WORLD TRADE  
ORGANIZATION  WT/TPR/M/181 
12 June 2007 
 (07-2466) 
Trade Policy Review Body 
30 April and 2 May 2007  
 
 
 
TRADE POLICY REVIEW 
 
MACAO, CHINA 
 
Minutes of Meeting  
 
Chairperson:  H.E. Mr. Vesa Himanen (Finland) 
 
   Page 
 
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3 
II. OPENING STATEMENT BY THE REPRESENTATIVE OF MACAO, CHINA 4 
III. STATEMENT BY THE DISCUSSANT 6 
IV. STATEMENTS BY MEMBERS 8 V. REPLIES BY THE REPRESENTATIVE OF MACAO, CHINA AND ADDITIONAL 
COMMENTS 14 
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 16 
 
 
     
 
    
 
    
 
  
Note:   Advance written questions by WTO Member s and the replies provided by Macao, China are 
reproduced in document WT/TPR/M/181/Ad d.1 and will be available online at 
http://www.wto.org/english/tr atop_e/tpr_e/tp_rep_e.htm. WT/TPR/M/181 
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  I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The third Trade Policy Review of Macao, China was held on 30 April and 2 May 2007.  The 
Chairperson (H.E. Mr. Vesa Himanen) welcom ed the Macao, China delegation, led by 
Mr. Tam Pak Yuen, Secretary for Economy and Finance, and Mr. Raimundo do Rosário, and the 
discussant Mr. Paulo Estivallet de Mesquita (Brazil) .  As usual, the discussant would speak in his 
personal capacity and not as representative of his country.  In accordance with the established 
procedures, the discussant had made available, in a dvance, outlines of the main issues he intended to 
raise (document WT/TPR/D/157). 
2. The Chairperson recalled the purpose of the Trad e Policy Reviews and the main elements of 
the procedures of the meeting.  The report by Macao, China was contained in document 
WT/TPR/G/181 and that of the WTO Secretariat in WT/TPR/S/181.  As indicated in 
WT/TPR/6/Rev.1, the Member under review should pr ovide written answers, by the beginning of the 
review meeting, to questions submitted at least two weeks before the meeting.  Questions posed 
subsequently should be answered, to the extent possi ble, before the start of the second session of the 
meeting.  Questions left unanswered at the end of the second session should be answered in writing no 
later than one month after the meeting. 
3. Questions by the following delegations had been  submitted in writing at least two weeks in 
advance of the meeting and had been transmitted to the delegation of Macao, China:  Singapore;  the 
United States;  Colombia;  Hong Kong, China;  th e European Communities;  and Japan.  Copies of 
these questions and of the answers provided by the delegation of Macao, China were available in the 
meeting room.  Canada had submitt ed written questions after the two-week deadline;  copies of these 
questions and of the answers provided by the delega tion of Macao, China were also available in the 
meeting room.  Copies of all advance questi ons, as well as the responses were reproduced in 
WT/TPR/M/181/Add.1. 
4. The Chairperson noted that since its previ ous Trade Policy Review in 2001, the Macao 
Special Administrative Region had risen to sever al challenges.  Growth had been impressive, 
underpinned by the liberalization of the gaming sect or, openness of the economy to trade and foreign 
investment as well as a favourable external environment since 2003, judicious macroeconomic 
policies, and the confidence-building effects of  the Closer Economic Pa rtnership Arrangement 
(CEPA) with China.  The growing integration of M acao, China with Mainland China had allowed it to 
continue to accelerate its structural transformation from a manufacturing- to a services-based economy centred around tourism and gaming. The re laxation of travel restrictions on Mainland 
Chinese had enabled a remarkable in crease in tourism to Macao, China. 
5. Progress had been especially noteworthy in several  areas, including:  the liberalization of the 
gaming sector, which had introduced competition with  positive spill-over effects on the rest of the 
economy;  efforts to diversify the economy;  rising inflows of foreign direct investment;  and the protection of intellectual property rights.  The Chairperson believed that Members would welcome 
further details on, among other things:  potential downside risks to economic stability, including the 
vulnerability of tourism to extern al shocks or health epidemics;  ensuring the smooth progress of 
gaming with the  healthy development of other sector s;  and opportunities arising under future CEPA 
liberalization arrangements.  He hoped that the di scussion within the context of this Trade Policy 
Review would help the policymakers of Macao, Chin a to prepare to meet some of the challenges 
ahead and, at the same time, a llow WTO Members to acquire a better understanding of the outlook for 
this small but dynamic and open economy in a number of trade-related areas. WT/TPR/M/181 
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  II. OPENING STATEMENT BY THE REPR ESENTATIVE OF MACAO, CHINA 
6. The representative of Macao, China
 noted that the Secretariat's Report underlined the 
fundamental stability in Macao's economic and trade policy since the resumption of sovereignty by 
China.  Macao, China had remained a free port, with  a very open trade and fo reign investment regime, 
no tariffs or other barriers to trade, and legal saf eguards for the free movement of goods, intangible 
assets, and capital.  The principle of "one country, two systems" embodied in its Basic Law had preserved its socio-economic system and way of lif e, and Macao had retained the principles of 
laissez-faire  and market-orientation that had always guide d the formulation of its economic and trade 
policy.  Macao, China would always abide by these principles in which it believed and had served it 
well. 
7. On the issue of transparency, to  which the Secretariat drawn attention, Macao had made great 
strides, through consultation and public informa tion, in involving the local community in the 
formulation and development of policy in key sectors of the economy.  He recognized that 
transparency was vital in an economy as open as Macao. 
8. Macao, China remained a wholly  committed Member of the WTO, and a strong supporter of 
the multilateral trade system.  In order to increase its involvement in the work of the WTO, the SAR 
Government had established the Macao Economic and Trade Office in Geneva in 2003.  Among other 
things, this had enabled Macao, China to follow mo re closely the course of the Doha Round.  He 
welcomed the formal resumption of the negotiations in February 2007 and hoped that real progress  would soon be made towards an agreement, which was needed by the entire membership.  Macao, 
China had offered a much improved schedule of spec ific commitments on services, including eight of 
the eleven sectors covered by the GATS.  Macao, China had no scope for tari ff reductions, since the 
applied tariff on imports of all goods from all sour ces was zero, but it was willing to make many more 
tariff bindings on industrial products as a c ontribution to the success of the Doha Round. 
9. The period under review had been one of st rong and sustained economic expansion.  GDP 
growth had averaged 18.1% a year in 2001-06.  Employment had improved to the extent that heavy demand had prompted shortage of labour in some industries.  Goods exports had been temporarily 
affected by the abolition of the textile quota syst em under the Agreement on Textiles and Clothing:  
Macao's total exports had fallen by 12 .1% in 2005, but recovered in 2006. 
10. The United States and the European Communities were Macao's main export markets, 
accounting for more than 65% of the total value of exports.  The persistent and growing deficit on 
visible trade had been more than compensated  by receipts from tourism and other services. 
11. To foster a fair and open investment envir onment, the Government had engaged in the 
ongoing review, reform, and enactment of laws a nd regulations in many areas, including notary 
operations, property registration, measures agains t money laundering, and the travel and tourism 
industries.  Foreign investment was encouraged by  a simple taxation structure with low tax rates, 
fiscal and financial incentives to investors, and a new "one-stop service" for investors setting up and 
registering a business in Macao. 
12. The structure of Macao's economy had changed.  It was overwhelmingly a services economy, 
and the Government was facilitating this transfor mation through deregulation and structural reform 
where necessary.  In this respect, the key developm ents since 2001 had been the liberalization of the 
gaming and telecommunications sectors.  The libera lization of gaming in 2002, after 40 years of 
monopoly, had been the main driving force of the economy during the period.  New entrants in this sector had spurred investment in gaming and tour ism and upgraded the opera tion and management of 
the industry;  gaming receipts had been increasing re markably.  However, as was made clear in the 
2007 Policy Address, Macao, China did not wish to be positioned merely as a gaming centre.  The 
Government expected that in this first phase of economic expansion rapid de velopment in the gaming  WT/TPR/M/181 
 Page 5 
 
 
  sector would spread to other parts of Macao's multi-faceted tourism industry and then to the rest of the 
economy. 
13. There had been a massive surg e in visitor numbers since 2001, mainly as a result of the 
Individual Traveller Scheme under the Closer Economic Partnership Arrangement with China 
(CEPA).  In 2006, visitor arrivals exceeded 20 m illion, a new record, and visitors from Mainland 
China accounted for more than half of all arriva ls.  New hotels and modern facilities were being 
developed to raise Macao's competitiveness as a tour ist destination, particularly for meetings, 
incentives, conventions and exhibitions (MICE).  In  July 2005, Macao's Historic Center had been 
designated a UNESCO World Heritage site;  this would strengthen the city's appeal. 
14. Boosted by both public and private investme nt, the construction and property sector had 
flourished and the city infrastructure was being tr ansformed.  Apart from the new casino/hotel-resorts, 
large-scale constructions included the third Macao -Taipa Bridge, the immigration building at the 
Border Gate, sporting facilities for the East-Asian  Games, the Fisherman's Wharf development and 
land reclamation in Colane-Taipa. 
15. Since 2001, the Government had further ope ned up the telecommunications sector, by 
liberalizing mobile telephony and internet services.   The Bureau of Telecommunications Regulation 
had been established in May 2006 to administer th e Basic Telecommunications  Law and ensure fair 
competition. 
16. Notwithstanding the strength of the services sector, the Government was determined to 
maintain a diversified industrial structure with a strong manufacturing component, to sustain long-
term economic growth and provide a full range of  employment opportunities.  Policies designed to 
promote diversification included the establishment of the Macao-Zhuhai Transborder Industrial Park 
and assistance programmes for small and medium-sized businesses.  These included three different financial assistance schemes and the establishment of an SME one-stop service centre. 
17. The signing of the CEPA with Mainland China in 2003 had strengthened the economic 
relationship between the Mainland and Macao and supported the growth of many sectors of the 
economy.  CEPA covered trade in goods and servi ces, and provided for cooperation in a wide range 
of activities, including trade facilitation, investment  promotion, and intellectual property protection.  
The SAR government had also been fostering ot her forms of cooperation, based on geographical 
proximity and historical bonds.  Examples include d the Pan-Pearl River Delta Regional Cooperation 
Agreement, and the Economic and Trade Coope ration Forum between China and the Portuguese-
speaking countries.  The Government believed Macao was well positioned to act as a business and 
services platform for the surrounding region, and as a bridge to the Mainland economy. 
18. To strengthen the regulatory framework on anti-money-laundering activities, the SAR 
Government had enacted new legislation and establis hed the Financial Intelligence Office (FIO) in 
2006.  Macao's anti-money-laundering regime was in full compliance with international standards. 
19. The Macao Customs Service had been established in November 2001;  one of its duties was 
the continued fight against infringements of intell ectual property rights.  Macao, China was pleased 
that, in recognition of its outstanding performance ( inter alia  in virtually eliminating local illicit trade 
in pirated optical discs), the Customs Service had been awarded the Sixth Annual Global Anti-
Counterfeiting Award by the Global Anti-Counterfeiting Group in 2003. 
20. The representative of Macao, China noted th at, as a small economy heavily dependent on 
trade, Macao was vulnerable to international shocks .  But in a reasonably favourable macroeconomic 
environment the Government was confident that th e economy would continue to develop robustly and 
to play a valuable role as a regional business and services platform.  Macao would continue to support 
the multilateral trading system and hoped that the Doha Round would be  concluded successfully. WT/TPR/M/181 
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  III. STATEMENT BY THE DISCUSSANT 
21. The discussant
 (Mr. Paulo Estivallet de Mesquita) noted that as a small, open economy, 
Macao, China was highly dependent on its external environment. Having suffered the impact of the 
Asian crisis in the late 1990s, it had taken full benefit of the upswing in recent years. Its close 
connections with Mainland China had enabled it to make the most of the opportunity to become a 
niche supplier of services, particularly gaming.  Investment in the tourism and gaming sector, and 
exports of related services, would continue to fuel Macao’s economic grow th for the foreseeable 
future.  Managing this breakneck pace of growth wo uld present a challenge to any country. It was an 
even greater challenge if the authorities did not have recourse to the traditional instruments of monetary policy.  The Secretariat reported the opinion of the authorities that an indirect peg to the 
U.S. dollar was the only viable alternative. This was somewhat counterintuitive, as the United States 
had huge deficits in its budget a nd current accounts, Macao’s business cycle was clearly not linked to 
the United States economy, there seemed to be little, if any, labour mobility between the two, and 
Macao was not dependent on exports to the United States for its external balance.  The peg was 
therefore not necessary for balance-of-payments purpo ses and it had an additional expansionary effect 
on what was already a high-speed economy.  Rising inflation in Macao, China was to be expected 
under these circumstances.  He was interested  in hearing any additional comments from the 
authorities on this subject. 
22. To some extent, the lack of monetary policy in struments seemed to be compensated by a very 
strong fiscal position, which enabled the Government , among other things, to hold very high foreign 
reserves.  The Secretariat Report had stated that th e Social Security Fund w as financed by employers 
and employees.  The first question was whether there was a Chinese wall between the SSF and the 
budget.  There was reference in the text to "little re gulation of the small factories that spring up and 
rapidly disappear".  He asked whether informal se ctor workers were entitled to benefits, and if so, 
whether these benefits were financed by the SSF or by the budget.  More generally, he asked whether 
there were any structural or physical impediments to maintaining the high rates of economic growth.  
Clearly, there was a high rate of investment, but he wondered whether there would be any physical 
constraints to the supply of energy or water, for instance. 
23. One of the most interesting developments in the trade policy regime appeared to be the Closer 
Economic Partnership Arrangement with Mainland China, which the Government considered one of 
the main factors behind Macao’s economic perform ance and a huge opportunity for at least partial 
diversification of economic activities. On the basis of the reports, it seems that only 625 tariff lines 
would be entitled to duty-free entry into Mainland China,  due to the lack of agreed rules of origin for 
the rest.  He requested confirmation of this unders tanding, as well as explanation of the procedures for 
establishing additional rules of origin.  In particul ar, whether there were any horizontal procedures for 
whether they would have to be developed on a case by case basis.  According to the Secretariat report, 
only small quantities of goods had b een exported under the CEPA.  He asked whether the authorities  
had detected any change in the trend for merc handise exports to Mainland China recently.  With 
regard to sectoral policies, the size of Macao , China made it difficult to assess whether general 
support could be deemed specific in the sense of Ar ticle 2 of the ASCM, and it might be unfair to 
expect the authorities to provide negative proof.  Ho wever, the Secretariat Report stated (on page 43) 
that, according to the authorities, M acao did not provide any export s ubsidies, but (on page 28) that 
"various tax incentives are made available for projec ts that ... encourage exports".  Law 1/86/M, for 
instance, seemed to grant wide discretion to th e Chief Executive of Macao to grant tax incentives, 
particularly exemptions.  He accepted that Macao  did not provide any export incentives, but it seemed 
that the law provided the Chief Executive with the authority to provide export subsidies. 
24. In services, given Macao’s focus on tourism, a key sector was air transport. The number of 
operators was expected to increase in  the near future, but on the b asis of sub-concessions granted by 
Air Macau.  He enquired about any plans for incr easing competition in this area.  The Secretariat  WT/TPR/M/181 
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  Report gave the impression that the textiles sector faced inevitable decline.  He asked whether the 
level of investment in this sector justified this assessment?   
25. He congratulated Macao on its economic perfo rmance and on its commitment to a liberal 
trade regime.  Holding its Trade Policy Review in the year of the Golden Pig was certainly a good 
omen, and he wished the authorities co ntinued success in the coming years. WT/TPR/M/181 
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  IV. STATEMENTS BY MEMBERS 
26. The representative of Singapore
 said post-2001 growth in Macao, China was remarkable.  
During 2001-05, GDP had grown at an average a nnual rate of 14.5%;  according to the recent 
statistics the growth rate for 2006 was 16.6%.  GDP for 2006 was at a record high of US$14.3 billion, 
a remarkable figure for a WTO member with a popu lation of just 500,000.  Like Singapore, Macao, 
China was heavily dependent on the external envi ronment and shared a similar philosophy toward 
trade and investment, key drivers of economic development.  The Singapore Business Federation and the Macao Chamber of Commerce had signed a memorandum of understanding aimed at providing mutual assistance in the understanding of each ot her's markets and investments. This MoU would 
boost business relations between Singapore and Macao, China.   
27. The liberalization of the gaming sector had significantly contributed to both GDP and 
investment growth in Macao, China.  Foreign dir ect investment had more than tripled between 2001 
and 2004, nearly quadrupled in the recreational and gaming sector, and was expected to increase 
substantially.  Macao, China’s gaming revenue in 2 006 had surpassed that of the Las Vegas Strip to 
become the world's biggest casino market.  In view of Macao, China’s booming tourism and gaming 
industry, Singapore companies and investors we re looking at it for investment opportunities. 
28. Other than the gaming sector, Macao, China’s openness toward trade and investment in other 
areas was also commendable.  For trade in goods , Macao, China was a free port – the customs 
territory imposed no tariffs and had no anti-dumping,  countervailing or safeguard laws.  And in the 
context of the services negotiations in the DDA, M acao, China’s revised offer could be considered 
comprehensive, covering commitments in eight of the eleven GATS sectors.  Given the low rates of 
tax on company profits and the absence of any discrim ination against foreign investors, Macao, China 
was considered as an attractive investment destinatio n.  Notably, there were no restrictions on imports 
of capital, capital equipment, raw materials or profes sional staff, or on the repatriation of profits.  The 
procedures for the approval of investments by  foreigners were the same as for locals 
29. As with any open economy, some aspects of M acao, China’s trade regime could benefit from 
further liberalization and commitments at the WTO:   Macao, China's tariff bindings remained limited, 
with 70% its tariff lines unbound;  and given Macao, China's steps to simplify government procurement procedures and enhance transparency in  recent years, he encouraged it to consider 
becoming a party to the GPA.   
30. Macao, China’s growth outlook was bright.  According to the Economist Intelligence Unit, 
around US$20 billion in investment was to be  carried  out in new casino and hotel projects.  Financial 
fundamentals were expected to remain strong.  Inflation rates had been kept reasonably low.  The 
administration was far-sighted and had undertaken  a number of commendable initiatives,  including 
the transformation of Macao, China into a regi onal hub for meetings, incentives, conventions, and 
exhibitions;  this transformati on would boost its services exports in coming years.  Singapore 
appreciated Macao, China’s participation in th e WTO DDA process and ongoing efforts to liberalize. 
31. The representative of the United States
 recognized Macao, China’s rich history as a focal 
point for international trade.  Since the 16th century, it had been a hub for traders and missionaries, 
serving as a location of cultural and economic exch ange between China and the West.  The United 
States valued Macao, China’s recent designation as a World Heritage Site by UNESCO.  Macao, 
China had long maintained an open trade and inv estment regime, and continued to demonstrate a 
commitment to free-market principles.  The benefits of these policies were apparent as its economy 
had recently experienced impressive growth.  More  importantly, these policies had generated a higher 
standard of living for its citizens, as GDP pe r capita had increased by 70% from 2001 to 2005.  WT/TPR/M/181 
 Page 9 
 
 
  32. Trade relations between the United States and Macao, China were strong and continued to 
grow.  The United States was one of Macao, China’s largest trading partners:  bilateral goods trade 
totalled US$277 million in 2006, an increase of 25%  over 2001.  From 2001-05, the United States was 
Macao, China’s largest export market.  U.S. forei gn direct investment flows to Macao, China were 
US$573 million in 2005, increasing over 300-fold since 2001, making the United States one of the top 
investors in Macao, China.  The United States appreciated Macao, China’s constructive efforts in 
reinforcing the WTO as an institution, and recogni zed its commitment towards a successful DDA.  It 
welcomed the opening of the Macao Economic and Trade Office in Geneva in 2003, and recognized 
Macao’s improved offer in the services negotiations.  
33. The United States commended Macao, China on the steady and consistent improvements in 
its IPR enforcement regime.  Monitoring efforts by Macao Customs had increased and instances of 
pirated and counterfeit goods seizures by Macao Cu stoms significantly lowered.  The United States 
also welcomed Macao’s efforts to combat consum er demand for fake products  through education and 
public awareness campaigns targeted at tour guide s and Customs officials.  Despite these positive 
developments, he urged Macao, China to continue to further strengthen its IPR regime to increase 
efficiency in its economy and help create the basi s for sustained economic growth.  For example, TV 
signal piracy was estimated to make up more than 90% of the market.  End-user software piracy was also an area of concern for the United States.  Specifically, Macao, China’s copyright law was 
ambiguous and did not empower authorities to prosecu te infringers.  He urged Macao, China to make 
software piracy a criminal offence and to amend its  existing laws to conform to the WIPO treaties.  
34. Liberalization within Macao, China’s mobile telephone market had generated many positive 
spill-over effects for other industries.  However, other key sectors, such as basic telecommunications 
services, continued to contain difficult barriers to entry resulting in monopoly.  He urged the government of Macao, China to liberalize these key service sectors to support its rapid economic development.  Macao China’s rapid growth ha d created new public policy challenges for the 
Government.  The United States supported recent plans to implement an accountability system for 
civil servants, to enhance transparency and improve the effectiveness of policy making and 
implementation.  Macao, China had passed legislat ion in 2006 targeting m oney laundering activities, 
and he encouraged increased monitoring and enforc ement in this area.  Macao, China was an open 
economy and a strong proponent of free trade.  The Un ited States shared a strong common interest in 
its continued growth and prosperi ty and hoped this Trade Policy Review would help Macao, China 
build further on its strong record of contributions to the world trading system. 
35. The representative of Colombia
 said that the Secretariat figures on Macao, China's economic 
growth were impressive:  annual real GDP growth of 14.5% since 2001, unemployment of 3.8% in 
2006 and single-digit inflation over the last three years.  Generally speaking, small countries saw 
themselves as small economies and looked at globali zation and free trade as a threat:  thanks to 
specialization, Macao, China had benefited from th e major advantages offered by globalization and 
the liberalization of trade.  Macao, China had clear ly decided to concentrate on a policy of open in 
trade, particularly in certain service sectors.  It  was to be hoped that the multimillions of investment, 
including foreign investment, in Macao, China, to consolidate services and especially tourist sectors, 
would make it possible for the Government to adopt  more transparent and competitive policies, and 
lead to economic diversification as well as poverty alleviation.  Global trade between Colombia and 
Macao, China was still very limited;  over the last si x years, the balance of trade had sometimes been 
in Colombia's favour and sometimes in Macao, China's. 
36. The representative of Hong Kong, China  said that Macao, China and Hong Kong, China were 
separate Special Administrative Regions of the Pe ople’s Republic of China, and under the "one 
country, two systems" principle, both enjoyed a high degree of autonomy in economic matters and maintained separate seats at the WTO.  In terms of economic and trade activities, they were separate 
customs territories but enjoyed very close relations .  All along, they had been among each others’ WT/TPR/M/181 
Page 10  
 
  most important trading partners.  According to the latest statistics, Hong Kong, China was Macao, 
China’s third largest trading partner, third largest export market and third largest source of imports in 
2005.  Bilateral trade had grown at an annual aver age of some 14% during the past five years. 
37. He commend Macao, China for maintaining a liber al and transparent trade regime.  Macao, 
China applied no import tariffs and had bound 28.6% of  its tariff lines at zero;  it was considering 
binding more lines in the current round of trade ne gotiations.  Macao, China maintained few non-tariff 
border measures:  those in place, including certa in import licensing requirements and prohibitions, 
were aimed at ensuring security as well as protecting pub lic health and the environment.  In respect of 
customs procedures, he appreciated Macao, Chin a’s efforts in implementing electronic customs 
clearance and documentation procedures.  In add ition, performance targets had been established to 
ensure that, under normal circumstances, border procedures were completed within 20 minutes. 
38. Given the dominance and ever-growing importa nce of the services sector to Macao, China’s 
economy, and as evident from the tourism boom r esulting from the liberali zation of its gaming 
industry since 2002, continued liberalization of trad e in services would be the key for further growth 
and development of the economy.  In this connecti on, he appreciated Macao, China’s initiatives to 
open up the telecommunications  infrastructure in recent years, as well as its revised offer for the 
current round of the services negotiations, which represented a considerable expansion of, and 
improvement on, its Uruguay Round commitments.  Ho wever, certain of Macao, China’s key services 
sectors, such as basic telecommunications and trans port services, remained in the hands of private 
companies with exclusive rights under government concessions.  He encouraged Macao, China to 
continue its progressive liberalization in services  trade, by lifting the monopoly restraints on 
competition, so as to fuel its further economic growth. 
39. The representative of th e European Communities
 noted with satisfaction that Macao, China's 
economy had seen remarkable recovery following  the Asian crisis in 1997-98 and achieved 
outstanding growth rates.  Its booming economy w as mainly based on the rapidly growing gaming 
sector, which had benefited greatly from the liber alization process started in 2002.  The resulting 
competition between gaming operators had spurred substantial private investment in the sector and 
had led to significant tourism growth.  The extrao rdinary development of the gaming sector had made 
Macao, China the largest gaming market in the world,  in terms of revenues.  However, an excessive 
dependence on the external sector could make M acao, China more susceptible to unpredictable 
external shocks, and therefore, it was necessary to ensure a certain diversification of the economy.  In order to sustain a sound booming economy, Macao, Chin a needed to strike the right balance between 
economic growth and social development, so that on e would not come at the expense of the other.  
Trade policy should contribute to more sustainable pr oduction patterns rather than to lower standards. 
40. While Macao, China's liberalization efforts in th e gaming sector, the ownership of a large part 
of Macao, China's tourism and related services rema ined highly concentrated in few hands.  She 
encouraged Macao, China to ex tend the liberalization process to other services such as 
telecommunications, maritime and airport transport, a nd public utilities.  In this regard, she would be 
interested to learn whether Macao, China was c onsidering facilitating the entry of new economic 
agents in these services sectors.  
41. A transparent and open government procuremen t system, providing for more equitable 
participation of foreign companies, would be in Macao, China’s interest.  Procurement policies were 
being revised with a view to achieving more consiste ncy with international practices.  She encouraged 
the authorities to exchange views with Members of the Government Procurement Agreement, in order 
to prepare to join this Agre ement in the near future.   
42. Regarding domestic regulatory reform and ensuring a level playing field for all businesses, 
Macao, China did not yet have comprehensive co mpetition legislation to address anti-competitive  WT/TPR/M/181 
 Page 11 
 
 
  behaviour and consumer protection.  Furthermore, an efficient, transparent and non-discriminatory 
taxation system was of utmost importance.  It was important for Macao, China to maintain a 
favourable trading environment for all entrepreneur s and service providers, domestic and foreign, and 
ensure that they enjoyed the same market access conditions, including market access under CEPA.  
The EC praised Macao, China's efforts to fight fraud and corruption.  It was commendable that 
Macao, China, despite its small size, had strengthened its  capacity to play an active part in the work of 
the WTO as a strong supporter of the multilateral trading system.  
43. The representative of Japan  noted that Macao, China needed  to address the issues of trade 
diversification and intellectual property rights.  Macao, China de pended heavily on the external 
economy, which could have adverse effects such as during the Asian economic cris is.  Thus trade 
diversification was a key issue for Macao, China.  He asked the authorities to elaborate on measures 
being taken to address this issue.  Japan appreciat ed that Macao, China had made positive efforts to 
protect intellectual property rights, such as establis hing laws for controlling optical disc piracy and 
improving the enforcement system under which the Customs Service seized infringing goods.  Japan 
requested Macao, China to continue taking meas ures to protect intellectual property rights. 
44. The representative of Canada  said Canada and Macao, China enjoyed a fruitful and mutually 
beneficial commercial relationship that stretched back over 200 years to the Hudson’s Bay Company 
and the fur trade.  The composition of the two- way trade had changed since then, now encompassing 
high-end knit and woven apparel imports into Ca nada, and Canadian food products into Macao.  
Canada and Macao, China also shared one undeniab le economic reality:  both economies were highly 
dependant on international trade.  Since its l ast Trade Policy Review, Macao, China had enacted 
policy changes that had helped its economy post im pressive growth.  Most significant had been the 
opening of the gaming sector in 20 02, which had led to increased foreign investment.  Macao, China’s 
growth had been driven by a vibrant tourism indus try, underpinned by the dynamic gaming sector and 
the introduction of the Individual Traveller Scheme in 2003. 
45. In light of Macao, China’s economic growth and increased investment, infrastructure projects 
and overall government procuremen t were proceeding at a rapid pace.  It was essential for a robust 
economy to practice transparent procurement procedures th at limited distortions in international trade.  
Canada urged the Government of the Macao SAR to  continue with its commitment to transparent 
tendering  processes.  Canada also proposed that  Macao, China consider observer status in the 
Committee on Government Procurement, from which it might consider the eventual goal of acceding 
to the GPA. 
46. During the review period, Macao, China had ma de significant efforts to eliminate optical-
media piracy and ensure the protection of inte llectual property rights.  Canada commended the 
Government’s effective policies and regulations, whic h had resulted in the reduction of illicit optical 
disc manufacturers, and trusted that IPR protecti on would remain a priority for Macao, China. 
47. Macao, China was an open economy, with imports entering duty-free.  Nevertheless, Canada 
urged the Government of the Macao SAR to move fo rward in binding the nearly 70% of its tariff lines 
that remained unbound.  This would further solid ify Macao, China as a predictable environment in 
which to do business. 
48. The Closer Economic Partnership Arrangement  (CEPA) between the Government of the 
Macao SAR and China continued to push the liberalization of goods and services trade.  The CEPA positioned Macao, China as one of the primary gate ways into the Mainland China market and was 
also significant in that Macao, China did not have  a preferential trade relationship with any other 
country.  This underscored the continued importance of the WTO to the prosperity of  Macao, China’s economy.  The new Macao Economic and Trade Offi ce, opened in 2003 in Geneva, demonstrated 
Macao, China’s commitment to the WTO and the D oha Development Agenda (DDA).  Macao, China WT/TPR/M/181 
Page 12  
 
  played an active role in the DDA negotiations, most  notably in the DDA service negotiations.  Canada 
shared with Macao, China th e desire to see the DDA negotiations conclude successfully. 
49. The representative of China
 was encouraged that, with the effective implementation of the 
"one country, two systems" principle, establishe d under the Basic Law, Macao, China has been 
experiencing political stability and robust economic expa nsion in the past six years.  Annual real GDP 
growth averaged 14.5% in the period 2001 to 2005 an d was expected to be closer to 20% in 2006. 
50. Macao, China was recognized as a small but liber al economy with distinct characteristics 
including duty-free entry for all imports from a ll sources, no government control on exports and 
investment, and no restrictions on foreign exchange  transactions and capital movement. As an original 
Member of the WTO, Macao, China participated actively in all WTO activities, particularly the 
current Doha Round negotiations. The authorities of Macao, China continued to recognize the 
importance of international trade and maintained the objectives of structural diversification and a 
market-driven and rules-based trade policy.  
51. More than 70% of Macao, China’s tariff lin es were unbound, and China noted that Macao, 
China was willing to negotiate the binding of more tariff lines in the Doha negotiations;  this would 
constitute an important contribution to th e success of the Round and to multilateral trade 
liberalization.  China also encour aged Macao, China to increase e fforts to diversify its economy in 
general and the tourism market in particular. 
52. The close trade and economic cooperation be tween Macao and Mainland China was self-
evident:  two-way trade reached US$2.44 billion in  2006, an increase of 30.5% over the previous 
year;  there was a further increase of 41.7% during the first two months of 2007.  China was also the 
main origin of FDI in Macao, China, and M acao and Mainland China had developed extensive 
cooperation in contracting services, project planning, and consulting.  To further strengthen trade and 
economic cooperation between the two economies, the Closer Economic Partnership Arrangement 
(CEPA) was concluded in 2003, and su pplements in 2004, 2005, and 2006. 
53. The representative of Chinese Taipei  noted that, since its second Trade Policy Review in 
2001, Macao, China had introduced a number of measures that were consistent with the spirit of the 
WTO and had helped to significantly improve its economic system and trade environment.  These 
included opening up the gaming and mobile phone sector s to competition, enhancing IPR protection, 
promoting transparency in the government procurem ent process, and adopting a low-tax policy.  In 
recent years, high economic growth rates had b een maintained, along with a lowering of the 
unemployment rate. 
54. The signing of the CEPA had fostered closer economic integration between China and 
Macao, China.  However, he was concerned that Macao China’s regulatory environment might be more restrictive to third countries than before th e formation of CEPA:  he hoped that Macao, China 
would continue efforts to make access free and fair to all WTO Members.  Every year, Chinese Taipei sent more than 1.4 million visitors to Macao, China and through Macao in transit into China.  Macao, 
China was an important market to develop transpor t and tourism services.  It should grant fair and 
equal treatment to Chinese Taipei's airlines making such transit. 
55. The representative of Brazil
 congratulated Macao, China on its remarkable economic growth.  
The MSAR had been successful in fighting the effects of the Asian financial crisis, with results that 
showcased the region’s potential fo r steady growth.  Two important policy decisions were relevant in 
that regard:  liberalizing the gaming sector and signing the CEPA with Mainland China.  These 
decisions seemed to flow from a broader policy fra mework set to better position Macao, China, in its 
immediate economic surroundings under the umbrella of the "one country, two systems" formula.  He 
noted the upward trend in FDI, particularly in  the gaming sector.  Although Brazilian legislation did  WT/TPR/M/181 
 Page 13 
 
 
  not allow for the private exploitation of gaming,  he acknowledged the sector's role in terms of 
generating jobs and crea ting business opportunities. 
56. The CEPA was an unorthodox trade agreement betw een two parties with a special bilateral 
relationship. Clearly, the Individual Traveller Ag reement was designed to complement and work in 
tandem with the liberalization of gaming. The econom ic boom of recent years could be traced back to 
these interrelated initiatives.  Notwithstanding sign ificant investments made in the tourism and 
financial sectors, gambling would remain the mainstay of Macao, China for some time to come. 
57. By reason of a common cultural heritage, Br azil was especially pleased to acknowledge 
efforts by Macao, China, to increase cooperati on with Portuguese-speaking countries.  The 
Framework Agreement on Cooperation between the MS AR and Portugal was a valuable initiative that 
had already resulted in two sessions of the Fo rum on Economic and Tr ade Cooperation Between 
Portuguese-speaking countries and China.  Braz il hoped that the third session, in 2009, would 
continue this positive trend. 
58. The Secretariat’s Report stated that the economy of Macao, China, grew at an average annual 
rate of 14.5% in 2001-05, and growth was expected to be close to 20% in 2006.  He asked whether 
local authorities foresaw continuation of this growth in 2007 without a substantial increase in the rate 
of inflation, considering, in particular, the ef fects of the local Currency Board Arrangement?  The 
Secretariat’s Report mentioned an apparent lack of transparency on land allocation (page vii);  it also 
identified some major challenges in terms of infrast ructure development that needed to be overcome 
in order to sustain two-digit growth.  He asked how the local authorities intend to deal with these 
interconnected questions in the future? 
59. He noted the challenge of an economy that extracted most of its vigour from gaming, and was 
at the same time an offshore financial centre.  Gaming accounted for 49% of GDP of US$11.6 billion, 
while total deposits in local banks amounted to US$ 23.1 billion, in 2005.  Therefore, he appreciated 
the passing of Law No. 2/2006 on the Prevention and Suppression of the Crimes of Money Laundering, and of Law No. 3/2006 on the Prevention and Suppression of the Crimes of Terrorism.  
Both legal instruments, however, were relativel y new, and he sought information regarding their 
implementation in accordance with the Administrative Regulation of May, 2006.  He also asked the 
delegation of Macao, China, to provide information on the activiti es of the Financial Intelligence 
Office, the Government unit responsible for the co llection and analysis of information concerning 
suspicious transactions. 
60. According to the Secretariat Report, the Commissioner Against Corruption (CCAC) had 
limited authority to combat public, but not privat e sector, corruption. As private sector corruption 
worldwide could be a scourge as nefarious as public sector corruption, if not worse, he asked the 
delegation of Macao, China, if the MSAR had plans to improve legislation to combat corruption in the private sector. 
61. The representative of Nigeria
 commended Macao China for its e fforts in achieving integration 
into the global economy through active particip ation in multilateral trade negotiations, as well as 
through policies aimed at attracting foreign di rect investment, especially in services and 
manufacturing.  Macao, China sustained high export gr owth, driven by the diversification of products 
and markets and increased foreign direct inv estment.  Nigeria commended Macao, China on its 
continued strategy to support development policies to promote the generation of new sources of 
employment in order to improve the living sta ndards for its population.  Since Macao, China’s 
previous TPR, it had made a number of signi ficant positive changes to the legal and business 
environment, these had a positive impact on its export  and import activities in telecoms, tourism, and 
gaming, as well as business services. WT/TPR/M/181 
Page 14  
 
  V. REPLIES BY THE REPRESENTATIVE OF MACAO, CHINA AND ADDITIONAL 
COMMENTS 
62. The representative of Macao, China
 structured his replies under the three themes set out by 
the Secretariat:  economic environment, trade policies and measures, and sectoral policies. 
(i) Economic environment 
63. The representative referred to the comments made  by the discussant on the peg of the Macao 
pataca to the Hong Kong dollar and noted that there were no plans to revise the policy, for the reasons 
set out in page 6, paragraph 13 of the Secretariat's Report.  In response to the discussant's question on the financing of the Social Secu rity Fund, he said that the Fund was financed by contributions from 
employers, employees, and the Government.  Th e Government's contribution was made from the 
central budget.  Some social benefits were availabl e irrespective of contributions to the Fund by the 
recipient.  The number of informal sector  workers in Macao, however, was negligible. 
64. Concerning the questions on Macao, China's efforts to stamp out money-laundering activities, 
following an update of the relevant legislation, guidelines were enacted in November 2006 for all the 
sectors covered by the recommendations of the Fina ncial Action Task Force, in order to combat 
money laundering and terrorist fi nancing more effectively.  The Financial Intelligence Office 
collected and collated the reports received under these guidelines, and processed the information.  
Regarding the possible extension of the authority of the Commissioner Against Corruption to cover 
corruption in the private as well as the public sect or, the Convention Against Corruption applied in 
full to Macao, with no reservations, and Macao, Chin a's legislation was in vi rtually full compliance 
with the mandatory elements of the Convention.  In some fields, the Convention left discretion to each 
member jurisdiction, and one of these was the crimina lization of corruption within the private sector.  
The Government was considering the possible amendm ent of the current legislation, in compliance 
with the Convention Against Corruption. 
(ii) Trade policies and measures 
65. With regard to the questions on the apparent l ack of transparency in certain areas of policy 
making, the representative affirmed his Government's commitment to a high level of transparency in 
policy making, in accordance with the law and to provide for a better public understanding of the 
rationale for policy decisions.  The small size of  Macao was a potential constraint on growth, but 
more land would be allocated for infrastructure and public housing for the purposes of sustainable 
development. 
66. In reply to the question raised by the discussan t concerning the power of the Chief Executive 
to grant tax incentives in certain circumstances, th e representative confirmed that Law 1/86M did not 
provide for the granting of export subsidies.  The tax incentives concerned (described on page 43, 
paragraph 58 of the Secretariat report), related to general export promotion activities, which were 
supported by most governments.  Th ey were not export subsidies. 
67. The Government would give appr opriate consideration to the s uggestion of participation as an 
observer in the Committee on Government Procurem ent.  Macao would continue to improve the 
substance and the enforcement of its Intellectual Property Law, although the legislation was already 
quite comprehensive and its implementation on the ground had been improved significantly since the 
previous Review.  WT/TPR/M/181 
 Page 15 
 
 
  (iii) Sectoral policies 
68. The textile sector was a matter of concern for the Government, particularly because of the 
employment implications.  Efforts were bei ng made to enhance the competitiveness of the 
manufacturing sector as a whole, including textil es and clothing.  Regarding the question on the 
aviation industry, the concession arrangement in Ma cao applied only to home-based airlines, and did 
not preclude airlines based outside Macao from operating into Macao:  there were currently 
12 airlines operating fixed-wing, scheduled services to and from Macao including two home-based airlines.  As a result, the airline industry was ope rating in a competitive environment, and this was 
increasingly the case, as more low-cost airlines ope ned new routes to and from Macao, China.  Due 
notice had been taken of the concern raised rega rding airline passengers in transit through Macao, 
China and the Government would give it careful consideration. 
69. The representative of the European Communities
 asked whether, when issuing SPS-related 
legislation, relevant international standards were taken into account, su ch as those in the International 
Plant Protection Convention, the CODEX, and the World Organization for Animal Health, and what 
had been experienced so far.  In reference to  the EC's question on government procurement 
legislation, Macao, China had mentioned several amendments and some new legislation;  she 
enquired about the possible timeframe for their adoption. 
70. The representative of Macao, China  stated that his delegation would answer these questions in 
writing. 
71. The representative of Macao, China  expressed his gratitude for the generosity with which 
Members had acknowledged the progress in areas such as intellectual property protection, the 
liberalization of services, the efficiency of public  administration, and the suppression of corruption.  
The processes of liberalization and reform would continue in all of these areas.  Macao, China was convinced that the basic line of policy was right.  In particular, the status of Macao, China as a free 
port, guaranteed by the Basic Law, would allow it to maintain attractive conditions for foreign 
investors, with no tariffs or other import or export restrictions.  
72. Macao, China had greatly benefited from the pros perity of its neighbours in the East Asian 
region since 2001.  It had made its own contribution to this prosperity through the CEPA and regional 
economic cooperation, and would pursue its comm itment to open markets and minimal intervention 
as the basis for prosperity in economies large and small. 
73. He noted Members' stress on the need for dive rsification of the economy and for striking the 
right balance between economic growth and social  development.  The management of economic 
growth on the scale experienced in the past few y ears presented real challenges, but Macao, China did 
not believe that any departure from its basic policy stance was needed.  It recognized the need (to 
which several Members had referred) to ensure th at the transport, energy, and general services 
infrastructure should provide world-class facilities fo r its visitors.  He emphasized Macao, China's 
strong commitment to the WTO multilateral trading system and the Doha Round.  Macao, China had 
already made a greatly improved offer of commitments on services and was ready to make a 
substantial increase in tariff bindings as a cont ribution to the success of the NAMA negotiations. WT/TPR/M/181 
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  VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
74. The third Trade Policy Review of Macao, Chin a has been thorough and informative and has 
given us a better understanding of the trade po licies and practices of the Macao Special 
Administrative Region (MSAR), together with the ch allenges that it faces.  I thank Mr. Tam Pak Yuen 
and his delegation as well as the discussant, Mr. Paul o Estivallet de Mesquita of Brazil, and Members 
of the TPRB for contributing to our fruitful exch ange of views. The reports by the Macao, China 
authorities and the Secretariat, as well as the deta iled responses of the delegation of Macao, China to 
the many questions posed, have provided a valu able resource for domestic reflection and for 
transparency within the WTO.  
75. Members noted that Macao, China continues to be  open to trade and investment.  Since its 
last Trade Policy Review, the economy has grown  rapidly as a result of sound economic policies, 
liberalization of the gaming sector, and a favourable external environment.  The MSAR is essentially 
a free port that imposes no tariffs and few non- tariff border measures, and has no contingency 
measures in place. While Members appreciated the ab sence of trade restrictive measures, they noted 
that the scope of MSAR's tariff bindings remains low.  They urged Macao, China to expand bindings 
coverage, notably in the context of the DDA ne gotiations, and the authorities have indicated a 
willingness to do so. Members also noted that a nu mber of services sectors have been liberalized, 
notably gaming and mobile telephony, and in the context of the DDA, Macao, China's revised GATS 
offer can be considered relatively comprehensive.  Regarding the investment  regime, given the low 
rates of tax on company profits and the non-discriminatory treatment of foreign investors, Macao, China is widely regarded as an a ttractive investment destination. 
76. Members welcomed Macao, China's active a nd constructive role in the WTO and its  
contribution to the DDA negotiations and its co mmitment to the primacy of the rules-based 
multilateral trading system. They also noted the current and potential benefits from the Closer 
Economic Partnership Arrangement (CEPA) with the Mainland in term s of both the opportunities for 
at least partial diversification of economic activitie s and for ensuring a steady and expanding flow of 
visitors and tourists to Macao, China,  mainly as a result of the Individual Traveller Scheme.   
77. Members noted the MSAR's steady and consis tent improvements in the protection of 
intellectual property rights, but welcomed furthe r efforts to strengthen transparency, the legal 
framework, and enforcement in matters relating in pa rticular to signal, software, and optical disc 
piracy. Members also appreciated the recent legisl ation that was passed targeting money-laundering 
activities, and a Member enquired about any plans to improve anti-corruption legislation in the private 
sector. 
78. Some Members noted the lack of a comprehe nsive competition policy law to address, for 
example, the activities of private companies with  exclusive rights under government concessions and 
consumer protection. Some Members encouraged  Macao, China to further open its government 
procurement system and encouraged the authorities to consider  joining the GPA.  Attention was also 
drawn to an apparent lack of transparency in certain areas such as land allocation and to difficult 
challenges in terms of infrastructure developmen t. The question was raised as to whether MSAR 
legislation gives the Chief Executive the authority to  provide export subsidies. Concerning sustainable 
development, a Member emphasized the need for M acao, China to strike a careful balance between 
economic growth and social development.  
79. Members noted that the MSAR has become in creasingly a services-oriented economy focused 
on tourism, and commended the initiatives of th e authorities to transform Macao, China from a 
gaming destination  into a regional hub for mee tings, incentives, conventions, and exhibitions.   WT/TPR/M/181 
 Page 17 
 
 
  80. This Review has been very useful in giving  us all an overview of Macao, China's trade 
policies and practices and the challenges it faces.  I would once again like to thank the Macao, China 
delegation for their efforts, the discussant for his insightful comments, and Members for contributing 
to what has been an enlightening two days of discussions.  We look forward to receiving the remaining outstanding responses as soon as possible. 
__________