria guiding the decisi on to establish R&D centres in those sectors?  
 
Answer
 
In 2004, the HKSAR Government identified 13 technology focus areas in 2004 for which R&D Centres might be set up and issued a consultation pa per to invite views of the industry and the public. 
 
In 2005, we decided to set up R&D Centres in fi ve focus areas having regard to the feedback received 
and the following criteria 
– 
 
(a) existing research capability  - the R&D Centres are expected  to work closely with local 
universities and R&D institutions. It is imperativ e that universities and R&D institutions possess 
considerable research strengths in the technology focus areas such that the R&D Centres could 
leverage on their resources and competitive edge; 
 
(b) competitive advantage  - it would be advantageous if the technology focus area is backed up 
by a strong industry base in Hong Kong, China or the Pearl River Delta such that a platform of 
commercializing the deliverables of the future R&D Centre could be provided; 
  WT/TPR/M/241/Add.1 
 Page 97 
 
 
  (c) industry needs and market potential  - there should be clear industry needs and market 
potential for the R&D deliverables under the technology focus area so as to ensure the relevance of 
our investments in the R&D Centre to industry and support for the continued operation of the Centre; 
and 
 (d) industry commitment and support
 - priority should be accorded to technology areas where 
industry players are committed to R&D activities and indicate substantive support for the operation 
of the R&D Centres. 
 
(iii) Price controls 
 
 According to Paragraph 95 of the Report by th e Secretariat, "[i]n general, the Government 
does not maintain price controls on economic activiti es.  Exceptions include price monitoring of some 
energy products, and dues for pilotage, whic h is a compulsory service in the HKSAR". 
 
 If there are no government price controls on economic activities, what consumer protection 
mechanisms are there, and how is the quality of goods and services controlled and regulated?  
 
Answer  
In Hong Kong, China, there are various pieces of legislation that seek to ensure that goods and 
services available are safe, of reasonable quality and offered on fair terms.  We also provide 
aggrieved consumers access to relevant legal remedi es.  Our consumer protection laws include the 
following − 
 
(a) the Consumer Goods Safety Ordinance , which requires manufacturers, importers and 
suppliers of consumer goods to ensure that the good s they supply for local consumption meet safety 
requirements;  (b) the Toys and Children's Products Safety Ordinance , which requires manufacturers, 
importers and suppliers of toys and children’s products to ensure that the goods they supply for local 
consumption satisfy the stipulated safety standards;  (c) the Unconscionable Contracts Ordinance , which empowers Hong Kong Courts to refuse to 
enforce or to revise unconscionable terms in consumer c ontracts for the sale of goods or supply of 
services; 
 (d) the Supply of Services (Implied Terms) Ordinance , which stipulates that a supplier of 
service is obliged to carry out the service with rea sonable care and skill and within reasonable time; 
 
(e) the Sale of Goods Ordinance , which provides that where a seller sells goods in the course of 
business, there is an implied condition that the goods  supplied are of merchantable quality and that a 
buyer has the right to reject defective goods unless he  or she has a reasonable opportunity to examine 
the goods; 
 
(f) the Trade Descriptions Ordinance , which prohibits false trade descriptions, false marks and 
misstatements in respect of goods, provided in the course of trade; and 
 (g) the Weights and Measures Ordinance , which carries provisions with respect to units and 
standards of measurement and weighing or measuring equipment used for trade and to regulate trade 
transactions regarding goods supp lied by weight or measure. 
 WT/TPR/M/241/Add.1 
Page 98  
 
  Besides, the Consumer Council, a statutory body est ablished by law, is also committed to protecting 
and promoting the interests of consumers. 
 
(vi) Competition and consumer protection policy 
(a) Competition policy  
 According to paragraph 104 of the Report by the Secretariat, "[c]urrently, competition policy 
in Hong Kong, China is regulated mainly under the Statement and the Guidelines issued by the Competition Policy Advisory Group (COMPAG) in 1998 and 2003, respectively.  COMPAG, chaired 
by the Financial Secretary, is responsible for revi ewing competition-related issues that have policy or 
systemic implications.  COMPAG issued the 'Gui deline to maintain a co mpetitive environment and 
define and tackle anti-competitive practices' in 2003 to supplement the 1998 Statement.  In addition, 
sectoral legislation for telecom and broadcasting services includes clauses aimed at preventing anti-competitive practices".  
 Since there is no competition law in Hong Kong, China, we wonder how the Competition 
Policy Advisory Group has dissuaded companie s from engaging in anti-competitive practices 
affecting the market in sectors other than telecom and broadcasting services, for which there is currently a law and a court which evaluates and penalizes anti-competitive practices.   
Answer
 
The Statement on Competition Policy promulgat ed by COMPAG in May 1998 provided an 
overarching policy framework to guide both privat e and public sector bodies to promote competition 
on a voluntary and self-discipline basis.  COMPAG  has also been giving advice to government 
bureaux and departments in reviewing policies and practices from the competition standpoint, and in 
proposing new initiatives to promote competition in  different sectors.  In addition, COMPAG has 
been monitoring complaints of anti-compe titive conduct and asking government departments 
responsible for the various sectors to look into  such complaints and where appropriate recommend 
administrative remedies. 
 
 Could it be said that for a long time, the Hong Kong, China author ities prohibited abusive 
conduct aimed at restricting or distorting competiti on only with respect to the telecommunications and 
broadcasting services sector?  If so, why?  
 
Answer  
Hong Kong, China's competition policy is to enhan ce economic efficiency and the free flow of trade 
through promoting sustainable competition to br ing benefits to both the business sector and 
consumers.  When COMPAG published the Stat ement on Competition Policy in May 1998, it was 
made clear in paragraph 9 of the Statement that “[ T]o maintain overall consis tency in the application 
of the competition policy, we provide a compreh ensive, transparent and over-arching competition 
policy framework through this Policy Statement and  reinforce this with sector-specific measures not 
limited to laws”.  In other words, the competition po licy is applicable to all sectors, not just targeting 
abusive conduct in the telecom and broadcasting services sectors. 
 
 In paragraph 105 of its Report, the Secretariat states that "the Competition Policy Advisory 
Group appointed a Competition Policy Review Comm ittee (CPRC) to review competition policy.  
The CPRC, comprising mostly non-Government stak eholders from the business, academic, consumer 
protection, and other sectors, reported to CO MPAG in June 2006.  It noted that, although 
Hong Kong, China had a free and open economy with fe w market barriers, ther e were possible cases 
of anti-competitive conduct.  It concluded that, to allow for an effective investigation of such cases 
and imposition of sanctions where appropriate, th e Government should introduce a cross-sector 
competition law and establish an independent Competition Commission."   WT/TPR/M/241/Add.1 
 Page 99 
 
 
   The authorities of Hong Kong, China submitt ed a cross-sector competition bill to the 
Legislative Council, which extends the Competition Law to all sectors of the economy.  Has the bill 
been adopted, and is it in force?   
Answer
 
A Bills Committee of our legislature has just begun the scrutiny of the Competition Bill.  Date for the 
passage of the Bill would depend on progress of the scrutiny of the Bill by the legislature. 
 
 What are the penalties provided for under the La w, following an investigation for enterprises 
that engage in anti-competitive practices?  
 
Answer  
The Competition Bill adopts a judicial enforcemen t model and empowers the Competition Tribunal, a 
superior court of record within the Judiciary, to apply a full range of remedies for contravention of a 
competition rule under the proposed Bill.  These re medies include in particular pecuniary penalties 
up to 10% of the global turnover of the undertaking( s) in breach of the competition rule for the year 
in which the contravention occurs; award of damage s to aggrieved parties; interim injunction during 
investigations or proceedings; termination or  variation of an agreement or merger; and 
disqualification orders against directors and others who have contributed to the contravention of the 
competition rule.  These remedies ar e in line with those adopted in some of the comparable overseas 
competition jurisdictions. 
 
(vii) Intellectual property rights 
(a) Legislation 
  According to paragraph 110 of the Report by th e Secretariat, "[a] number of amendments 
were made to the Copyright Ordinance in 2007 an d 2009; and in December 2006, the Government 
released a consultation document to review the le gislative framework for c opyright protection in the 
digital environment.  After considering opinions r eceived from the public, the Government issued its 
preliminary proposals in April 2008.  In November  2009, the Government issued revised proposals, 
introducing, inter alia , a right of communication covering all modes of electronic transmission for 
copyrights, a statutory limitation of the liability regi me for online services providers in dealing with 
online piracy, and additional factors for the Court to  consider when awarding additional damages.  It 
also introduced proposals for criminal sanctions against unauthorized communication of copyright 
works to the public, if the communication is for busi ness profit, or where it affects prejudicially the 
copyright owners.  The Government is currently en gaged in further discussions with the public to 
build consensus on the details of the revised prop osals, with a view to submitting the amendment 
legislation to the Legislative Council in the 2010-11 legislative session." 
  Colombia would appreciate more informati on on the legislative framework for copyright 
protection in the digital environment in Hong Kong.   
Answer
 
To meet the challenges posed by advances in  technology, the HKSAR Government issued a 
consultation document in December 2006 to seek public  views on whether and if so how our copyright 
protection regime should be strengthe ned in this digital era.  We issu ed a set of refined proposals in 
November 2009.  We intend to introduce the legislati ve amendments to the legislature in 2011.  More 
details concerning the four areas mentioned in the Report by the Secretariat are set out below – 
 
First, the proposed right of communication is intend ed to be technology neutral which will cover all 
modes of electronic transmission, including certai n existing exclusive rights under the Copyright 
Ordinance, i.e.,   WT/TPR/M/241/Add.1 
Page 100  
 
   (a) the broadcasting of the work;  
 (b) the inclusion of the work in cable programme service;  and   (c) the making available of the work to th e public, by wire and wireless means, in such a 
way that members of the public in Hong Kong, China or elsewhere may access the 
work from a place and at a time individually chosen by them, such as the making available of works through the Internet.   
 
It will also encompass any other kinds of electronic transmission that may develop in future as a 
result of advances in technology.   
The new proposed right of communication will be available to all kinds of works protected by 
copyright under the Copyright Ordinance in Hong Kong, China, namely – 
  (a) literary works; 
 (b) dramatic works; 
 (c) artistic works;  (d) musical works; 
 (e) sound recordings; 
 (f) broadcasts;  (g) cable programmes; 
 (h) films inclusive of their sound tracks; and 
 (i) typographical arrangement of published ed itions of literary, dramatic or musical 
works. 
 
Second, regarding the scope of the proposed stat utory limitation of the liability regime for online 
services providers (OSPs) in dealing with online pi racy, the proposed amendments aim to provide 
incentives (and legal certainty) for OSPs to coopera te with the rights owners in the fight against 
online piracy. The proposed statutory framework wi ll give OSPs the assurance that compliance with 
certain conditions (e.g. they do not receive a financial benefit directly attributable to the infringement; take reasonable steps to deal with the infringement when being notified of the infringing 
activities etc.) would qualify them for limitation of liability (mainly pecuniary liability) for copyright 
infringements occurring on their service platforms.  There will also be a Code of Practice which sets 
out the conduct expected of OSPs when notified of infringing activities occurring on their service 
platforms.  OSPs who observe the Code would be d eemed to have also complie d with the conditions.  
The Code will cover measures including the “Notice and Notice” and “Notice and Takedown” 
systems now practised in the UK and US.
12 
 The limitation of liability regime will be available to  any OSP who, by means of electronics equipment 
and /or network, provides or operates facilities for any online services, including but not limited to 
the following – 
 
 (a) offers transmission, routing, or provisio n of connection for or access to digital online 
communications, between or among points sp ecified by a user, of material of the 
user's choosing; 
 (b) hosts material that can be accessed by a user; 
 (c) stores material in his system or networ k temporarily as an automatic response to the 
request of another person without modifying the material; 
                                                     
 
12 Under a "Notice and Notice" system, OSPs are requir ed to forward to users or subscribers notices of 
claimed infringements that they recei ve from the right holders.  Under a "Notice and Takedown" system, OSPs 
are required, upon receipt of a notice from the copyright owner concerned, to  (a) take down or disable access to 
materials identified to be infringing;  and (b) where applicable, notify the alleged infringer who makes the 
materials available.  WT/TPR/M/241/Add.1 
 Page 101 
 
 
   (d) refers or links users to an online location by using info rmation location tools;  or 
 (e) provides application-based services such as social networking systems to users. 
 
Third, the additional damages in an infringeme nt claim. Recognizing the practical difficulties 
encountered by the rights owners, particularly in  online piracy cases, to prove and quantify their 
actual loss when seeking an award of damages, we will propose legislative amendments to give more 
guidance to the Court for awarding additional damag es in an infringement claim (e.g. the possible 
widespread circulation of infringing copies as a re sult of the infringement) in addition to factors 
already mentioned in our Copyright Ordinance (i.e . the flagrancy of the infringement; any benefit 
accruing to the defendant by reason of the infr ingement; and the completeness, accuracy and 
reliability of the defendant's business accounts and reco rds).  All proposed and existing factors in the 
legislation remain to be non-exhaustive, i.e. the Court may still take into account all the 
circumstances as appropriate when determining whether additional damages ought to be awarded, 
and if so, the quantum of such damages.  The objectiv e is to facilitate a copyright owner in an 
appropriate case to obtain an award of damages plus  additional damages in a total amount that is 
more commensurate with the prej udice, injury and/or loss suffered. 
 Finally, the proposed criminal sanctions against u nauthorized communication of copyright works will 
make it an offence for any person who –  
  (a) engages in a trade or business that consis ts of communicating copyright works to the 
public through electronic transmissions, without  authorization, in the course of a 
trade or business that consists of comm unicating works to the public for profit or 
reward (be it profit or reward obtained (i) di rectly from subscribers e.g. in the form 
of a fee, or (ii) indirectly through ad vertisements e.g. revenue generated from 
advertisements placed on a website from  which unauthorized communication could 
be obtained); or   
 (b) communicates infringing copies to the p ublic otherwise than for trade or business to 
such extent as to affect prej udicially the copyright owner. 
 
Other details on the legislative framework can be found at:  http://www.legco.gov.hk/yr09-10/ 
english/panels/ci/papers/ci1117cb1-341-8-e.pdf. 
 
 Paragraph 111 of the Report by the Secretaria t states that "Hong Kong, China has standard 
patents and short-term patents.  During the peri od under review, Hong Kong, China implemented the 
WTO 'Paragraph 6 system' enabling it to grant co mpulsory licences for exports of pharmaceutical 
products to WTO Members with no or insufficient capacity to manufacture the patented products.  
Under the amendment, import compulsory licences fo r such products can only be granted during a 
period of extreme urgency declared by the Chief Executive, where the local industry has no or insufficient capacity to manufacture the patented product." 
 
 Bearing in mind the discussions being c onducted in the Council for TRIPS, could 
Hong Kong, China please tell us what measures it has taken to implement the paragraph 6 system?  
 
Answer
 
To implement the Protocol on TRIPS and Public He alth, amendments were introduced to the Patents 
Ordinance in 2007 (“Amendment Ordinance”) to allow for the grant of compulsory licences for the 
import or export of pharmaceutical  products in specific circumst ances.  The Amendment Ordinance 
took effect on 22 February 2008.  The effect of the Amendment Ordinance is summarized below.   
 WT/TPR/M/241/Add.1 
Page 102  
 
  Import of Pharmaceutical Products
 
 
Under the Amendment Ordinance, the Chief Execu tive-in-Council may declare a period of extreme 
urgency in Hong Kong, China by way of notice in the Gazette if it is considered necessary or 
expedient in the public interest to do so or to add ress any actual or threatened public health problem 
in Hong Kong, China.  For determining the end date of the period of the extreme urgency, he is also 
required to keep the public health prob lem under review from time to time.  
 
During such a declared period of extreme urgency,  the Director of Health is empowered, if he 
considers that Hong Kong, China has insufficient  or no manufacturing capacity to make certain 
pharmaceutical product to contain the public health problem in question, to grant a non-exclusive 
compulsory licence to any person to import, use, put on market, or stock the pharmaceutical product 
or do any other act which would otherwise amount  to an infringement of the patent concerned, 
without the consent of the proprietor of the paten t.  The Director of Health has to, as soon as 
practicable, notify the proprietor of the patent of  the grant of the import compulsory licence and 
advertise in the specified official journal of th e grant of the licence and its terms and conditions. 
 In line with the requirements of the Protocol and the TRIPS Agreement, the Amendment Ordinance 
has stipulated that the import compulsory licence  would be subject to the following conditions – 
  (a) the entire quantity of the pharmaceutical product imported under the licence should 
only be used in Hong Kong, China and not for export to other places; 
 (b) the pharmaceutical product should be clea rly identified, through specific labeling or 
marking, as being imported pursuant to such licensing system;  
 (c) the licence is not assignable except with such part of the business of the assignor that 
enjoys the use of the patent under the compulsory licence; and 
 (d) other terms and conditions as the Direc tor of Health thinks fit having regard to the 
public health needs in Hong Kong, China in  the period of extreme urgency that has 
been declared. 
 The Director of Health has power to termi nate an import compulsory licence where there is 
contravention of any term or condition of the licence.   
 
Under the Amendment Ordinance, an obligation to pay the proprietor of the patent for the grant of an 
import compulsory licence only arises where the propr ietor of the patent can show that remuneration 
has not been paid in the exporting member fo r the production and export of the pharmaceutical 
product to Hong Kong, China and all legal remedies to recover payment of the remuneration in the 
exporting member have been exhausted.  Payment will be borne by the HKSAR Government.  The 
amount of remuneration shall be agreed between th e Director of Health and the proprietor of the 
patent.  Where an agreement cannot be reached, the amount of remuneration can be determined by 
the court.  The court is required to take into account all factors relevant to the circumstances, 
including the economic value to Hong Kong, Chin a of the use of the pharmaceutical product and 
humanitarian or non-economic factors relevant to the grant of the licence. 
 
The Amendment Ordinance has provided for the disposal of remaining stock upon the termination of the period of extreme urgency.  The licensee is required to take re asonable steps to recall such stock 
and either surrender them to the Government or dispose of them in such a way as may be agreed with 
the proprietor of the patent.  The Government w ill pay the licensee the price of such surrendered 
stock at cost, and is required to dispose of the surren dered stock in such a wa y as may be agreed with 
the proprietor of the patent or destro y them if agreement cannot be reached. 
  WT/TPR/M/241/Add.1 
 Page 103 
 
 
  Any person aggrieved by the grant of an import co mpulsory licence, the terms or conditions imposed 
on the licensee, the apportionment of remuneration or the termination of an import compulsory licence can apply to the court for review. 
 
Export of Pharmaceutical Products
 
 
The Amendment Ordinance empowers the Director of Health to grant a compulsory licence for the 
making and export of a pharmaceutical product to be supplied to a WTO Member recognized as a 
least-developed country or a WTO Member that has gi ven notice to the TRIPS Council that it intends 
to import pharmaceutical products under the syst em.  Where the importing WTO Member does not 
declare that it is under a national emergency or other circumstances of extreme urgency, the 
applicant for an export compulsory licence has to make reasonable efforts to obtain an authorization from the proprietor of the patent on reasonable co mmercial terms and conditions before applying for 
the licence.  The application would only be c onsidered if the applicant has failed to obtain the 
authorization within 28 days. 
 
The grant of the export compulsory licence would be subject to the terms and conditions stipulated in 
the Amendment Ordinance, including –   (a) terms relating to the quantity of the pharmaceutical product that can be produced 
and sold for export; 
 (b) the pharmaceutical product should be clea rly identified, through specific labelling or 
marking, as being produced pursu ant to such licensing system;  
 (c) the posting on a dedicated WTO website of  information relating to the amount of the 
pharmaceutical product that will be expor ted to the importing Member and the 
labelling or marking used for identifying the product; and  
 (d) such other terms and conditions as the Director of Health thinks fit. 
 The Director of Health has power to termi nate an export compulsory licence where there is 
contravention of any term or condition of the licen ce or where any information, document or evidence 
specified in or accompanying the application for the compulsory licence is  false, incorrect or 
incomplete in any material particular.   
 
The remuneration payable by the licensee of an export compulsory licence is to be determined by the Director of Health on a case-by-case basis.  Any person aggrieved by the grant of an export co mpulsory licence, the terms or conditions imposed 
on the licensee, the appropriate amount of remuneration payable to the proprietor of the patent or the 
termination of an export compulsory licence can apply to the court for review.  In determining the 
appropriate amount of remuneration payable to the propr ietor of the patent, the court has to take into 
account all relevant factors, including the economic  value to the importing Member of the use of the 
pharmaceutical product and humanita rian or non-economic factors relevant to the grant of the 
licence. 
 
(b) Enforcement 
 
 According to paragraph 115 of the Secretariat Report, "[t]he Customs and Excise Department 
(C&ED) protects intellectual property rights by co mbating related crimes at the border and in all 
districts of Hong Kong, China.  The C&ED has ex officio power to seize infringing goods.  It 
maintains enforcement through intelligence-led inv estigations and repeated raids conducted at 
different levels, including import and export, manufacture, distribution, and retail.  (…) The C&ED 
operates the Intellectual Property Rights Protection Alliance (IPRPA), which allows IPR owners to 
monitor IPR infringing activities in the market.  The number of online auctioned items suspected to be WT/TPR/M/241/Add.1 
Page 104  
 
  counterfeit dropped by 85% in 2009, as the C&ED and lo cal Internet auction sites began to cooperate 
closely to combat such activities."   On the subject of Customs measures, we would like to have confirmation that Hong Kong has introduced measures to protect the to tality of intellectual property rights.  Furthermore, as in the case 
of copyright protection in the digital environmen t, Colombia would like to have more detailed 
information regarding the schemes it has introduced ("Youth Ambassador Against Internet Piracy 
Scheme" and "Fast Action Scheme" against infringin g activities in local large-scale trade exhibitions 
and fairs).   Answer
 
 The Youth Ambassador Against Internet Piracy Scheme   
 The "Youth Ambassador Against Internet Piracy Sche me" (the Scheme) is an initiative launched in 
July 2006 to promote awareness of and respect for IPR.   The Scheme aims at inculcating in the minds 
of the participating young people positive values that fortify respect for IPR in the digital 
environment.  We have enlisted the support of so me 200,000 youngsters who are members of eleven 
local uniformed youth groups, such as the boy sc outs, the girl guides and many others to report 
infringing activities on peer-to-peer (P2P) networks .  We encourage their members to notify the 
Hong Kong Customs via a designated web page when they detect any suspected infringing BitTorrent 
(BT) seeds on local discussion forum websit es while surfing on the Internet.   
 After preliminary vetting, the Hong Kong Customs w ill forward the information to relevant copyright 
owners.  If it is confirmed that  the BT seeds can lead to sharing of  infringing files, the owners will 
request the webmasters of the discussion forums co ncerned to delete the relevant messages and the 
BT seeds posted therein. This helps contain the ci rculation of infringing BT seeds on the Internet. 
 Since the launching of the Scheme, the Hong Kong Customs has received 1,652 notifications from the 
"Youth Ambassadors". After initial vetting (which includes eliminating cases not pursuable for 
reasons such as invalid links), the Hong Kong Cu stoms passes on the information (i.e. the location of 
the discussion forum websites where  the suspected infringing BT seeds are found) to the relevant 
copyright owners.  Up till now, the copyright owners  have, on the basis of the notifications received, 
issued 644 letters to the concerned webmasters, t hus enabling the latter to remove the BT seeds from 
the websites.   The Fast Action Scheme 
 
To facilitate quick and timely enforcement action in res ponse to complaints of infringement activities 
that take place in large-scale trade exhibitions and fairs, the Hong Kong Customs collaborated with 
the Hong Kong Brands Protection A lliance (HKBPA) in laun ching the Fast Action Scheme (the FAS) 
in July 2006.  The FAS is a scheme for comba ting infringement goods at large-scale exhibitions. 
Under the FAS, rights owners will provide the HKBPA with product copyright information in 
compliance with Customs criminal investigation re quirements in advance.  Such information will be 
passed on to the Customs for speedy verification an d swift enforcement action once infringing activity 
is spotted in the exhibitions or reported by membe rs of the HKBPA.  Since its inception, the FAS has 
been implemented on 44 occasions, where a total of  144 cases were detected and prosecuted.  This 
mechanism is different from the regular Customs recor dation procedure in that the Customs is able to 
ascertain instantaneously the infringed article and take fast response or enforcement action once a 
complaint from the right holder is  received.  The FAS has enhanced the protection of IPR in large-
scale trade exhibitions and fairs.  
  WT/TPR/M/241/Add.1 
 Page 105 
 
 
  IV. TRADE POLICIES BY SECTOR 
(5) S ERVICES  
 
 According to paragraph 39 of the Report by the Secretariat, "[t]he HKSAR is a net-services 
exporter, with imports (payments) of non-factor services equivalent to about half of exports of 
services in 2009 (Table IV.2 and Charts IV.2 and IV .3).  Net exports contributed about 20% to GDP 
in 2009 (18.8% in 2006).  The services subsectors with  the highest growth rates in recent years are 
financing and insurance, followed by import and export trade, and transport and storage services, 
reflecting Hong Kong, China's position as a financial and trading centre." 
 
 When you refer to import and export tr ade as a subsector of services, what W/120 
classification are you referring to?   
Answer
 
The import and export trade refers to establishmen ts engaged in the import of goods for wholesaling 
and/or export of goods.  Buying agents or commissi on agents arranging for import or export of goods 
are also included.  It is cons idered as a subsector of services. 
 
Sectoral classification of economic activities is based on the Hong Ko ng Standard Industrial 
Classification (HSIC).  The HSIC is devised by using the International Standard Industrial 
Classification as a framework with local adaptio n to reflect the structure of the economy of 
Hong Kong, China.   
(iv) Transport 
(a) Maritime transport 
 
Port administration and port services  
 According to paragraph 90 of the Report by the Secretariat, "Hong Kong, China's port facilities are financed, owned, and operated by the private sector, while the role of the Government 
has been to undertake long-term strategic planni ng for port facilities and to provide the necessary 
supporting infrastructure.  There are currently nine  container terminals, which are privately owned 
and operated by five operators (H ongkong International Terminal Ltd. (HIT), Modern Terminals Ltd., 
COSCO-HIT Terminals Ltd, DP World, and Asia Container Terminals Ltd.)." 
  How does it work in practice for the privat e sector to own the port facilities while the 
Government undertakes long-term strategic planning fo r port facilities?  What do you mean when you 
say that the Government provides "the necessary supporting infrastructure"? 
 
Answer
 
The HKSAR Government is responsible for the l ong-term strategic planning for port facilities which 
include monitoring the growing trend of the ship’s planning characteristic (like draft, ship's length 
and carrying capacity), the development of Hong Kong, China’s port sector and cargo forecasts from 
time to time to determine whether adequate provisi on of port facilities and port related infrastructure 
can be timely provided for the shipping industry.  To realize this end, the Government undertakes a 
series of technical (site search for example), environmental and port cargo forecasts consultancy 
studies as well as consultation with the shipping  industry and relevant stakeholders through a number 
of advisory consultative committees before reaching a conclusion for the development or upgrading of 
port facilities. 
 
Once a decision is made, the selected site for deve lopment will be put out to tender and the successful 
bidder is responsible to develop, own and operate th e port facilities for a specified period of time.  At 
the same time, the Government will also undertake to provide necessary supporting infrastructure like WT/TPR/M/241/Add.1 
Page 106  
 
  new road links, possible upgrading of existing road networks including approa ch waterways to and 
from the newly developed port facilities. 
  Paragraph 91 of the Secretariat Report states that "[t]he frequency of shipping calls is a 
critical factor affecting the efficiency of port oper ations.  To strengthen th e port's attractiveness and 
avert cargo diversion to competing ports, in 2009 the Government reduced the statutory fees and 
charges for port services, and licensing fees for vess els and seafarers.  According to the authorities, 
Hong Kong, China's port costs are among the lowest in  the world.  In late 2009, the pilotage dues 
were reduced from HK$1,900 to HK$1,820 for a period of 18 months.  Operators of local (non-ocean 
going) passenger and cargo vessels have benefited from a licence fee waiver scheme implemented by the HKSAR Government in response to the global economic downturn."   The authorities say that "Hong Kong, China's port costs are among the lowest in the world".  
Since this paragraph is talking about fees and charge s, it is not clear what is meant by "costs".  
 
Answer
 
The word "costs" in paragraph 91 means port c harges levied or regulated by the HKSAR 
Government.  The port charges are anchorage dues, buoy dues, port facilities and light dues, fee for 
port clearance and pilotage dues. 
 
(b) Air transport 
 
Airport management and ground handling services 
  According to paragraph 109 of the Report by th e Secretariat, "[t]he AA is authorized to 
conduct airport-related activities on the artificial is land where the airport is located, while outside 
activities are subject to restrictions in the Air port Authority (Permitted Airport-related Activities) 
Order (Cap. 483).  Airport support services, such as ground handling, maintenance and repair of aircraft, or air cargo at the HKIA, are provided by third parties granted franchises by the AA through 
a competitive open bidding process.  There are curre ntly ten airfield-related licensees and franchisees.  
The AA periodically assesses the demand for services, and allows entry of additional operators if 
necessary.  Subject to operational considerations, su ch as space and efficiency, airlines may also apply 
for permission to provide these services themselves.  Governments other than the Government of the HKSAR may not hold majority shares or control franchisees that provide certain categories of 
ground-handling services at HKIA." 
  What criteria are applied for the necessity test  to allow the entry of additional operators? 
 
Answer
 
The Airport Authority generally welcomes more comp etition in the provision of airport services with a 
view to enhancing service level and lowering the costs fo r users.  The Airport Authority will consider 
a host of relevant factors, including the market demand, efficiency of airport operation and the 
availability of space at the Hong Kong International Airport, in order to d ecide whether additional 
operators are necessary.  
(v) Tourism 
 
 According to paragraph 119 of the Report by the Secretariat, "[t]he Government has made 
available additional resources to attract more MICE  events (meetings, incentive travel, conventions, 
and exhibitions) to Hong Kong, China.  The Hote l Accommodation Tax was waived with effect from 
1 July 2008 to promote tourism and enhance the co mpetitiveness of the hotel industry.  In 2009, the 
Government also set up the HK$100 million Me ga Events Fund to sponsor local non-profit 
organizations in staging large-scale arts, cultural, and sports events in Hong Kong, China.  In addition,  WT/TPR/M/241/Add.1 
 Page 107 
 
 
  the Government is seeking to strengthen the city's  position as a premier destination for fine food and 
wine, and reinforce Hong Kong, China as a wine trading and distribution hub in the region".   What kind of incentives does the Government o ffer for the development of the tourism and 
hotel industry?  
 
Answer
 
To promote tourism and hotel development, the HKSAR Government waived the Hotel 
Accommodation Tax in 2008.  Since 2009, the Tra vel Industry Compensation Fund levy has also been 
waived. 
 
The HKSAR Government does not provide direct subs idies for commercial or profit-making events.  
When the HKSAR Government ea rmarked an additional HK$150 million in 2008 for strengthening 
MICE (Meetings, Incentive travels, Conventions, and Exhibitions) promotion, there was a clear 
understanding that this sum can only be used for providing professional services and in-kind support 
to MICE event organisers and visitors, such as si te inspection, event promotion and hospitality 
arrangements.  As for the HK$100 million-Mega E vents Fund, it is for local non-profit-making 
organisations to host more arts, cultural and sports  events in Hong Kong, China until March 2012. 
 
(vi) Development of new industries 
  Paragraph 127 of the Secretariat Report states that  "[i]n line with the principle of 'Big Market, 
Small Government', the Government's strategy is to remove barriers to  the selected industries and help 
them tap into new markets.  The Government has also been examining whether the existing resources 
can support the further development of these industries, and factors of production are tied up by outdated policies and economic structures.  The re levant policy bureaus of the HKSAR Government 
have developed and are implementing specific measures, some of which may also benefit 
Hong Kong, China's economic development in general." 
  How are the barriers to the selected industries identified and how are the industries helped to 
tap into new markets?   Answer
 
 For Testing and Certification Services
 
 In September 2009, the HKSAR Government est ablished the Hong Kong Council for Testing and 
Certification (HKCTC), an advisory body, to co-ord inate and spearhead th e development of the 
industry.  Members of HKCTC include practiti oners from the testing and certification industry, 
business sector, professional bodies as well as relev ant public bodies and Government departments.  
 
The Government is now working together with H KCTC to make general improvements to the 
accreditation service and factors of production (e.g . enhance training for practitioners, support 
research and development of new testing methods) to enhance the industry's competitiveness, whilst at 
the same time focusing particular attention to a ssist the industry in exploring business opportunities 
in four selected trades, i.e. Chinese medicine, construction materials, food and jewellery.  
 
There will be enhanced efforts to promote Hong K ong, China's testing and certification services both 
within and outside Hong Kong, China.  The "Tested  in Hong Kong, Certified in Hong Kong" branding 
will be the theme of promotional activities.  The Go vernment will also help the industry to seek wider 
recognition of Hong Kong, China's conformity asse ssment results (i.e. testing reports, inspection 
reports and certificates). 
 WT/TPR/M/241/Add.1 
Page 108  
 
  For Cultural and Creative Industries
 
 We do not see any barriers to enter the cultural i ndustries.  To develop local and overseas cultural 
markets, we have earmarked an additional recurrent  expenditure of HK$486 million for the period 
from 2010/11 to 2014/15 to strengthen the cultural software of Hong Kong, China through arts 
programme development, manpower training, promo tion of arts education, audience building and 
cultural exchanges.  In July 2010, we also injected HK$1.5 billion into the arts portion of the Arts and 
Sport Development Fund, the investment returns of wh ich will be used to support projects that are 
conducive to building a vibrant local arts scene, and to step up our support for small and medium arts 
groups with good potential. 
 
We will continue to promote cultural exchanges with the Mainland of China and the rest of the world, 
and support our arts groups in staging perfor mances, organising exhibitions and participating in 
exchange activities in different economies, thus showcasing Hong Kong, China’s creativity and 
building our cultural brand.  Specific tasks include setting up cultural co-operation frameworks with 
various economies to provide a conducive envir onment for exchanges; and d eveloping brand-building 
arts programmes and major cultural exhibitions join tly with partners in the Pearl River Delta region 
through the mechanism of the Greater Pear l River Delta Cultural Co-operation Meeting. 
 
For the promotion of creative industries, the Create Hong Kong (CreateHK) dedicated office was 
established in 2009 as a one-stop shop for Hong Kong, China’s creative industri es.  In identifying the 
barriers to the industries and devising strategies to  help industries overcome these barriers and 
further the development, CreateHK conducted extensi ve consultation with the industry representatives 
to better understand the industries’ needs.  
After consultation with the industries, CreateHK  promulgated a seven-pronged strategy to drive 
development of Hong Kong, China’s creative industri es, one element of which is to promote our 
creative industries in markets outside Hong Kong, Chi na.  To this end, CreateHK has been working 
with the industry organisations to devise measures in promotion of Hong Kong, China’s creativity.  
Relevant measures include supporting local talent  to take part in international competitions, 
development of web portals showcasing Hong Kong , China’s creative products and services, as well 
as staging of business matching activities in Mainl and of China to explore new market opportunities 
for the local design sector.  
 
For Medical Services
 
 
The increasing and aging population in Hong Kong, China has led to continuous growth in the 
demand for healthcare services.  We have to increase the overall c apacity of our healthcare services 
and so we seek to facilitate and encourage the d evelopment of medical industry through necessary 
supply of hardware and software.  For hardware, we  have identified four suitable sites in Hong Kong, 
China for private hospital development.  As for softw are, we will continue to enhance the training and 
development of local medical professionals, and facilitate exchange of expertise between local and 
overseas medical professionals, with a view to further raising the service standards of Hong Kong, China's healthcare sector. 
 
For Environmental Services
 
 The development of green financing is essential fo r supporting the growth and expansion of a green 
sector.  Hong Kong, China welcomes initiatives pr oposed by overseas econom ies in pursuing green 
growth and encouraging regional cooperation in this aspect.   
 
In view of the huge investment potential on envir onmental technologies and infrastructure in the 
Mainland of China, there will be substantial oppor tunities for our environmental service providers to  WT/TPR/M/241/Add.1 
 Page 109 
 
 
  access the business opportunities.  Hong Kong, China will also seek to deepen cooperation with the 
Guangdong authorities in the Mainland of China in resp ect of the wider use of renewable and cleaner 
energy, promoting the development of circular ec onomy, enhancing cleaner pr oduction in the Pearl 
River Delta region, as well as promotin g the wider use of electric vehicles. 
    
Specifically, the HKSAR Government is committed to promoting a green economy through a whole 
range of policies –   (a) cross-boundary cooperation to transform the Pearl River Delta (PRD) region into a 
green and quality living area.   The Government allocated over HK$93 million to 
jointly launch with Guangdong a five-year Cleaner Production Partnership 
Programme in April 2008.  The Progra mme facilitates Hong Kong, China-owned 
factories in the PRD region to adopt cl eaner production technologies and practices, 
as well as facilitates the exchange of info rmation on environmental technology and 
the promotion of environmental technology  and services.  Up to end August 2010, 
813 projects have been approved; 
 (b) about 40% of the 2,300 approved Cl ean Development Mechanism (CDM) projects 
are being carried out in the Mainland of China, involving an investment of more than HK$80 billion and major technology transfer.  The Government has secured approval for eligible Hong Kong, China ent erprises to participate in CDM projects in 
the Mainland of China, which will gen erate green business opportunities to Hong 
Kong, China enterprises;  
 (c) we have pledged an investment of HK$50 billion on infrastructural projects directly 
related to our environmental initiatives, incl uding a district cooling system at the Kai 
Tak Development, a sludge treatment fac ility and an integrated waste management 
facility with daily capacities of 2,0 00 tonnes and 3,000 tonnes respectively; 
 (d) we are working on the strategy and specific  measures to promote the use of electric 
vehicles, which are more energy efficient and emit no exhaust gas; 
 (e) the Government is taking the lead by adopting a green procurement policy and 
promoting green government buildings through minor works and demonstration 
projects.  We have allocated HK$130 million to enhance energy efficiency of 
government buildings and public faciliti es, and another HK$450 million to carry out 
minor works for enhancing a green and su stainable environment in government 
buildings; 
 (f) we have injected HK$1 billion into the Environment and Conservation Fund (ECF) in 
early 2008 to incentivize the community to  join hands with the Government in 
promoting green economy.  Schools and c haritable organizations are encouraged to 
apply funding for public education and minor works projects for promoting 
environmental protection; and 
 (g) to encourage the public to take conc rete actions for enhancing building energy 
efficiency, HK$450 million has been reserved  under the ECF to subsidise building 
owners to conduct energy-cum-carbon audits and energy efficient projects.  As at end-November 2010, more than $200 million of funding has been granted.  
 
During the formulation of and rolling out any incenti ve scheme, Hong Kong, China will bear in mind 
that the scheme shall not discriminate any WTO me mber and shall provide fair business opportunities 
for all.   
For Education Services
 
 We have introduced a number of measures to fa cilitate the development of self-financing post-
secondary sector, including – WT/TPR/M/241/Add.1 
Page 110  
 
    
 (a) Land Grant Scheme to grant sites at nominal premium to non-profit-making self-
financing post-secondary education institutions; 
 (b) Start-up Loan Scheme to provide loans to meet the start-up expenses to self-financing 
post-secondary institutions; 
 (c) Quality Enhancement Grant Scheme to fund worthwhile one-off non-works projects 
that could help enhance the quality of te aching and learning of self-financing post-
secondary programmes; and 
 (d) One-off grants to self-financing post- secondary institutions to facilitate their 
development. 
 
The Chief Executive announced in the 2010-11 Poli cy Address that we propose establishing a 
HK$2.5 billion Self-financing Post-secondary Educat ion Fund to support the further development of 
the local self-financing post-secondary education sector.  We will also work with our higher education ins titutions to step up exchange and promotion efforts 
overseas to encourage more students to regard Ho ng Kong, China as a preferred destination for 
education.  In 2010, we visited a number of c ountries (including Malaysia, Indonesia, South Korea, 
Japan and India) together with our higher education institutions to showcase the achievements of our 
higher education sector.  We will con tinue our efforts in this area. 
 For Innovation and Technology
 
 
We encourage close collaboration among Governme nt, industry, academic and research sectors in 
meeting the challenges for promo ting innovation and technology.   
 In addition to providing support on the hardware an d software fronts for strengthening the innovation 
and technological capability of the industries to tap into new opportunities, the HKSAR Government 
has also been actively promoting technology collaborations with other economies and research 
institutions outside Hong Kong, China, with a view to nurturing more technology exchange and 
transfer of knowledge to the local industry for technology upgrading.   
 We have established close working relationship with the Mainland of China at all levels, including the 
central government, provincial and municipal authoriti es with a view to facilitate the collaboration 
between the local innovation system and its Mainla nd counterpart, leveraging each other’s resources 
for jointly exploiting the opportunities in the region.  We have also signed Memoranda of Understandi ng (MoU) on science and technology collaboration  
with world-renowned universities, agencies and research  institutions including the University of 
California (Berkeley and Los Angeles), University Co llege of London, Tsinghua University, SunYat-
Sen University, National ICT Australia, Danish Ag ency for Science, Technology and Innovation, and 
the Department of Advanced Education and Tec hnology of the Government of the Province of 
Alberta. 
   WT/TPR/M/241/Add.1 
 Page 111 
 
 
  ARGENTINA  
 
Report by Hong Kong, China (WT/TPR/G/241) 
 
II. ECONOMIC AND TRADE ENVIRONMENT 
(A) M ACROECONOMIC SITUATION  
(c) Policies in Response to the Global Financial Crisis 
(i) Enhanced Services of the Hong Kong  Export Credit Insurance Corporation 
 Paragraph 9 of the Report by Hong Kong, Chin a mentions that the Hong Kong Export Credit 
Insurance Corporation (ECIC), which provides ex porters with export credit insurance protection 
against non-payment risk, has launched a basket of  enhancement measures to assist exporters to 
sustain their business and develop new mark ets during the global financial crisis. 
  Would Hong Kong, China kindly describe in great er detail the characteristics of this export 
credit insurance.  
 
Answer
 
To assist Hong Kong, China exporters (which are mostly small and medium enterprises) to sustain 
their business and develop new markets in view of the economic downturn, the Hong Kong Export 
Credit Insurance Corporation (ECIC) has launche d a basket of enhancement measures since October 
2008.  These measures include –  
(a) Higher insurance cover for exports  
 ECIC has been as accommodating and flexible as possible to exporters’ requests for export credit 
insurance.  Where risks allow,  ECIC provides higher credit limits for exporters under the mechanism 
of applying deductibles for claims and lower-than-usual  indemnity ratios for the insurable exports to 
share out the risks.  (b) Upgrading the market ratings for emerging markets  
To assist Hong Kong, China exporters to develop emerging markets, ECIC has upgraded the 
country/market ratings of eight emerging markets
13.  With the upgrading, the same market will enjoy 
a higher credit ceiling so that more exporters/credit limits may be covered by ECIC.  The premium 
rates for the upgraded markets will also be lowered.  
 
(c) Annual policy fee waiver  ECIC has waived its annual policy fee
14 of HK$1,500 (US$192) for 2009 and 2010. 
 (d) Expediting the processing of small credit limit applications  
ECIC has pledged to process the applications fo r small credit limits (HK$1 million (US$128,205) or 
below) with maximum flexibility and undertaken to shorten the processing time from 4 days to 2 to 3 
days upon receipt of adequate information.    
                                                     
 
13 The markets include the United Arab Emirates, Kuwait, Chile, Braz il, the Czech Republic, Malaysia, 
Uruguay and Morocco. 
14 Policy fee is an annual fee to cover part of the costs of acquiring necessary credit reports for 
processing of credit limit applications.  The policy fee is charged at the beginning of each policy period. WT/TPR/M/241/Add.1 
Page 112  
 
  (e) Free credit assessment service 
 ECIC has provided each exporter three free buyer credit assessments un til end September 2010. 
 
(ii) Measures to Support Business Enterprises  
Paragraph 10 states that, in response to the global financial crisis, the Government has implemented a 
package of measures which aim to provide greater support to small and medium enterprises (SMEs).  
Footnote 1 clarifies that an SME is defined as a manufacturing business which employs fewer than 100 persons in HKC, or a non-manufacturing business which employs fewer than 50 persons in HKC. 
 
 Would Hong Kong, China kindly describe the characteristics of the non-manufacturing businesses which benefit from the Government programmes.   
Answer
 
Regarding the three schemes mentioned in paragra ph 10 of the Government  Report by Hong Kong, 
China, since the grant or guarantee provided by the HKSAR Government under the schemes is not 
specific to particular industries or sectors, the bene ficiaries of the schemes come from a wide range of 
manufacturing and non-manufacturing sectors.  Non-manufacturing businesses account for 25%, 
54% and 72% of all the beneficiaries under th e SME Loan Guarantee Scheme, the SME Export 
Marketing Fund, and the Special Loan Guarantee Scheme  respectively.  They en compass sectors such 
as import and export tr ade, wholesale and retail, professional services, transportation, restaurants 
and hotels, etc. 
 
Paragraph 15(d) states that a new Research and Deve lopment Cash Rebate Scheme has been launched 
since April 2010 to encourage the private sector to increase investment in research and development. 
 
 Would Hong Kong, China kindly specify whether these are rebates of direct or of indirect 
taxes.  Please also indicate which enterprises benef it and the activities in which they are engaged.  
 
Answer  
The rebate is given in the form of cash payment to  private companies, which is a direct form of rebate 
so to speak. 
 
The cash rebate is available to private sector co mpanies for their investments in two types of applied 
R&D projects -  
 (a) projects funded under different funding programmes of the Innovation and 
Technology Fund set up by the HKSAR Government; and 
  (b) projects undertaken by the designated local public research institutes in Hong Kong, 
China for the companies. 
 Upon payment of their investments under these project s, the companies will be eligible for the 10% 
cash rebate under the Scheme.  
Report by the WTO Secr etariat (WT/TPR/S/241) 
 
SUMMARY 
 
Paragraph 10 states that imports a nd exports of textiles remain subject  to special controls regarding 
their origin.   WT/TPR/M/241/Add.1 
 Page 113 
 
 
   Would Hong Kong, China kindly specify what kind of controls are carried out.  Are these 
customs inspections or some other form of control?   
Answer
 
The textiles control system is a law-based system.  It is built upon an import/export licensing system 
and an origin certification system.  Vigorous enforce ment is taken to forestall origin abuses and any 
textiles malpractices where appropriate.  Under the laws of Hong Kong, all textiles export from and import into Hong Kong, China (other than 
a few exempted items
15) are required to be covered by valid licen ces or textiles notifications lodged by 
textiles traders registered under the Textiles Trader Registration Scheme  (TTRS).  Different licensing 
requirements apply to textiles exports/imports invo lving “sensitive” and “non-sensitive” markets.  
The current textiles control arr angements are summarized below: 
  (a) all textiles imports from and exports to th e Mainland of China, and exports to the US 
(classified as involving "sensitive markets" ), shall be covered by either consignment-
specific import/export licences, or notific ations lodged by registered traders under 
TTRS; 
  (b) all other textiles imports and exports (c lassified as involving "non-sensitive markets") 
shall be covered by either consignment specific import/export licences, or 
comprehensive import/export licences conven iently available for covering multiple 
shipments in a year;  and 
  (c) manufacturers producing cut-and-sewn garme nts intended for export to the US are 
required to lodge Production Notification (PN)  on the day of or within three working 
days prior to the commencement of the ma jor assembly work in Hong Kong, China.  
The PN arrangement enables the conduct of real time checks to ensure that the origin 
conferring processes are carried out in Hong Kong, China as claimed. 
 Another centrepiece of our textiles control system is a credible and sound origin certification system.  
It ensures origin compliance of textiles (and other products) claiming Hong Kong origin and 
facilitates their customs clearance overseas.  Our certification of orig in system follows internationally 
accepted practices.  Only registered manufacturers with verified manufacturing capacity to perform 
the origin-conferring processes may apply for Certificates of Hong Kong Origin. 
 Hong Kong, China’s textiles control system is vigorously enforced by the Customs and Excise 
Department through an in tegrated, targeted and factory-ba sed approach.  A multi-tiered checking 
system is in place under which key enforcement actions include c onsignment/production checks, pre-
registration factory inspections and thereafter p eriodic re-inspections, as well as blitz checks at 
boundary control points, etc.  If certain fact ories are found engaging in export activities not 
commensurate with their production capacity, intens ive checking or investigation will be conducted 
against them. 
 
Paragraph 15 states that Hong Kong, China grants tax allowances for environmental and intellectual 
property-related expenditures.  
                                                     
 
15 Exempted items are woven or knitted fabric swatches and sample yarn imported by air and not 
exceeding 0.8m2 in size in respect of fabric swatches and 1.2 kilograms in weight in respect of each type of 
yarn;  textiles articles of reasonable quantity that are impor ted or exported by an individual for his personal use 
or as a bona fide gift to another individual;  and textile s articles of reasonable quantity to be used by the crew or 
passengers of a vessel, aircraft, or vehicle. WT/TPR/M/241/Add.1 
Page 114  
 
   Would Hong Kong, China kindly provide furthe r details of the kinds of environmental and 
intellectual property-related activities which specifically benefit from tax allowances.  
 
Answer
 
Tax deductions are provided to taxpayers of H ong Kong, China for the following expenditures in 
relation to environmental protection and intellectual properties – 
 
− specified capital expenditure incurred on envi ronment-friendly vehicles, environmental 
protection machinery and environmental protec tion installation used in the production 
of chargeable profits.  
− expenditure for registration in Hong Kong, China of a trade mark, design or patent 
and capital expenditure on the purchase of patent rights or rights to any know-how for 
use in Hong Kong, China in the pr oduction of chargeable profits.  
 
I. ECONOMIC ENVIRONMENT 
(1) O VERVIEW OF RECENT ECONOMIC DEVELOPMENTS  
 
Paragraph 3 of the Report states that Hong Kong im plemented an economic stimulus plan amounting 
to HK$87.6 billion (approximately US$11.4 billion)  in 2008-2009 and 2009-20 10, which included a 
full deposit-protection scheme, a Special Loan Guarantee Scheme, increased government-backed 
export credit insurance cover, tax incentives a nd the waiving of business registration fees. 
 
 Does the Government intend to implement a new stimulus plan in 2011?  If so, what sectors 
will it target?   
Answer
 
To consolidate economic recovery and to provide re lief, further measures were introduced in 2010-11 
increasing the package since the 2008-09 budget to  nearly HK$110 billion (US$14.1 billion).  The 
stimulus and relief measures introduced since 2008-09  mainly fall into the following categories – 
 Supporting enterprises to preserve jobs 
− Launched a time-limited Special Loan G uarantee Scheme to provide HK$100 billion 
(equivalent to US$12.8 bill ion) liquidity to small and medium enterprises. 
− Hong Kong Export Credit Insurance Corpor ation provides higher cover for exports.  
− Waiving business registration fees. 
 
Providing jobs and training opportunities 
− Implementing infrastructure projects, creation of temporary positions, expediting 
minor works and launching other programmes. 
− Providing internship opportunities to new graduates and employment assistance. 
 
Providing relief to the public 
− A series of revenue concessions and expenditu re measures to provide relief, e.g. 
waiving rates and taxes, paying rent for public housing tenants, extra subsidies for low income groups receiving the HKSAR Go vernment’s financial assistance etc. 
 
We consider an appropriate exit strategy important to ensure sustainable growth and to avoid undue 
influence on the market.  As th e economic recovery has become increasingly entrenched and local 
credit conditions have returned to normal, for examp le, the application period for the Special Loan 
Guarantee Scheme will cease after December 2010.   
  WT/TPR/M/241/Add.1 
 Page 115 
 
 
  III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) O VERVIEW  
 
Paragraph 5 states that Hong Kong, China has gran ted non-tax incentives mainly in the form of 
grants, loans or government loan guarantees to suppor t agriculture and fisheries, some services, small 
and medium-sized enterprises (SMEs), and research and development.  It also notes that the HKSAR 
Government has pledged to provide a total loan guarantee of up to HK$100 billion to help enterprises 
to overcome liquidity problems during the global financial crisis.   Would Hong Kong, China please describe the char acteristics of these guarantees.  For which 
agricultural, fisheries and services activ ities are they specifically intended?  
 
Answer
 
The Trade and Industry Department of the HKSAR Government currently runs two loan guarantee 
schemes to help enterprises, par ticularly SMEs, secure loans from the commercial lending market 
through the provision of govern ment guarantee.  They are: 
 
− the SME Loan Guarantee Scheme, which ai ms to facilitate SMEs in securing loans 
from participating lending institutions fo r acquiring business installations and 
equipment or meeting working capital needs.  The scheme consists of two types of 
loans: (i) Business Installations and Equipment Loan; and (ii) Working Capital Loan.  
The amount of guarantee for each SME is 50% of the approved loan, subject to a maximum amount of HK$6 million (USD0.77 million) (i.e. a loan size of HK$12 
million or USD1.54 million); and 
 
− the Special Loan Guarantee Scheme, which is a time-limited scheme introduced in 
December 2008 to help enterp rises secure loans from participating lending institutions 
for meeting general business needs to tide over the liquidity probl em during the global 
financial crisis.  The Government has pledge d to provide a total loan guarantee of up 
to HK$100 billion (USD12.8 billion).  All en terprises (except listed companies), with 
substantive business and registered in Hong Kong,  China are eligible for the scheme.  
The application period for the Sche me will close after December 2010. 
 
The Agriculture, Fisheries and Conservation Depar tment (AFCD) of the HKSAR Government 
provides loans to farmers and fish farmers for development and working capital.  An Emergency 
Relief Fund is also available to provide prompt assistance to pers ons (including farmers, fishermen 
and other citizens) who are in need of relief as a resu lt of a natural disaster such as tempest, typhoon, 
rainstorm, landslide, and flooding.  Grants are ava ilable to applicants who are found to have suffered 
a loss to an extent that merits assistance.  The government loan guarantees in question are not 
targeted at the agricultural and fisheries sectors. 
 
(2) M
EASURES DIRECTLY AFFECTING IMPORTS  
(i) Customs procedures 
 Paragraph 14 of the Report states that the Govern ment is considering introducing an "authorized 
economic operator (AEO)" framework to facilitate trade.   Would Hong Kong, China kindly provide a description of what this programme entails.  
Answer
 
Hong Kong Customs launched the AEO Pilot Progra mme in June 2010 to test the AEO accreditation 
mechanism for twelve months.  Prior to the roll- out of the Pilot, Hong Kong Customs had consulted WT/TPR/M/241/Add.1 
Page 116  
 
  the trade and made reference to th e best practices of other Customs administrations in devising the 
programme framework.  The Pilot offers two tiers of AEO with a view to coping with the local trading 
environment.  The measures adopted in the Pilo t are in compliance with the standards under the 
WCO SAFE Framework of Standard.   Dedicated teams have been set up and trained to process 
applications, including on-site validation with the ap plicants.  The Pilot has been running smooth so 
far, and we have seen growing support from the trad ers in the supply chain.  Upon completion of the 
Pilot, Hong Kong Customs will conduct a review and plan the way forward in regard to the full 
implementation of the AEO programme, including th e feasibility of mutual recognition of AEOs with 
other Customs administrations. 
 (ii) Tariffs 
 
Paragraph 16 of the Report mentions  that Hong Kong has only bound 43.9 per cent of all tariff lines at 
the HS 8-digit level. 
 
 Moreover, paragraph 8 of the Summary by the WTO Secretariat states that only slightly more than one third of the non-agricultural tariffs are subject to WTO bindings, which imparts a certain 
degree of unpredictability to Hong Kong, China's tariff.  
 Would Hong Kong, China kindly state the reasons for this low level of tariff binding.  
 
Answer
 
Our present scope of binding is the outcome of  previous negotiations pl us additional autonomous 
binding we made since the conclusion of the Urug uay Round.  We look forward to ambitious binding 
of our tariff lines following the successf ul conclusion of the DDA negotiations. 
 (iii) Internal taxes collected at the border 
 
Paragraphs 21 and 22 of the Report state that motor vehicles are taxed on their first registration.  As 
none of the vehicles or parts are produced in Hong K ong, China, this tax is levied exclusively on 
imports and tax rates range from 35 per cent to 100 per cent for private cars. 
  Would Hong Kong, China please state the reasons for imposing such high tax rates on motor vehicle imports.   Answer
 
In determining the level of vehicle First Regist ration Tax, the HKSAR Government takes into account 
the revenue, transport and environmen tal considerations.  Vehicle First Registration Tax has not been 
revised since 2003. 
 
(vii) Import prohibitions, restrictions and licensing 
 
Paragraph 31 of the Report states that Hong Kong , China operates its own control system for 
"strategic commodities", such as dual-use goods.  Th e Report mentions that "strategic commodities" 
include specified ammunition, nuclear-related mate rials, and articles for use relating to nuclear, 
chemical or biological weapons. 
 
 Would Hong Kong, China kindly provide a descr iption of what the control system entails.  
  Would Hong Kong, China please identify the dual-use goods referred to in the Report.  
   WT/TPR/M/241/Add.1 
 Page 117 
 
 
  Answer  
Hong Kong, China operates its own control system for strategic commodities.  The Government 
implements a comprehensive control system on the im port and export of strategic commodities.  The 
system serves to prevent Hong Kong, China from being used as a conduit for proliferation of weapons 
of mass destruction and other weaponries, and to secu re our continued access to high-tech goods that 
are essential for economic development.     
The legal basis of the control on strategic commod ities is set out in the Import and Export Ordinance.  
The Ordinance requires that the import and export of strategic commodities be subject to licensing 
control.  The items subject to licensing control are listed in the Schedules to the Import and Export 
(Strategic Commodities) Regulations under the Ordi nance.  The control list of strategic commodities 
covers munitions items, chemical and biological wea pons and their precursors, nuclear materials and 
equipment and dual-use goods.  It mirrors those control lists adopted by various international non-
proliferation regimes, viz. the Wassenaar Arrangeme nt, the Missile Technology Control Regime, the 
Australia Group, the Nuclear Suppliers Group and the Chemical Weapons Convention.   
 
Dual-use goods are those products determined by the international non-proliferation regimes 
mentioned above as capable of both civil/industrial and military uses.  The common examples are 
certain “military grade” electronic components and encryption devices.  A full list of the dual-use 
goods under import and export licensing control in H ong Kong, China can be found at the following 
website:  http://www.stc.tid.gov.hk/ english/checkprod/sc_control.html. 
 
(ix) Government procurement 
 
Paragraph 39 of the Report states that government procurement in Hong Kong  is subject to open and 
competitive tendering procedures.  However, in 20 06-2009, 77% of contracts were awarded through 
"selective" tendering (63%) and "restricted" tendering ( 14%).  The Report states that, due to technical 
and financial capability requirements and magnit ude, selective tendering is adopted for works 
contracts, whereby contractors on the relevant  approved list are invited to submit tenders. 
  Would Hong Kong, China kindly indicate the technical and financial capability requirements 
for selective tendering.    What requirements must contractors fulfil in order to be included on the approved list?  
 
Answer
 
Under selective tendering, contractors/s uppliers on the relevant approved lists of 
contractors/suppliers would be invited to  submit tenders.  Tenders received from 
contractors/suppliers not yet on the approved lists w ould also be considered, provided that there is 
sufficient time to complete the qualification proc edure.  The technical and financial capability 
requirements for admission to the approved lists of contractors/suppliers are set and justified by 
bureaux/departments responsible for establishing  the relevant approved lists.  The requirements 
would be limited to those which are essential to en sure the ability of the contractors/suppliers to 
provide the required stores or services and shall not discriminate among foreign 
contractors/suppliers or between domestic and forei gn contractors/suppliers.  Bureaux/Departments 
maintaining approved lists of qualified contractors/ suppliers would publish the method of application 
and assessment in their Homepages on the Internet and/ or the Government Gazette annually.  Eligible 
contractors may apply for inclusion in the approved li st in accordance with the method of application. 
 The approved lists cover different categories of pub lic works.  Contractors under each category are 
further classified into different groups according to their capabilities.  Contra ctors with the necessary 
management, technical and financial c apability as well as capable to m eet the site safety standards, 
can apply for inclusion in the approved lists.  The purpose of establishing and managing the approved WT/TPR/M/241/Add.1 
Page 118  
 
  lists is to ensure that only qualified contractors c an tender and undertake public works contracts, so 
that the quality and safety of public works can meet the required standards.  In addition, through the 
listing system, performance of the contractors in public works contracts will be monitored and 
systematically recorded.  Regulating action can also  be taken when doubt arises on their capability 
and integrity.  
The technical and financial capab ility requirements include requirements on the employed capital 
and minimum working capital, requirements on number and qualification of full time management 
and technical personnel to be employed by the c ontractors, and requirements on the relevant past 
project experience etc.  These requi rements are different for different  works categories and contractor 
groups.  For detailed requirements, please refer to  the Contractor Management Handbook published 
at the following website - http://www.devb.gov .hk/en/construction_sector_matters/contractors/ 
index.html. 
 
 What is the basis for determining that a contract must be awarded through restricted tendering?  Answer
 
Restricted tendering shall only be adopted und er exceptional circumstances when open or selective 
tendering would not be an effectiv e means of obtaining the requisite supplies or services.  Examples 
include procurement of items that are protected by patent or have to be compatible with the existing 
equipment or systems; and extreme urgency purchase brought about by unforeseeable event. 
 
(x) Standards and other technical requirements 
 
Paragraph 45 of the Report mentions that, sin ce 2007, Hong Kong has been preparing technical 
regulations regarding a mandatory energy effici ency labelling scheme for certain products (air 
conditioners, refrigerating appliances, fluorescent lamps, washing machines and dehumidifiers). 
 
 Would Hong Kong, China kindly indicate the current status of these draft regulations.    What obligations will have to be assumed by exporters? 
 
Answer
 
The Government of Hong Kong, China has introduced the mandat ory energy efficiency labelling 
scheme (MEELS) throug h the Energy Efficiency (Labelling of Prod ucts) Ordinance, Cap. 598.  Under 
the Ordinance, a prescribed product being supplied by a local manufacturer or importer in Hong 
Kong, China shall be a listed model having a reference number assigned in his name and bears an 
energy label.  Prior to supplying a prescribed produ ct in Hong Kong, China, the local manufacturer 
or importer shall submit the product information, including test report of the product model, to 
Electrical and Mechanical Services Department of the HKSAR Government for assignment of 
reference number.  
 
The initial phase of the MEELS covers three types of products, namely room air conditioners, 
refrigerating appliances and compact fluorescent lamps,  and has been fully implemented since 9 
November 2009.  The second phase of the MEELS ext ends the coverage to two more electrical 
appliances, namely washing machines and dehumi difiers, and commenced on 19 March 2010 with an 
18-month grace period.  For details of the MEELS, please refer to the following link: 
http://www.emsd.gov.hk/emsd/eng/pee/eels_mandate.shtml   WT/TPR/M/241/Add.1 
 Page 119 
 
 
  (4) M EASURES AFFECTING PRODUCTION AND TRADE  
(i) Taxation and tax incentives 
 
Paragraph 83 of the Report states that the Governme nt is considering broadening Hong Kong, China's 
tax base. 
 
 Would Hong Kong, China kindly explain what this broadening of the tax base would entail.   
Answer
 
The HKSAR Government conducted in  2006 a public consultation on tax reform.  However, there was 
no consensus on the appropriate means to broaden the tax base.  The Government will continue to 
study options for broadening the tax base and consu lt the public further on those options which are 
more practical in due course.  
 
Tax concessions, exemptions, and incentives 
 
Paragraph 84 mentions that, against the global econo mic crisis, the Government proposed several tax 
concessions or exemptions in the 2010-2011 Budget , with a view to lowering the tax burden on 
enterprises and individuals.   Would Hong Kong, China kindly describe the characteristics of these tax concessions and 
exemptions and of the beneficiary enterprises.  
 
Answer
 
Hong Kong, China has just gone through the worst time of the global financial crisis, but its impact on many people is not yet over.  After taking into  account its financial position, the Government has 
proposed in the 2010-11 Budget the following one-o ff tax concessions / exemptions to lower the tax 
burdens on all enterprises and individuals -  
− A one-off reduction of salaries tax and tax under personal assessment for 2009-10, 
subject to a ceiling of HK$6,000. 
− Waive rates for all four quarters of 2010- 11 capped at HK$1,500 per tenement for 
each quarter. 
− Waive business registration fee from 1 August 2010 to 31 July 2011. 
 
(vii) Intellectual property rights 
(b) Enforcement 
 Paragraph 113 of the Report mentions that alt hough IPR protection was further strengthened during 
the review period, the quantity of seized counterfeit goods increased greatly in 2009. 
 
 Would Hong Kong, China kindly explain the reasons for this situation and indicate what 
measures the Government intends to adopt in order to deal with the problem.   
Answer
 
The HKSAR Government attaches great importance to the protection of IPR.  We allocate substantial 
resources on enforcement.  The Hong Kong Cust oms takes all forms of counterfeiting activities 
seriously and spares no efforts in combating counterfe iting activities.  Vigorous raids are made at all 
levels: manufacturing, import and export, distribution and retailing.  On top of the 250 officers in its Intellectual Property Investigation Bureau, the Cu stoms also deploys a 150-member raiding squad to 
carry out intensive raids against known bl ack spots where counterfeit goods are sold. 
 WT/TPR/M/241/Add.1 
Page 120  
 
  The unrelenting efforts of the Hong Kong Custom s over the years have now put the counterfeiting 
problem under control.  There is no longer any manuf acturing operation in Hong Kong, China.  In 
the local market, only low-level sales activities of a limited scale are found.  For instance, some 
hawkers are now operating for short time intervals and on irregular hours, while others may resort to 
displaying merely photographs or catalogues of c ounterfeit goods on the stalls to evade Customs 
action, or maintain a very low stock level there to minimise financial losses resulting from Customs 
raids.   In 2009, the Hong Kong Customs intercepted a few larg e shipments of counterfeit cigarette cases at 
import/export level.  That has pushed the quantity of seized goods to a level optically higher than that 
of 2008.  However, counterfeiting activities in H ong Kong, China remain under firm control.  There is 
no sign of deterioration. 
 
We will continue to put our strenuous efforts in stifling such illicit trade.  The Hong Kong Customs 
will keep staging repeated raids against counterfe it traders and their backroom activities.  Its 
enforcement strategies include: focused and repea ted raids at known black spots; proactive 
interception of infringing goods at boundary point s; development of intelligence on the supply and 
distribution of infringing goods; close cooperation with the rights owners and other local, Mainland 
China and overseas law enforcement agencies; intensive enforcement action to track down 
syndicates; and confiscation of crime proceeds as well as seeking stiffer sentences/penalties to 
provide greater deterrence against organized counterfeiting activities.  
 
Apart from robust enforcement against counterfe iting, the HKSAR Government will continue to 
educate the public, enhance awareness, and promote a culture of respect in the community for IPR. 
 IV. TRADE POLICIES BY SECTOR 
(2) A
GRICULTURE AND FISHERIES  
(iii) Fisheries 
 
Paragraph 18 mentions that about 78% of the catch  was harvested in waters outside the HKSAR.  The 
local fishing fleet consists of some 3,700 fishing vessels and 7,600 fishermen.  
 Would Hong Kong, China please specify the re gions in which its fishing fleet operates. 
 
Answer
 
In addition to HKSAR waters, local fishing vessel s also operate in the South China Sea. 
 Paragraph 19 states that most loans were granted under the Fish Marketing Organization Loan Fund, 
of which HK$76.5 million in 2008- 2009 were provided to fishermen affected by the two-month 
annual fishing moratorium in the South China Sea imposed by Mainland China.   Does the Government of Hong Kong, China inte nd to continue granting such loans in the 
future? 
 
Answer
 
Yes. 
 
 INDONESIA
 
 
1. Please kindly describe the type of incentive schem es that the Government of Hongkong China 
provides to the six sectors: education, health services, testing and certification, innovation and 
technology, creative industries and culture, and environmental industries. How does the Government  WT/TPR/M/241/Add.1 
 Page 121 
 
 
  of Hongkong China ensure the consistency of rele vant schemes and policies with WTO rules? Please 
explain whether the incentive schemes included in the State Budget of the Government of Hongkong 
China? ( Secretariat Report , summary, par. 4, page vii)  
Answer  
 
For Education Services  
 We have adopted the following measu res to develop education services –  
 
- On the internationalisation front, we implem ented in 2008 a basket of measures including 
doubling the non-local student quotas of the public ly-funded programmes to 20%, establishing the 
HK$1 billion HKSAR Government Scholarship Fund , allowing non-local students to take on summer 
jobs and on-campus part-time jobs and enabling n on-local students to stay in Hong Kong, China 
without limitations for 12 months after graduation.  
- In 2009, the “Hong Kong PhD Fellowship Sc heme” was launched.  The scheme aims to 
attract the best and brightest students around the world to pursue their PhD programmes in Hong 
Kong, China’s education institutions.  An a nnual stipend of HK$240,000 and a conference and 
research-related travel allowance of HK$10,000 w ill be provided for up to three years.  This 
prestigious scheme will unite top international  research postgraduate students and Hong Kong, 
China's world-class resea rch institutions.  In the 2010/11 acad emic year, 106 fellowships were 
awarded.  
- On diversification, we have introduced a number of measures to facilitate the development of 
self-financing post-secondary sector, including:  
 (a) Land Grant Scheme to grant sites at nominal premium to non-profit-making self-
financing post-secondary education institutions; 
 (b) Start-up Loan Scheme to provide loans to meet the start-up expenses to self-financing 
post-secondary institutions; 
 (c) Quality Enhancement Grant Scheme to fund worthwhile one-off non-works projects 
that could help enhance the quality of te aching and learning of self-financing post-
secondary programmes;  and 
 (d) One-off grants to self-financing post- secondary institutions to facilitate their 
development. 
 
The Chief Executive announced in the 2010-11 Poli cy Address that we propose establishing a 
HK$2.5 billion Self-financing Post-secondary Educat ion Fund to support the further development of 
the local self-financing post-secondary education sector.  
Looking ahead, we will continue to adopt a two-pronged strategy of promoting the parallel 
development of the publicly-funded sector and the self- financing sector.  We will also work with our 
higher education institutions to step up exchange and promotion effo rts overseas to encourage more 
students to regard Hong Kong, China as a preferred d estination for education.  In 2010, we visited a 
number of countries (including Malaysia, Indonesia,  South Korea, Japan and India) together with our 
higher education institutions to showcase the achiev ements of our higher education sector.  We will 
continue our efforts in this area. 
 The measures introduced to facilitate the devel opment of self-financing post-secondary education 
institutions are applicable to all post-secondary ins titutions which satisfy the criteria regardless of 
their origin. 
 WT/TPR/M/241/Add.1 
Page 122  
 
  All of the financial implications of the various schemes have been included in our budget (although 
some of them may be of one-off in nature and may have been accounted for in previous years’ budget) 
except for the HK$2.5 billion Self-financing Post-sec ondary Education Fund which will be set up next 
year.  
 
For Medical Services
 
 
We seek to develop our medical services as one of th e six industries crucial to the development of the 
economy of Hong Kong, China.  We seek to st rengthen our hardware and software to facilitate 
private hospital development.  On hardware, we  have reserved four sites (in Wong Chuk Hang, 
Tseung Kwan O, Tai Po and Lantau respectively) for private hospital development.  As for software, 
we will continue to enhance the training an d development of local medical professionals, and 
facilitate exchange of expertise between local and overseas medical professionals, with a view to 
further raising the service standards of Hong Kong, China’s healthcare sector.  The relevant initiative 
on development of private hospital was featured in the Government’s Budget for 2010-11.  
The Government has conducted an Expression of In terest (EOI) exercise from December 2009 to 
March 2010 to solicit market interest in developing pr ivate hospitals at the reserved sites.  The EOI 
exercise was open to all interested parties, incl uding local and overseas parties.  The future land 
disposal exercise will also be open to all interested parties.  For Testing and Certification Services
 
 
The HKSAR Government shall work together w ith the Hong Kong Council for Testing and 
Certification (HKCTC) and various stakeholders to implement the recommendations in the HKCTC 
report issued in March 2010, which include st rengthening the accreditation service provided by 
Hong Kong Accreditation Service, assi sting the industry to attract ta lents, promote internship and 
enhance professionalism of the practitioners; and prom oting to the industry wider use of various 
Government funding schemes e.g. the Innovation a nd Technology Fund, R&D Cash Rebate Scheme 
and Small Entrepreneur Research Assistance Progr amme.  We shall link up the industry to 
technological institutions e.g. R&D Centres, H ong Kong Jockey Club Institute of Chinese Medicine, 
etc for more collaboration opportunities and a rrange more technical seminars and workshop to 
promote the transfer of technical knowledge to the industry.  We shall also work with Hong Kong 
Productivity Council (HKPC) and Science Park to promote their fac ilities available for shared use to 
the industry. 
 
HKCTC has selected four trades with good potentia l in using testing and certification services, i.e. 
Chinese medicine, construction materials, food and je wellery.  Panels have been set up under HKCTC 
to explore more business opportunities and to promot e use of testing and certification services in 
these trades. 
 As to promotion, we shall promote the "Tested in Hong Kong; Certified in Hong Kong" branding and 
Hong Kong, China's accreditation services and connect the industry to potential customers through 
Hong Kong Trade Development Council’ s various channels like trade fairs, website, publications, etc. 
and work with HKPC to strengthen the industry’s connection with manufacturers in Pearl River Delta 
Region.  
For Innovation and Technology
 
 The HKSAR Government strives to foster the development of innovation and technology through the 
provision of support on both the hardware and software fronts.   
 
On the hardware front, the Hong Kong Science Park is established to offer one-stop infrastructural 
support services to technology-based companies and activities.  There are now more than 300  WT/TPR/M/241/Add.1 
 Page 123 
 
 
  companies located in the Science Park.  As at th e end of September 2010, the number of tenants by 
places of origin is 60% local and 40% non-local.   Among the non-local companies (determined by 
reference to the place of incorporation of the pa rent company of the tenant), 29% were from the US, 
27% from Europe, 19% from the Mainland of  China and the rest 25% from Asia-Pacific. 
 
On the software side, the Innovation and Technol ogy Fund is set up to support applied research and 
development (R&D).  The funding schemes under the ITF provide funding su pport for applied R&D 
projects conducted by public research institutions and private sector companies, as well as non-R&D 
activities such as promotion of local innovati on and technology culture and funding support for the 
training of research interns. 
 
To ensure optimal use of resou rces and the relevancy of applied R&D activity to industry needs, R&D 
Centres were set up under the ITF to drive industry oriented R&D in selected technology focus areas 
and to promote technology transfer to the relevant industries.   
To encourage more private sector investment in R& D and their collaboration with universities/public 
research institutes, the HKSAR Government launched the “R&D Cash Rebate Scheme” in April 2010.  
Companies incorporated in Hong Kong, China can enjoy cash rebate equivalent to 10% of their R&D investment.   For Cultural and Creative Industries
 
 
We have earmarked an additional recurrent expend iture of HK$486 million for the period from 
2010/11 to 2014/15 to strengthen the cultural softwa re of Hong Kong, China through arts programme 
development, manpower training, promotion of ar ts education, audience building and cultural 
exchanges.  We aim to create an environment which is conducive to the freedom of artistic expression 
and creation, and the wider participation in cultura l activities.  There are no particular incentive 
schemes for the arts and cultural sector.  For the promotion of creative industries, the Create Hong Kong (CreateHK) dedicated office was 
established in 2009 as a one-stop shop for Hong K ong, China’s creative industries.  CreateHK 
administers a number of funding schemes that prov ides financial assistance for the promotion of the 
further expansion of Hong Kong, China’s creativ e industries.  These funding schemes include: 
 
− Film Development Fund (FDF) : The HK$320 million FDF aims to provide financial 
support for projects conducive to the long-term development of the local film industry.  FDF offers funding assistance to part-finance small-to-medium budget film productions, as well as supports  projects that are conducive to the development of the 
local film industry, including promotiona l efforts outside Hong Kong, China; 
− Film Guarantee Fund (FGF) : The HK$30 million FGF provides a guarantee that 
assists local film production companies to obtai n loans for producing films.  This helps 
create an environment conducive to the development of the film financing infrastructure in Hong Kong, China. 
− DesignSmart Initiative (DSI) : The HK$250 million DSI provides financial assistance 
to support projects conducive to the developm ent of the design sector, such as design 
research, design/business collaboration, pr ofessional and continuing education in 
design, and promotion of design.  DSI also supports an incubation programme that helps nurture local design start-ups. 
− CreateSmart Initiative (CSI) : The HK$300 million CSI offers financial support to 
projects conducive to the development of creative industries, and which are not covered by the above-mentioned funding schemes. 
 WT/TPR/M/241/Add.1 
Page 124  
 
  CreateHK works with the creative industries to intr oduce measures that help  further the development 
of Hong Kong, China’s creative industries, as we ll as promoting Hong Kong, China’s creativity 
outside the city.  Following the philosophy of an open economy ad opted by the HKSAR Government, our measures in 
support of the development of creative industries do no t restrict overseas creativ e establishments from 
setting up operations and doing business in Hong Kong, China.  In fact, all organisations registered 
in Hong Kong, China can file applications to the above-mentioned funding schemes. 
 For Environmental Services
 
 
The development of green financing is essential fo r supporting the growth and expansion of a green 
sector.  Hong Kong, China welcomes initiatives pr oposed by overseas econom ies in pursuing green 
growth and encouraging regional cooperation in this aspect.   
In view of the huge investment potential on envir onmental technologies and infrastructure in the 
Mainland of China, there will be substantial oppor tunities for our environmental service providers to 
access the business opportunities.  Hong Kong, China will also seek to deepen cooperation with the 
Guangdong authorities in the Mainland of China in resp ect of the wider use of renewable and cleaner 
energy, promoting the development of circular ec onomy, enhancing cleaner pr oduction in the Pearl 
River Delta region, as well as promoting the wider use of electric vehicles.    
 
Specifically, the HKSAR Government is committed to promoting a green economy through a whole 
range of policies –  (a) cross-boundary cooperation to transform the Pearl River Delta (PRD) region into a 
green and quality living area.   The Government allocated over HK$93 million to 
jointly launch with Guangdong a five-year Cleaner Production Partnership 
Programme in April 2008.  The Progra mme facilitates Hong Kong, China-owned 
factories in the PRD region to adopt cl eaner production technologies and practices, 
as well as facilitates the exchange of info rmation on environmental technology and 
the promotion of environmental technology  and services.  Up to end August 2010, 
813 projects have been approved; 
 (b) about 40% of the 2 300 approved Cl ean Development Mechanism (CDM) projects 
are being carried out in the Mainland of China, involving an investment of more than HK$80 billion and major technology transfer.  The Government has secured approval for eligible Hong Kong, China ent erprises to participate in CDM projects in 
the Mainland of China, which will gen erate green business opportunities to Hong 
Kong, China enterprises;  
 (c) we have pledged an investment of HK$50 billion on infrastructural projects directly 
related to our environmental initiatives, incl uding a district cooling system at the Kai 
Tak Development, a sludge treatment fac ility and an integrated waste management 
facility with daily capacities of 2,0 00 tonnes and 3,000 tonnes respectively; 
 (d) we are working on the strategy and specific  measures to promote the use of electric 
vehicles, which are more energy efficient and emit no exhaust gas; 
 (e) the Government is taking the lead by adopting a green procurement policy and 
promoting green government buildings through minor works and demonstration 
projects.  We have allocated HK$130 million to enhance energy efficiency of 
government buildings and public faciliti es, and another HK$450 million to carry out 
minor works for enhancing a green and su stainable environment in government 
buildings; 
 (f) we have injected HK$1 billion into the Environment and Conservation Fund (ECF) in 
early 2008 to incentivize the community to  join hands with the Government in 
promoting green economy.  Schools and c haritable organizations are encouraged to  WT/TPR/M/241/Add.1 
 Page 125 
 
 
  apply funding for public education and minor works projects for promoting 
environmental protection; and 
 (g) to encourage the public to take conc rete actions for enhancing building energy 
efficiency, HK$450 million has been reserved  under the ECF to subsidise building 
owners to conduct energy-cum-carbon audits and energy efficient projects.  As at 
end-November 2010, more than HK$200 milli on of funding has been granted.  
 
During the formulation of and rolling out any incenti ve scheme, Hong Kong, China will bear in mind 
that the scheme shall not discriminate any WTO me mber and shall provide fair business opportunities 
for all.  
 
2. In recent years, the Government of Hongko ng China developed export credit scheme from 
early 2008 until late 2010 that aims to increase its  trade surplus by increasing exports and reducing 
imports. Could the Government of Hongkong China explain whether this  type of subsidy consistent 
with WTO Rules? Such incentive could increase Hongkong China export competitiveness directly. 
(Secretariat Report, par. 4, page 22)  
Answer  
The Hong Kong Export Credit Insurance Corporation (ECIC) was established in 1966 for providing 
insurance protection for exporters against non-pa yment by buyers, and country risks arising from 
commercial and political events.  ECIC’ schemes are neither specific, as ECIC does not favour any 
particular enterprise or industry, nor contingent u pon export performance or the use of domestic over 
imported goods.  They are c onsistent with the WTO Agreement on Subsidies and Countervailing 
Measures.  Moreover, the current export credit insurance services offered by ECIC are not 
discriminatory against overseas exporters, as all expor ters registered in Hong Kong, China under the 
Business Registration Ordinance (whether foreign- owned or not) are eligible for ECIC’s 
underwriting services. 
 3. Hongkong China still does not have a Competition Po licy.  In this regard, when will the Act 
be enforced and what type of legal  basis will be used to determine measures? Please explain how does 
the Government of Hongkong bind the decision of measu res given that it does not have a draft law on 
business competition? (Secretariat Report, summary, par.7, page viii)  
Answer
 
The objective of Hong Kong, China’s competition po licy is to enhance economic efficiency and the 
free flow of trade through promoting sustainable co mpetition to bring benefits to both the business 
sector and consumers.  In July 2010, the HKSAR Go vernment introduced the Competition Bill into the 
legislature to provide a legal framework for en suring effective implementation of our competition 
policy. 
 
The Bill sets out the competition rules prohibitin g anti-competitive conduct in three major areas, 
namely agreements, decisions and concerted prac tices (the first conduct rule); the abuse of a 
substantial degree of market power in a ma rket (the second conduct rule); and mergers or 
acquisitions of carrier licensees under the Telecommunications Ordinance that have, or are likely to 
have the effect of substantially lessening competiti on in Hong Kong, China (the merger rule).  On 
institutional arrangements, the Bill provides for a judicial enforcement model, under which an 
independent statutory Competition Commission will be  established to investigate and bring public 
enforcement action in respect of anti-competitive conduct.  A Competition Tribunal will likewise be 
set up within the Judiciary as a superior court of  record to hear and adjudicate on competition cases 
brought by the Commission and private actions. 
 
A Bills Committee has just begun the scrutiny of the Comp etition Bill.  Date for the passage of the Bill 
would depend on progress of the scrutiny of the Bill by the legislature. WT/TPR/M/241/Add.1 
Page 126  
 
   
Even without a cross-sector competition law in place at the moment, we  have been promoting 
competition through the Competition Policy Adviso ry Group (COMPAG), which is chaired by the 
Financial Secretary, to review competition issues that  have policy or systemic implications.  In May 
1998, COMPAG issued the Statement on Competition Policy (the Statement) to an overarching policy 
framework to guide public and private sector bodies to promote competition across sectors on a 
voluntary and self-discipline basis.  In 2003, CO MPAG published a set of guidelines to supplement 
the Statement and to advise businesses on the types of c onduct that could be seen as anti-competitive.  
COMPAG has also been giving advice to HKSAR Government bureaux and departments in reviewing 
policies and practices from the competition standpoi nt, and in proposing new initiatives to promote 
competition in different sectors.  In addition, CO MPAG has been monitoring complaints of anti-
competitive conduct and asking HKSAR Government de partments responsible for the various sectors 
to look into such complaints and where appr opriate recommend administrative remedies. 
 4. With regard to the infrastructures developmen t plan in Hongkong, please explain and confirm 
whether Indonesia would be eligible to participate in that program? (Secretariat Report, summary, 
par. 19, page ix)  
Answer
 
The government procurement market of Hong Kong,  China, including procurement of services for 
infrastructure development, is open to all forei gn suppliers/contractors.  Foreign contractors, 
including those from Indonesia, may participate in tendering for infrastructure works contracts let out 
by the government of Hong Kong, China.  However,  please note that for most of the public work 
contracts in Hong Kong, China, only contractors on the approved lists are allowed to participate in 
tendering.  The contractors with  the necessary management, technical and financial capability as well 
as capable to meet the site safety standards, in cluding those from foreign countries, can apply for 
inclusion in the approved lists.  Therefore, contract ors interested in participating in infrastructure 
development are encouraged to apply for inclusion in  the approved lists as soon as possible.  The 
application details can be found at the following website: 
http://www.devb.gov.hk/en/construction_sector_ma tters/contractors/applications_as_public_works/in
dex.html.  
 
5. What are the laws and regulations concer ning labelling requirements in Hongkong China? 
What are the specific measures in this regard? (Secretariat Report, par. 45, page 31)  
Answer  
Between 2006 and 2010 (up to 15 April 2010), Hong Kong, China submitted 16 notifications to the 
WTO Committee on Technical Barriers to Trade, con cerning, inter alia, labeling requirements for 
food, and energy efficiency or wat er efficiency labeling schemes.   
 To enhance food safety and protect consumers’ in terest, the Food Business Regulation (Cap. 132 sub. 
leg. X), as amended by the Food Business (Amendmen t) Regulation 2006 which came into effect in 
August 2006, requires chilled beef, mutton or pork to be pre-packaged and properly labelled if it is 
sold in fresh provision shops/market stalls which also sell fresh beef, mutton or pork.  Information 
required to be shown on the labels is similar to  the labelling requirement for pre-packaged food in 
general under the Food and Drugs (Composition and L abelling) Regulations (Cap. 132 sub. leg. W), 
e.g. name, “use by” date, net weight, etc.  In additio n to that, the labels are required to indicate the 
name and address of the slaughtering plant and the slaughtering date.  Where pre-packaging and labelling are required, such procedures may be comp leted either in the exporting economy or in Hong 
Kong, China.  On electrical appliances, there a re two energy efficiency labelling schemes, viz mandatory energy 
efficiency labelling scheme (MEELS) and voluntary energy efficiency labelling scheme (VEELS). The  WT/TPR/M/241/Add.1 
 Page 127 
 
 
  MEELS was introduced through the Energy Efficiency (Labelling of Products) Ordinance, Cap. 598.  
Under the Ordinance, a prescribed product being supp lied by a manufacturer or importer shall be a 
listed model having a reference number assigned in hi s name and bears an energy label.  The initial 
phase of the MEELS covers three types of produc ts, namely room air conditioners, refrigerating 
appliances and compact fluorescent lamps, and has been  fully implemented since 9 November 2009.  
The second phase of the MEELS extends the coverage  to washing machines and dehumidifiers, which 
has commenced on 19 March 2010 with an 18-month grace period.  For details of the MEELS, please 
refer to the website at - http://www.emsd.gov.hk/emsd/eng/pee/eels_mandate.shtml  As regards Voluntary Energy Efficiency Labelling Sc heme (VEELS) for fax machine, hot/cold bottled 
water dispensers and television, it was developed to facilitate the public to choose energy efficient 
products.  Participation in the Scheme is on voluntary basis.  Suppliers/importers are encouraged to 
participate in the VEELS to promote energy savings in Hong Kong, China.  Details of the Scheme 
including application procedure can be found in the website at - http://www.emsd.gov.hk/emsd/ 
eng/pee/eels_vlntry.shtml 
 
Similarly, for the Voluntary Water Efficiency Labelling Scheme  (WELS) on showers for bathing and 
water taps, there is no laws and regulations governin g labelling requirements as the existing Scheme 
is voluntary in nature.  The showers for bathing and water taps shall be tested in accordance with the 
testing requirements specified under the Scheme in  a recognized laboratory.  Besides, the showers 
and water taps shall be designed and manufactured  under a design and production system operating 
according to a recognized international quality system (such as ISO 9001). 
 
 
REPLIES TO FOLLOW-UP QUESTIONS
 
 
Follow-up Question from Canada 
 
Canada would like to respectfully seek further clar ification from Hong Kong, China, on their answer 
provided to our first question.  Specifically, we feel  that their reply only addressed the 'procurement' 
portion of our question, and does not provide deta ils on the specific legislative measures to be 
undertaken.  
Answer
 
The HKSAR Government is committed to making H ong Kong, China a greener city.  Legislative 
measures recently introduced/to be underta ken for this purpose are set out below. 
 To Improve Air Quality
 
 
To improve roadside air quality, we are bringing the Motor Vehicle Idling (Fixed Penalty) Bill 
through the legislature to ban idling vehicles with running engines.  To promote the use of biodiesel as motor vehicle fuel, we have implemented sin ce 1 July 2010 a regulatory framework to require 
motor vehicle biodiesel to comply with international standards such as EN14214.  In 2008, we have 
amended the law for stipulating emission caps for the power sector for 2010 and beyond.  These 
emission caps will be further reduced by 34% to  50% starting 2015 to further improve local and 
regional air quality.  Since 2009, we have linked the two power companies’ rate of return to 
environmental performance and signed a Memorandum  of Understanding with the National Energy 
Administration of the Central People’s Government of China to enable an increase in the use of 
natural gas for power generation.  To control emissions from other sources, we have imposed 
statutory limits on the content of volatile organic compounds of selected products and mandated all industrial and commercial processes to  use ultra-low sulfur diesel.   
 WT/TPR/M/241/Add.1 
Page 128  
 
  The Ozone Layer Protection (Products Contai ning Scheduled Substances) (Import Banning) 
Regulation was amended in 2009 to extend the banning of the import of controlled products 
(including refrigeration and air-conditioning equipm ent, aerosol products such as metered dosed 
inhalers, fire extinguisher, insulation panel and pre-polymer) containing chlorofluorocarbons and 
halons to those containing other scheduled subst ances including hydrochloro fluorocarbons by phases 
starting from January 2010 with a view to achievi ng the phase-out rate of 75% by 2010, 90% by 2015 
and 100% by 2020. 
 Waste Management
 
 
We are also developing policy measures to provid e incentive for the commun ity to discard less and 
recycle more.  In this connection, the Product Eco-responsibility Ordinance (C ap. 603) was enacted 
in July 2008.   It provides the legal basis fo r introducing producer respons ibility schemes in Hong 
Kong, China.  Commenced in July 2009, the enviro nmental levy on plastic shopping bags is the first 
scheme introduced under the Ordinance, which aims  to reduce the indiscriminate use of plastic 
shopping bags.   
 Building Energy Code
 
 
Buildings account for 89% of the total electricity  consumption in Hong Kong, China.  Since Hong 
Kong, China is a commercial city with limited in dustrial operations, we have great potential to 
improve energy efficiency and reduce our greenhouse gas  emissions by promoting energy efficiency in 
buildings.  The Buildings Energy Efficiency Ordinance was enacted in November 2010 for the 
mandatory implementation of a set of standards an d requirements called the Building Energy Codes 
at four types of building services installations, viz.  air-conditioning, electrical, lifts and escalators, 
and lighting installations.  We expect that for new buildings, the implementation of the Ordinance will 
result in energy saving of 2.8 billion kWh in the fi rst decade, which will contribute to a reduction in 
carbon dioxide emission of 1.96 million tonnes. 
 
Energy Labelling Scheme  
 To promote the use of energy efficient el ectrical appliances, the HKSAR Government has 
implemented a Mandatory Energy Efficiency Labelli ng Scheme (MEELS) through legislation.  The 
initial phase of MEELS, which has fully implemen ted since November 2009, covers three types of 
products, namely room air conditioners, refrigera ting appliances and compact fluorescent lamps.  
The second phase of MEELS, which will be fully implemented in September 2011, extends the 
coverage to two more electrical appliances, namel y washing machines and dehumidifiers.  The five 
products covered under the two phases of MEELS take up about 70% of annual electricity 
consumption in the residential sector.  It is estim ated that the two stages of MEELS will bring about 
an energy saving of about 175 gigawatt hours.  All these prescribe d products for supply in Hong 
Kong, China are required to be listed models w ith reference numbers and bear energy labels which 
state the energy efficiency performance of the pr oducts.  Consumers can then make informed choices 
to help protect the environment by  choosing energy-efficient products. 
  
EU follow-up questions and comments 
 
The EU thanks Hong Kong, China for its written replies. The EU has the following additional 
comments and questions.  
1) Q 7 follow-up question -
 The EU welcomes the stated intentio n of Hong Kong, China to review the 
impact of the Nutrition Labelling Sc heme on "new-to-market" products one year after the entry into 
force of the legislation.  Could Hong Kong, China elaborate further on how it intends to react in case  WT/TPR/M/241/Add.1 
 Page 129 
 
 
  the review shows that as a result of the legislation,  this particular category of products is adversely 
impacted and what could be likely steps to remedy such a situation? 
 
Answer  
The HKSAR Government will review the impact of the Nutrition Labelling Scheme on "new-to-
market" product one year after commencement of the legislation.  Since we have yet to start our 
review, it is premature to prejudge the result.  We will consider the way forward after the completion 
of the review. 
 
2) Qs 8 and 9 comment and follow up question -  The EU welcomes the introduction of the draft 
Competition Bill and has also taken note of the lik ely time-table concerning its entry into force 
(provided in response to a question from Switzerland ). As regards one aspect of the draft Competition 
Bill, i.e. the automatic exemption of a significant number of statutory bodies, the EU is aware of the 
suggestion by the Law Society that rather than ha ve such bodies automatically exempted, they should 
be subject to scrutiny, including by the Legisl ative Council. Could Hong Kong, China elaborate 
further on the rationale for the proposed automatic exemption?  Answer
 
In the light of the fact that the activities of statutory bodies in Hong Kong, China are non-economic 
and regulatory in nature or involve provisi on of essential public services, the Competition Bill 
proposes exemption to be given to these statutory bodi es.  Cases in other jurisdictions indicate that 
such activities would effectively be excluded from  the application of the competition law.  The 
Competition Bill, with the proposed exemption, is  being scrutinised by the legislature.    
3) Q 26 has been partially replied  - in relation to illegal unreported and unregulated (IUU) fishing, 
Hong Kong, China has provided a response in relation to vessels fishing in Hong Kong waters.  Could 
Hong Kong, China also specify, what monitoring m echanisms does it have in  place to ensure that 
vessels listed on its shipping register but fishing ou tside Hong Kong, China waters do not engage in 
IUU fishing? 
 
Answer  
Fishing vessels are not included in the vessel regi stration system in Hong Kong, China and thus no 
fishing vessel shall bear a Hong Kong, China identity (i.e. flying the Hong Kong, China flag) while in 
high sea/other waters.   
 4) Q 27  follow-up and additional question - in its  reply, Hong Kong, China describes how it ensures 
that vessels listed on its shipping register r espect the relevant environmental agreements,  inter alia  
MARPOL. Could Hong Kong, China also elaborat e further on how does it monitor in practice the 
compliance of its flagged vessels with MARPOL? In  addition, could Hong Ko ng, China explain how 
does it monitor in practice the compliance of its fl agged vessels with Hong Kong China's labour laws 
and regulations, as well as the relevant ILO C onventions relating to maritime workers?  
 Answer
 
All cargo ships and passenger ships registered in Hong Kong, China shall comply with the 
regulations under the International Convention For The Prevention of Pollution From Ships 
(MARPOL).  Relevant certificates are issued to  these vessels upon satisfactory completion of 
initial/periodical/renewal surveys.  Annual surveys to check continuous satisfaction of some MARPOL 
certification as per requirements are also perf ormed.  The "Merchant Shipping (Prevention and 
Control of Pollution) Ordinance" (Cap. 413) is also introduced in Hong Kong, China monitoring vessels registered in Hong Kong, China and certified local vessels.  Hong Kong, China is in the 
process of making local legislation in relation to Maritime Labour Con vention 2006 to regulate 
Hong Kong, China registered vessels on regula tion related to the ILO Convention.   
 
__________