RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/241 
27 October 2010  
 
(10-5548) 
Trade Policy Review Body Original:  English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
HONG KONG, CHINA 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by Hong Kong, China is attached. 
 
 
Note: This report is subject to restricted ci rculation and press embargo until the end of the 
first session of the meeting of the Trade Policy Review Body on Hong Kong, China. Hong Kong, China WT/TPR/G/241 
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CONTENTS 
  Page 
I. OVERVIEW  5 
 (A) C ONTINUANCE OF THE SUCCESSFUL OPERATION OF THE HONG KONG SPECIAL 
ADMINISTRATIVE REGION  5 
 (B) T RADE POLICY OBJECTIVES  5 
II. ECONOMIC AND TRADE ENVIRONMENT 5 
 (A) M ACROECONOMIC SITUATION  5 
 (a) Economic Environment 5 
 (b) Impact of the Global Financial Crisis 6  (c) Policies in Response to the Global Financial Crisis 6 
 (d) Ways to Sustain Long-term Growth  after the Global Financial Crisis 7 
 (e) Outlook 8 
 (B) F
ISCAL SITUATION  9 
 (C) M ONETARY POLICY  9 
 (D) E XTERNAL TRADE & FOREIGN DIRECT INVESTMENT  10 
 (a) Merchandise Trade 10 
 (b) Major Trading Partners 10 
 (c) Trade in Services 11 
 (d) Foreign Direct Investment 11 
III. TRADE POLICY  DEVELOPMENT 11 
 (A) P ARTICIPATION IN THE WORLD TRADE ORGANIZATION (WTO) 11 
 (B) P ARTICIPATION IN ASIA-PACIFIC ECONOMIC CO-OPERATION (APEC)  AND THE 
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT (OECD) 12 
 (C) R EGIONAL TRADE AGREEMENTS  12 
 (a) Mainland and Hong Kong Closer Economic Partnership Arrangement 
(CEPA) 13 
 (b) Hong Kong, China-New Zealand Closer Economic Partnership Agreement 13 
 (c) Free Trade Agreement under Nego tiation between Hong Kong, China and 
European Free Trad e Association 14 
IV. SECTORAL DEVELOPMENTS 14 
 (A) D EVELOPMENTS IN TRADE IN GOODS  14 
 (a) Textiles and Clothing 14  (b) Reserved Commodities 15 
 (c) Strategic Commodities 15 
 (d) Wine and Related Business 16  (e) Trade Facilitation 16 
 (B) D
EVELOPMENTS IN SERVICES  17 
 (a) Financial Services 17 
 (b) Telecommunications 19 
 (c) Broadcasting 19 WT/TPR/G/241 Trade Policy Review 
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  Page 
 (C) P ROTECTION OF INTELLECTUAL PROPERTY RIGHTS IN HONG KONG, CHINA  20 
 (a) Comprehensive Legislation 20 
 (b) Rigorous Enforcement Action 21  (c) Sustained Public Education 21 
 (d) Close Cooperation with Rights Owners and Other Law Enforcement 
Agencies 22 
 (D) E
LECTRONIC COMMERCE  22 
 (E) G OVERNMENT PROCUREMENT  23 
 (F) C OMPETITION POLICY  23 
V. DOHA DEVELOPMENT AGENDA 24 
 (A) H ONG KONG, CHINA 'S OVERALL POSITION IN THE DOHA DEVELOPMENT AGENDA 
(DDA)  24 
 (B) H ONG KONG, CHINA 'S PRIORITY AREAS IN THE ROUND  24 
 (a) Services 24 
 (b) Non-agricultural Market Access 25  (c) Trade Rules 25 
 (C) O
THER AREAS IN THE DOHA DEVELOPMENT AGENDA  26 
 (a) Intellectual Property Rights 26 
 (b) Trade Facilitation 26 
 (c) Trade and Environment 26  (d) Dispute Settlement Understanding Review 26 
 
  Hong Kong, China WT/TPR/G/241 
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 I. OVERVIEW 
(A) CONTINUANCE OF THE SUCCESSFUL OPERATION OF THE HONG KONG SPECIAL 
ADMINISTRATIVE REGION  
1. This is the fourth Trade Policy Review of Hong Kong, China (HKC) since the establishment 
of the Hong Kong Special Administrative Region (HKSAR) of the People's Republic of China 
(PRC).  In the past four years since the last  Trade Policy Review in 2006, the HKC economy has 
gone through various ups and dow ns.  In 2007, our economy expande d rapidly alongside the strong 
global economic upturn.  However, due to the intens ification of the global financial crisis in the 
latter part of 2008, the HKC economy was hard hit in  the first quarter of 2009, due mainly to the 
plunge in world trade.  As the global economy began to stabilise and as the economy of the 
Mainland of China resumed faster growth, our economy rebounded strongly in the second quarter of 
2009 and continued to improve in the second half of the year.  The economic recovery became 
increasingly entrenched in the first quarter of 2010.  The global economic downturn in 2008-09 has 
not shaken HKC's firm belief in free and open trad e.  The principle of "One Country, Two Systems" 
has continued to be implemented effectively.  Th e institutions and policies that served HKC well in 
the past, such as the rule of law, free and open trade policy, low and simple tax regime, and a level playing field for business, remain the bedrock of HKC's prosperity.    
2. The Basic Law, the constitutional document of  the HKSAR, provides that the HKSAR shall 
maintain the status of a free port, allow the fr ee movement of goods and capital, be a separate 
customs territory and may, on its own, using the name of "Hong Kong, China", maintain and develop 
relations and conclude and implem ent agreements with foreign stat es and regions and international 
organisations in the appropriate fields including the economic and trade fields, and participate in 
international organisations and conferences not limite d to states.  This provides the very foundation 
for our separate membership in the World Trade Organization (WTO). 
(B) T
RADE POLICY OBJECTIVES  
3. HKC's trade policy objectives are to promote a free, open and stable multilateral trading 
system;  to safeguard our rights and fulfil our ob ligations under multilateral, regional, and bilateral 
trade and trade-related agreements and arrangement s;  and to secure, maintain and improve access 
for our exports. 
4. Active participation in the multilateral trading sy stem through our separate membership in the 
WTO is the cornerstone of HKC's external trad e policy.  Such participation is guided by 
two objectives:  firstly, to sustain the momentum of progressive global trade liberalisation;  and 
secondly, to strengthen and update the rules-based mu ltilateral trading system so that it continuously 
provides an effective framework to promote trade expansion and liberalisation, as well as to protect 
HKC against arbitrary and discriminatory actions. 
II. ECONOMIC AND TRADE ENVIRONMENT 
(A) MACROECONOMIC SITUATION  
(a) Economic Environment 
5. HKC is recognised as the world's freest economy.   The Heritage Foundation has put HKC at 
the top of the list in its Index of Economic Freedom for the 16th consecutive year.  Canada's Fraser 
Institute, in conjunction with institutes from over 70 countries and territories, has also consistently WT/TPR/G/241 Trade Policy Review 
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 ranked HKC as the freest economy in the world in their Annual Report on Econ omic Freedom of the 
World.  In continuing to uphold the principles of "Market Leads, Government Facilitates" and "Big 
Market, Small Government", the HKSAR Government  has taken an active role to create a conducive 
environment for business and to facilitate economic development, particularly to enhance HKC's 
competitiveness and to allow the market to  function efficiently and effectively.  
(b) Impact of the Global Financial Crisis 
6. HKC is a small and open economy.  Its econom ic performance necessarily hinges on the 
global and regional environment.  The HKC econom y had sustained robust economic growth since 
the latter half of 2003, until the abrupt escalation of  the global financial crisis in August 2008 and the 
subsequent global recession that spanned most of  2009.  Real GDP growth reached 7% in 2006, 
followed by 6.4% in 2007 before slowing to 2.2%  in 2008.  The HKC economy was hard hit by the 
global financial crisis in the first quarter of 2009, due mainly to the plunge in world trade as a result 
of the severe recession in the advanced economies.  R eal GDP contracted by 7.7% in the first quarter 
of 2009 over a year earlier.  Yet, as the major economies began to stabilise and the economy of the 
Mainland of China returned to faster growth , the HKC economy rebounded strongly in the second 
quarter of 2009, resuming quarter-t o-quarter expansion, and has sin ce continued to improve.  In the 
fourth quarter of 2009, the HKC economy returned to positive year-on-year growth at 2.5%.  For 
2009 as a whole, GDP fell by 2.8%, the first annual recession since 1998.  The economy continued to show broad-based recovery in the first half of  2010, with real GDP growing strongly by 7.2% over 
a year earlier.  By the first quarter of 2010, overall economic activity had largely returned to the peak 
level of early 2008.  The seasonally adjusted GDP  level in the second quarter of 2010 surpassed the 
pre-crisis peak of the first quarter of 2008 by some 1.6%. 
(c) Policies in Response to the Global Financial Crisis 
7. Faced with the worst global recession in d ecades, the Government spared no effort in 
stabilising the financial system, supporting enterp rises and preserving employment in the shortest 
possible time.  We have exercised our best end eavours to ensure financial system stability and 
strictly performed our supervisory functions.  The Hong Kong Monetary Authority, the Securities 
and Futures Commission, and the Office of the Co mmissioner for Insurance have strengthened their 
supervision of financial markets a nd institutions to ensure proper protection of the public interest.  
The Hong Kong Monetary Authority also introduced  a full deposit protection scheme for the period 
from October 2008 to end of 2010.  As a result, interbank rates fell significantly. 
8. As a consequence of the global financial crisis , world trade declined sharply towards the end 
of 2008 and the downward trend continued into the ear ly part of 2009.  The market for trade finance 
also tightened abruptly.  In the face of the gl obal recession, HKC resisted trade protectionism and 
continues to maintain an open market.  Furthermor e, HKC has implemented certain trade facilitation 
measures, namely in the form of expanded tr ade finance facilities, which represent the policy 
initiative to help reverse the contraction of interna tional trade.  Relevant details are set out below. 
(i) Enhanced Services of the Hong Kong Export Credit Insurance Corporation 
9. Since the end of 2008, the Hong Kong Export Credit Insurance Corporation, a statutory 
corporation set up in HKC to provide exporters with export credit insurance protection against 
non-payment risk, has launched a basket of enhancem ent measures to assist exporters to sustain their 
business and develop new markets during the global financial crisis.  These measures include, where Hong Kong, China WT/TPR/G/241 
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 risk allows, providing higher cover for expor ters, expediting the processing of credit limit 
applications and offering free buyer credit consultation sessions for exporters. 
(ii) Measures to Support Business Enterprises 
10. In response to the global financial crisis, th e Government has implemented a package of 
measures which aim to provide greater suppor t to small and medium enterprises (SMEs).1  T h e  
support measures included introducing greater flex ibility in the use of loans and extending the 
guarantee period for the SME Loan Guarantee Sc heme, as well as raising the grant ceiling and 
expanding the scope of reimbursable items of th e SME Export Marketing Fund.  All SMEs that 
comply with the application requirements of the resp ective funding schemes are eligible to apply.  In 
addition, the Government introduced a Special Loan  Guarantee Scheme (SpGS) in December 2008.  
This is a time-limited scheme to tackle the pr oblem of the credit crunch arising from the global 
financial crisis.  All enterprises (except liste d companies) complying with the application 
requirements are eligible to apply.  Under the Sp GS, the Government has pledged to provide a total 
loan guarantee of HK$100 billion in support of  enterprises obtaining credit facilities from the 
commercial lending market. 
11. As the credit crunch problem had been largel y alleviated by early 2010, the Government 
decided to let the credit market gradually resume  its normal operation.  It was announced that the 
application period for the SpGS would end on 31 December 2010. 
(iii) Banking Institutions' Loans to SMEs 
12. To encourage banking institutions to adopt  a supportive attitude towards their SME 
customers, the Hong Kong Monetary Authority in late 2008 issued a circular to such institutions urging them to be as accommodating and flexible as possible to the funding needs of SMEs, within 
the bounds of prudent risk management.  Any actions  which have the effect of tightening credit to 
SME customers should as far as practicable be c onsidered on a selective and case-by-case basis in 
the light of the given customer's credit position rath er than applied across the board to SMEs within 
the same industry or sector. 
13. The Hong Kong Monetary Authority has also a dvised the banking institutions that, if any 
tightening in the provision of credit to existing SM E customers is considered necessary, the banking 
institution should be prepared to wo rk with the customers to identify whether there are other ways in 
which the banking institutions’ credit or other concerns might be addressed.  Where SME customers 
experience financial stress and run into difficulti es as a result of the global financial crisis, the 
banking institutions should rema in supportive and adopt a sympathetic attitude towards requests for 
temporary relief arrangements, such as extensions of repayment deadlines. 
(d) Ways to Sustain Long-term Growth after the Global Financial Crisis  
14. The global financial crisis has dealt a great bl ow to many governments and economies.  While 
HKC has exhibited much resilience in countering the cr isis, we have also been constantly looking for 
opportunities to strengthen our ec onomic foundations further and enhance our competitiveness.  In 
his 2009-10 Policy Address, the Chief Executive of the HKSAR unveiled new incentives to promote the development of six innovati on and knowledge-based industries where HKC enjoys a competitive 
advantage.  These six industries are education services, medical services, testing and certification, 
                                                     
 
1 A 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. WT/TPR/G/241 Trade Policy Review 
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 innovation and technology, cultural and creative industr ies, and the environmental industry.  The aim 
of the policy initiative is to broaden HKC's economi c structure to complement the development of 
the four traditional pillar industries, namely financ ial services, trading and logistics, tourism, and 
professional services.  These four pillar industries together account for almost 60% of GDP and 
nearly half of the total workforce whilst the othe r six industries contribute about 8% of GDP, and 
employ around 380,000 workers, or about 11% of the total workforce.   
15. The role of the Government is to create a c onducive environment for the development of the 
six industries under the principle of “Market Leads,  Government Facilitates”.  The Government will 
provide the necessary support in land resources, human capital, regulatory framework, etc. to 
facilitate the development of industries unde r the market mechanism.  Some specific 
measures/proposals to promote the development of the six industries are as follows – 
(a) Two urban sites will be earmarked for self-financed tertiary education.    (b) Four sites have been earmarked  for private hospital development. 
(c) The Hong Kong Council for Testing and Ce rtification was established in September 
2009 to promote the professional standards and international recognition of HKC’s 
testing and certification industry and to draw up a three-year development plan. 
(d) On innovation and technology, a new Research and Development Cash Rebate 
Scheme has been launched since April 2010 to encourage the private sector to increase investment in research and development. 
(e) A dedicated office, Create Hong Kong (CreateHK), was established in June 2009 for 
co-ordination within the Government to  drive the development of cultural and 
creative industries, respond more effectivel y to industries’ demands and better serve 
the trade through a one-stop service.  A comprehensive strategy to speed up development of the industries and build HKC  into Asia’s creative capital has been 
drawn up. 
(f) The Government is working closely with the arts sector to strengthen the cultural 
software through arts programme development,  manpower training, promotion of arts 
education, audience building and cultural exchanges.  How cultural and creative 
industries can make greater use of unde r-utilised industrial buildings through 
retrofitting or redevelopment will be explored. 
(g) Legislative measures as well as expanding the scope of green procurement will be 
undertaken to make HKC a greener city. 
These new measures will bring new business opportuniti es for overseas and local investors alike.   
(e) Outlook  
16. The global economy is emerging from the worst recession in more than sixty years.  So far 
the pace of recovery has been uneven and has varied greatly across regions.  This is likely to remain 
so going forward. 
17. The impact of the global financial crisis in  2008-09 was much stronger and more widespread 
than the Asian financial turmoil in 1997-98.  Neve rtheless, HKC's labour market was more resilient Hong Kong, China WT/TPR/G/241 
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 this time, with significantly fewer job losses.  This was attributable to the stronger economic 
fundamentals possessed by HKC now than before.  It  also reflected partly the effect of the 
Government's prompt policies in respon se to the global financial crisis.  
18. On the short-term outlook, the growth forecast of the HKC economy for 2010 as a whole is 
4% to 5%.  In view of the current strong grow th momentum in HKC and in the Asian region, 
economic growth will likely exceed the forecast if no major external shocks occur.  But with the 
latest developments in the external environment a nd the already fragile nature of the global recovery, 
the outlook for the HKC economy has turned somewhat more uncertain, more so in the latter part of 
the year upon the waning of exceptional fiscal boosts  in the advanced economies.  The medium-term 
outlook for the HKC economy is bright neverthe less.  HKC will continue to strengthen its 
competitiveness and evolve into a high value- added knowledge-based economy, complemented by 
deepening economic relations with the Mainland of China.  The large-scale infrastructure projects 
planned or in train will enter their peak construc tion period in the coming years, thereby providing 
impetus to aggregate demand over the medium te rm and raising the production capacity of the 
economy upon their completion.     
(B) FISCAL SITUATION  
19. Fiscal prudence has all along been a guiding principle of the HKSAR Government. 
Expenditure is kept within the limits of revenu es in drawing up the budget.  It strives to achieve 
fiscal balance, avoid deficits and keep the budget comme nsurate with the growth rate of the GDP.  It 
also adheres to the principles of pragmatism, co mmitment to society and sustainability in managing 
public finances. 
20. The Accounts of the HKSAR Government have b een in surplus since 2004-05.  Consolidated 
surplus for 2009-10 is HK$25.9 billion (equivalent to US$3.3 billion or 1.6% of GDP).  In 2010-11, 
HKC will continue to invest in infrastructure, pr omote the development of its industries and adopt 
various measures to achieve the objectives of c onsolidating the recovery, developing its economy 
and building a caring society.  A deficit of HK$25. 2 billion (equivalent to US$3.2 billion or 1.5% of 
GDP) is budgeted for the year. 
21. In the medium term to 2014-15, the Government  forecasts a surplus in the Operating Account 
from 2011-12, which would help meet the capital de ficit arising from its enormous expenditure on 
infrastructure in these years.  The deficit in th e Consolidated Account is forecast to decrease 
gradually in the next few years, and a balance is expected by 2013-14.  The Government anticipates 
that the fiscal reserves would be around HK$480 billion (equivalent to US$61.5 billion) by end-
March 2015, representing approximately 22% of GDP and 16 months of go vernment expenditure. 
(C) MONETARY POLICY   
22. HKC is a highly externally-oriented economy.  Our trade-to-GDP ratio was 380% in 2009.  A 
credible fixed exchange rate system helps mini mise exchange rate risk, benefiting externally-
oriented businesses.  A stable Hong Kong dollar is al so an important anchor for financial stability, 
which underpins HKC’s role as an international financial centre. 
23. The primary monetary objective of HKC is to maintain currency stability, defined as a stable 
external exchange value of the currency of HKC, in terms of its exchange rate in the foreign 
exchange market against the US dollar, at around HK$7.80 to US$1.  The structure of the monetary 
system is characterised by currency board arra ngements, requiring the Hong Kong dollar monetary WT/TPR/G/241 Trade Policy Review 
Page 10 
 
 
 base to be at least 100% backed by, and changes in  it to be 100% matched by corresponding changes 
in, US dollar reserves held by the Exchange Fund at  the fixed exchange rate of HK$7.80 to US$1.   
(D) EXTERNAL TRADE & FOREIGN DIRECT INVESTMENT  
(a) Merchandise Trade 
24. According to the preliminary figures publis hed by the WTO, HKC was the world's 11th largest 
trading entity in 2009 in terms of value of me rchandise trade.  It was also the world's 11th largest 
exporter and 9th largest importer. 
25. Supported by strong performance of the global and regional economic environment, the value 
of HKC's merchandise trade2 grew from HK$5,060 billion (US$649 billion) in 2006 to 
HK$5,849 billion (US$750 billion) in 2008.  The same value however declined to HK$5,161 billion 
(US$662 billion) in 2009 due to the global economic downturn.  Re-exports remained the key driver 
for overall trade due to strong trade flows with th e Mainland of China.  The outlook for trade in 2010 
remains largely positive. 
26. In 2009, electrical machinery, apparatus and appliances, and parts accounted for the largest 
share (26.4%) by value of total exports (sum of  domestic exports and re -exports) of goods, followed 
by telecommunications, audio and video equipmen t (16.8%), and office machines and computers 
(10.1%). 
(b) Major Trading Partners  
27. HKC's largest trading partner in 2009 was the Mainland of China, which accounted for a 49% 
share by value of total merchandise trade.  This was followed by the European Union (EU) and the 
United States (US), which accounted for 10% and 8% respectively.   
28. Total merchandise trade between the Main land of China and HKC increased from 
HK$2,349 billion in 2006 to HK$2,513 billion in 2009.   Principal export items to the Mainland in 
2009 included electrical machinery, apparatus and appliances, and parts; telecommunications and 
sound recording and reproducing apparatus and e quipment; office machines and automatic data 
processing machines.  Major imports from the Ma inland in 2009 included electrical machinery, 
apparatus and appliances, and parts;  teleco mmunications and sound r ecording and reproducing 
apparatus and equipment;  office machines and automatic data processing machines. 
29. Total merchandise trade between the EU and HKC was HK$532 billion in 2006 and 
registered a continuous growth, reaching HK$615  billion in 2008.  Due to the global economic 
downturn, merchandise trade dropped to HK$517 bi llion in 2009, representing a decrease of 15.9% 
over 2008.  Principal export items to the EU in  2009 included telecommunications equipment, 
jewellery, and clothing.  Major imports from th e EU in 2009 included telecommunications 
equipment, non-electric engines and motors, and pearls and precious and semi-precious stones. 
30. Total merchandise trade between the US and HKC increased from HK$495 billion in 2006 to 
HK$510 billion in 2008 before dropping to HK$427 billion in 2009 due to the global economic 
downturn.  Principal export items to the US in  2009 included articles of apparel and clothing 
accessories, miscellaneous manufactured articles, and telecommunications and sound recording and 
reproducing apparatus and equipment.  Major imports from the US in 2009 included electrical 
                                                      
2 Total merchandise trade comprises impor ts, re-exports and domestic exports. Hong Kong, China WT/TPR/G/241 
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 machinery, apparatus and appliances, and part s; telecommunications and sound recording and 
reproducing apparatus and equipment; and office m achines and automatic data processing machines. 
(c) Trade in Services 
31. According to preliminary figures published by the WTO, HKC was the world's 15th largest 
services trading entity in 2009.  It was also the world's 11th largest services exporter and the world's 
19th largest services importer.  The major export services sectors of HKC in 2009 were merchanting, 
merchandising and other trade-related services (30. 2% of total exports of services), transportation 
services (29.0%) and travel services (19.1%), while the major import services sectors in 2009 were 
travel services (36.0% of total imports of services) and transportation services (30.8%). 
(d) Foreign Direct Investment 
32. HKC is a major destination for foreign direct investment (FDI) in Asia.  According to the 
World Investment Report 2010 released by the United Nations Conference on Trade and Development (UNCTAD), HKC ranked fourth in the wo rld in FDI inflows in 2009, and was also the 
second largest recipient of FDI in Asia, after the Mainland of China.  The preliminary figure of 
HKC's FDI inflow in 2009 was HK$374 billion (US $48 billion).  At the end of 2008, the Mainland 
of China was HKC's largest source of inward di rect investment (IDI), with an IDI stock of 
HK$2,309 billion (US$296 billion), accounting for 37% of HKC's total IDI stock. 
III. TRADE POLICY DEVELOPMENT   
(A) P
ARTICIPATION IN THE WORLD TRADE ORGANIZATION (WTO)   
33. Hong Kong is a founding member of the WTO.  Our separate membership continues after 
reunification with China in 1997, under the name of "Hong Kong, China". 
34. It is HKC's top priority to bring the Doha  Round of multilateral trade negotiations to a 
successful and early conclusion.  We will continue  to contribute actively in the negotiating process 
and work closely with other Members to push for progress in reaching a successful conclusion of the 
Round.  Details of HKC's participation in the Doha Round are elaborated in Section V.   
35. HKC welcomes the current work that the WTO is  undertaking to monitor trade protectionist 
measures.  We strongly support and encourage the WTO's continued work in this area.  HKC has 
been working closely with other Members to ensure that the m onitoring process undertaken by the 
Trade Policy Review Body is effective and comprehe nsive.  We believe that our strong commitment 
against protectionism will be the only way to ensure  that international trade, which has been a key 
engine of global prosperity a nd our own economic success, will not be hampered.  HKC has been 
working with other Members on initiatives to fight against protectionism.  We maintain our position 
that the rules-based system embodied under the WTO and the dispute settlement mechanism have 
provided the most effective insurance against the outbreak of widespread trade protectionism time 
and again.  Our Secretary for Commerce and Econom ic Development speaks out against any form of 
protectionist measures whenever it counts, includi ng at the Organisation for Economic Co-operation 
and Development (OECD) Ministeria l Council Meeting held on 25 June 20093 and during the 
                                                      
3 At the OECD Ministerial Council Meeting held on 25 June 2009, Ministers of HKC and 10 other 
WTO Members issued a joint statemen t, calling upon all WTO Members to remain vigilant and exercise 
restraint against protectionism, rectify promptly any protectionist measures already introduced, and conclude the WT/TPR/G/241 Trade Policy Review 
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 Seventh Ministerial Conference of the WTO later that  year.  We will continue to call on our trading 
partners to refrain from protectionist measures and to roll back any trade-distorting measures they 
have implemented.   
(B) PARTICIPATION IN ASIA-PACIFIC ECONOMIC CO-OPERATION (APEC)  AND THE 
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT (OECD)   
36. HKC attaches great importance to regional economic cooperation fora with the aim of 
promoting free and open trade in support of the multila teral trading system.  In the past four years, 
we have continued to participate actively in  the Asia-Pacific Economic Cooperation (APEC) and 
contribute to its work.  Such work includes, among others, (a) APEC's political  statements in support 
of the WTO and the Doha Round negotiations, an d commitments in keeping markets open and 
resisting all forms of protectionism4;  (b) initiatives to strengthen economic integration in the 
Asia-Pacific region;  (c) formulation of a growth strategy to ensure that economic growth in the 
region is balanced, inclusive, sustainable, innova tive and secure;  (d) initiativ es to build capacity and 
skills in developing member economies to enable th em to participate more fully in the regional 
economy and the liberalisation process in trade and in vestment, including a financial contribution in 
2008 to the APEC Support Fund;  and (e) initiativ es on trade and investment liberalisation and 
facilitation undertaken by APEC.   
37. APEC Leaders set a visionary goal of free and open trade and investment in Bogor, Indonesia 
in 1994 (often referred to as "the Bogor Goals") fo r industrialised economies to achieve no later than 
2010 and developing economies no later than 2020.   Though not an industrialised economy, HKC 
has set out for itself to achieve the Bogor Goal s by 2010 and volunteered for assessment together 
with the industrialised economies.  In the la test APEC Individual Action Plan Peer Review 
conducted on HKC in January 20 07, HKC was commended for having made remarkable progress in 
a number of areas in achieving the Bogor Goals and having established itself as a "model member 
economy" in trade and investment  liberalisation and facilitation. 
38. HKC has been an observer to  the OECD's Trade Committe e and Committee on Financial 
Markets since 1994 and 1995 respectively.  We have contributed to and benefited from the work of these two Committees, and will continue to participate actively therein. 
(C) R
EGIONAL TRADE AGREEMENTS  
39. HKC considers that free trade agreements ( FTAs) which are fully WTO-consistent should 
help promote the cause of eventual global trade lib eralisation.  While upholding our commitment to 
the primacy of the multilateral trading system, we maintain a positive an d active approach in 
pursuing with other economies comprehensive and high standard FTAs that go beyond the 
commitments under the WTO.  So far, we ha ve concluded a Closer  Economic Partnership 
Arrangement with the Mainland of China and a Cl oser Economic Partnership Agreement with New 
Zealand.  FTA negotiations with the Eur opean Free Trade Associ ation are under way. 
                                                                                                                                                                     
Doha Round negotiations as soon as possible.   The joint statement can be viewed at 
http://www.cedb.gov.hk/speech/2009/annex_26062009.pdf. 
4 On anti-protectionism, APEC Mini sters agreed to continue to exercise maximum restraint in 
implementing measures that may be considered to be WTO consistent if they had a significant protectionist 
effect and promptly rectify such  measures where implemented. Hong Kong, China WT/TPR/G/241 
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 (a) Mainland and Hong Kong Closer Economic  Partnership Arrangement (CEPA)  
40. The Mainland of China and HKC signed th e "Mainland and Hong Kong Closer Economic 
Partnership Arrangement" (CEPA) on 29 June 2003.  CEPA is the first FTA concluded by HKC.  
CEPA adopts a building block approach, whereby th e scope and content of the agreement may be 
expanded from time to time to suit the needs of the parties.  To date, the two sides have concluded 
seven supplements.  Since the last Trade Policy Revi ew of HKC in 2006, Supplements IV to VII to 
CEPA have been signed in June 2007, July 2008, May 2009 and May 2010 respectively.   
41. CEPA provides a convenient platform for HKC and the Mainland of China to pursue new 
trade and investment facilitation and liberalisatio n initiatives.  In fulfilment of the pertinent 
objectives of CEPA, both sides seek to: 
(a) apply zero tariffs to the merchandise of the other party; (b) progressively reduce or eliminate existing restrictive measures applicable to service 
suppliers of the other party; and 
(c) promote cooperation in ten designated areas to facilitate trade and investment flows 
between both sides.
5 
42. Under CEPA, effective from 1 January 2006, a ll products of HKC origin (except for some 
prohibited articles) enjoy tariff-free treatment on importation into the Mainland of China upon 
fulfilment of the CEPA rules of origin.  On the services front, inclusive of the measures in 
Supplement VII to CEPA, there are market access liberalisation measures in 44 service sectors.  
CEPA also enhances cooperation of both parties in  financial services, tourism promotion, mutual 
recognition of professional qualifications and exchange of professional talent. 
(b) Hong Kong, China-New Zealand Closer Economic Partnership Agreement  
43. HKC and New Zealand signed the "Hong Kong, China – New Zealand Closer Economic 
Partnership Agreement" (CEP Agreement) on 29  March 2010.  The CEP Agreement is HKC's 
first FTA with a foreign economy.  Both parties aim to have the CEP Agreement come into force 
soon after completion of their respective domestic procedures. 
44. The CEP Agreement is a comprehensive and hi gh quality FTA, with the commitments therein 
going beyond the commitments undertaken by HKC and New Zealand under the WTO in many 
areas.  It comprises liberalisation measures for trade in both goods and services.  It also contains provisions on facilitating investment and movement of business persons, as well as improving the business environment.  It is expected that  the CEP Agreement will open up new business 
opportunities for the two economies, and strengt hen bilateral trade and investment ties. 
45. Specifically on trade in goods, HKC and New Ze aland have both committed to eliminating 
tariffs on all products.  New Zealand's tariffs on products originating from HKC will be gradually 
removed over a six-year period, while HKC will bind its existing zero tariff regime with respect to 
                                                     
 
5 CEPA promotes cooperation between both sides in trade and investment promotion;  customs 
clearance facilitation;  commodity inspection and quarantin e, food safety and quality and standardization;  
electronic business;  transparency in laws and regulations;  cooperation of small and medium enterprises;  
cooperation in industries;  protection of intellectual property;  cooperation on branding;  and cooperation on 
education. WT/TPR/G/241 Trade Policy Review 
Page 14 
 
 
 New Zealand originating products, upon the entry in to force of the CEP Agreement.  On trade in 
services, the CEP Agreement covers a comprehensive range of service sectors.  The service providers of the two economies will be able to enjoy secure market acces s.  The CEP Agreement 
also provides for a set of robust disciplines on domestic regulation. 
(c) Free Trade Agreement under Negotiation be tween Hong Kong, China and European 
Free Trade Association 
46. In January 2010, HKC commenced FTA nego tiations with the European Free Trade 
Association, which comprises Iceland, Liechtenste in, Norway and Switzerland.  The negotiations 
encompass a wide-ranging scope, covering, among others , liberalisation of trade in goods, trade in 
services, and liberalisation and promotion of in vestment.  The negotiations are making good 
progress. 
IV. SECTORAL DEVELOPMENTS 
(A) D
EVELOPMENTS IN TRADE IN GOODS  
(a) Textiles and Clothing 
47. Textiles and clothing (T&C) products remain as one of the key export items of HKC.  In 
2009, domestic exports of T&C products amounted  to HK$6.7 billion (roughly US$0.86 billion), 
which accounted for 11.5% of our tota l domestic exports of merchandise. 
48. With the global elimination of textile quotas starting 1 January 2005 as prescribed under the 
World Trade Organization Agreement on Textiles a nd Clothing, HKC has streamlined its textiles 
control system to provide greater facilitation to the trade while ensuring origin compliance of T&C 
products claiming HKC origin.  All quota-related operations have been dispensed with, and the 
licensing requirements for all personal shipments have been lifted.   
49. The simplified textiles control system continu es to be backed up by the Import and Export 
Ordinance, Laws of Hong Kong, and its subsidiary  regulations.  For the purpose of safeguarding the 
interest of its textiles trade, all impor t and export of T&C products, unless exempted6, are required to 
be covered by import and export licences or notif ications.  Different licensing requirements are 
applied to textiles exports/imports involving th e "sensitive" and "non-sensitive" markets in the 
following manner: 
(a) For sensitive markets7, textiles imports/exports s hould be covered by either 
consignment-specific import/export licences or  textiles notifications whereby details 
of individual shipments are captured. 
                                                      
6 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 quantities that are im ported or exported by an individual for his personal use 
or as a bona fide gift to another individual; and textiles ar ticles of reasonable quantities to be used by the crew or 
passengers of a vessel, aircraft, or vehicle on which the articles are carried. 
7 Sensitive markets are textiles exports to and imports from the Mainland of China, and exports to the 
US.  Textiles exports to the EU were once classified as "sensitive market" but reclassified as "non-sensitive" on 
29 June 2009 in light of the expiry of the EU's qua ntitative restrictions and the EU/Mainland joint import 
surveillance system on T&C products originating in the Mainland of China by end-2007 and end-2008 
respectively. Hong Kong, China WT/TPR/G/241 
 Page 15 
 
 
 (b) Places other than the sensitive markets ar e classified as non-sensitive markets.  For 
shipments to the non-sensitive markets, apart from consi gnment-specific licences, a 
comprehensive licence (valid for a year for multiple shipments) may be used, 
regardless of the product type, quantit y and country of origin of the goods. 
(c) A Production Notification requirement is applied to cut-and-sewn garments intended 
for export to the US.8  Under this requirement, manufacturers are required to lodge a 
Production Notification with the Trade and Industry Department shortly before 
commencement of the origin-conferring process in HKC, so as to enable the 
Hong Kong Customs officers to conduct real time checks on the garments during the 
manufacturing process. 
50. The textiles control system is rigorously enfor ced by the Customs and Excise Department to 
safeguard the legitimate interest of HKC's textiles trade.  Malpractices are taken seriously.  Any 
person who commits an offence under the Import an d Export Ordinance of Hong Kong is liable upon 
conviction to a maximum fine of HK$500,000 (r oughly US$64,000), imprisonment for two years 
and possible forfeiture of the goods concerned .   
(b) Reserved Commodities 
51. Rice is the major staple foodstuff in HKC and is therefore scheduled as a reserved commodity 
under the Reserved Commodities Ordinance, Laws of Hong Kong.  Under the Ordinance, the 
Government operates the Rice Control Scheme to ensu re a stable supply of rice and to keep a reserve 
stock sufficient for consumption by the population fo r a reasonable period to cater for emergencies 
or any temporary shortage of supply.  Since the liberalisation of the Rice Control Scheme in 2003, 
the rice trade generally operates in a free market  environment.  Any business may register as an 
importer of rice and there are no restrictions on rice import.  The Government continues to maintain 
only the necessary controls to ensure a stable supply of rice and to keep a reserve stock adequate for 
about 15 days' consumption to cater for emergencies. 
(c) Strategic Commodities 
52. The Government maintains a comprehensive and effective control system on the import and 
export of strategic commodities.  The system serv es to prevent the HKSAR from being used as a 
conduit for proliferation, and to secure our conti nued access to high-tech goods and technology that 
are essential for our economic development. 
53. The legal basis for strategic trade control in th e HKSAR is set out in the Import and Export 
Ordinance, Laws of Hong Kong.  The Ordinan ce requires the import and export of strategic 
commodities to be subject to licensing control admi nistered by the Trade and Industry Department.  
Re-export and transshipment cargoes ar e treated as import and export a nd are subject to the licensing 
requirement.  Certain sensitive items are required to  be covered by licences when they are transiting 
through HKC. 
54. The items under licensing control are listed in the Schedules to the Import and Export 
(Strategic Commodities) Regulations under the Or dinance, and mirror those adopted by various 
international export control regime s and conventions.  Items subject to control include munitions 
items, chemical and biological weapons and their precursors, nuclear materials and equipment, and 
                                                      
8 The Production Notification requirement was similarly applied to cut-and-sewn garments intended for 
export to the EU for the period from 15 March 2006 to 28 June 2009. WT/TPR/G/241 Trade Policy Review 
Page 16 
 
 
 industrial dual-use goods.  End-use control is also imposed on products which are used in connection 
with the development of weapons of mass destruct ion.  The control lists are updated from time to 
time in order to reflect the changes made by the in ternational regimes.  The latest amendment of the 
control lists which has been effective since mid- June 2010 reflects, among other things, the latest 
changes in respect of commonly traded strategic commodities (including electronics, computers, and 
telecommunications and information security products) adopted in th e international non-proliferation 
regime control list up to end-2009. 
55. Over the years, various facilitation measures have  been introduced in the licensing service for 
strategic commodities.  The latest facilitation in itiative is the "Approval-in-Principle Arrangement 
for Bulk Users of Strategic Commodities Licensing Serv ice" introduced in 2007.  It aims to further 
streamline licensing procedures and expedite pro cessing time for certain frequent and qualified users 
of licensing services for strategic commodities.  Under the Arrangement, a company which frequently imports certain products from the same s upplier or frequently exports certain products to 
the same consignee may request for an approval-in -principle for such consignments.  The company 
may then apply for the relevant import/export licen ce electronically, on a pre-shipment basis, for 
each and every shipment which is within the scope  of the approval-in-pri nciple granted.  The 
relevant licence applications would require less processing time and may be processed even outside 
office hours as they will be vetted and processed  by the computerised licensing system 
automatically.  
(d) Wine and Related Business  
56. To support the further development of the wine  and related business in HKC, with effect from 
February 2008, HKC exempted the duties on wine, b eer and all other alcoholic beverages with an 
alcoholic strength not more than 30%.  The ma rket has responded positively to the wine duty 
exemption.  Business related to wine trading, distri bution and auctions, etc. has grown.  On trading, 
the value of wine imports has increased significantly.  It reached HK$3.2 billion in 2008-09, 
representing an increase of 80% over 2007-08.  In 2009-10, the imports continued to grow by 
another 45% year-on-year, amounting to HK$4.6 billi on.  As at the second quarter of 2009, over 150 
new wine-related companies had been established in HKC since the duty exemption, covering areas 
including trading, storage, retailing, etc.  The policy has also brought benefits to related economic 
activities such as tourism, catering and hospita lity, exhibitions as well as brand promotion. 
57. Since the wine duty exemption, our wine auctions  have also flourished.  In 2009, a total of 
14 wine auctions were held in HKC, with the aggregate sales amounting to some HK$496 million.  
According to the industry, HKC has become the second largest wine auction centre in the world, just 
after New York.  The surge in wine auctions a nd the wine-related business across the board is 
largely attributable to the growing demand in the region, HKC's zero wine duty policy, and a 
favourable business environment. 
(e) Trade Facilitation  
58. The HKSAR Government attaches great importa nce to trade facilitation.  We have been 
actively implementing measures to facilitate legiti mate trade and movement of goods, while ensuring 
effective controls on cargo clearance. 
59. To facilitate customs clearance,  the Customs and Excise Department (C&ED) rolled out the 
electronic Road Cargo System (ROCARS) on 17 May 2010.  With ROCARS, Customs officers can receive cargo information before the goods arrive  at the land boundary.  This enables C&ED to Hong Kong, China WT/TPR/G/241 
 Page 17 
 
 
 perform computer-based risk profiling in advance to determine whether inspection is called for.  As 
a result, cross-boundary trucks, except those selected for inspection, enjoy seamless customs 
clearance at the land boundary.  After a transiti onal period of 18 months, ROCARS submissions will 
become mandatory in November 2011.  ROCARS al so provides added room for C&ED to facilitate 
the passage of transshipment cargoes which involve in ter-modal transfer (e.g. from land to air/sea).  
At present, transshipment cargoes may be subject to customs inspection at both the land boundary 
control points and the Airport/container terminals.  In future, for traders using ROCARS and certain 
tracking devices prescribed by C&ED, such cargoes will only be subject to customs inspection at 
either the point of exit or entry.  Subject to consultation with the industry, we plan to introduce the facilitation measures in October 2010 . 
60. Guided by the principles and standards promulgated by the World Customs Organization in 
its Framework of Standards to Secure and Facilitate  Global Trade, and in the light of the growing 
importance attached to supply chain security and f acilitation of international trade, C&ED plans to 
introduce an "Authorised Economic Operator" pilot scheme in HKC in 2010, having regard to local 
circumstances.  Under the scheme, companies w ith good compliance track record will be given 
customs facilitation.  We will conduct a review 12 months after the pilot to decide on the way 
forward, including implementation of the scheme on a wider scale.   
(B) D
EVELOPMENTS IN SERVICES  
(a) Financial Services   
61. To strengthen HKC's competitiveness in th e face of increasing global competition and 
maintain our position as a leading regional and intern ational financial centre, we continue our efforts 
in improving the quality of the market, modernis ing the regulatory regime and upgrading market 
infrastructure. 
(i) Banking Industry  
62. HKC has an open banking sector whereby local and foreign banks compete on a level playing 
field.  Under the current three-tier licensing syst em maintained by the HKSAR, foreign banks may 
enter the HKC banking market as licensed banks, restricted licence banks or deposit-taking 
companies.  They may operate in the form of local ly incorporated companies or branches of foreign 
banks.  
(ii) Securities and Futures  
63. The Securities and Futures Ordinance (SFO), Laws of Hong Kong, which brought HKC's 
regulatory framework on a par with international st andards and practices, has been in operation since 
1 April 2003.  
64. From March to June 2010, the Government c onsulted the public on a legislative proposal to 
oblige timely disclosure of price sensitive informat ion by listed companies.  The objective is to 
cultivate a continuous disclosure culture among co mpanies listed in HKC and further improve the 
transparency of our equity market.  The Government is studying the public response. 
65. With the Government's support, our securities regulator, stock exchange and federation of 
share registrars have reactivated a working group and launched a public consultation in 
December 2009 on the operational model for impl ementing a scripless secu rities market in HKC, 
with a view to modernising HKC's financial infrast ructure, enhancing shareholder transparency and WT/TPR/G/241 Trade Policy Review 
Page 18 
 
 
 investor protection.  The consultation has cl osed and the working group would publish the 
consultation conclusions in the third quarter of 2010.  As a first step in the entire legislative 
amendment exercise, the Government proposed some  technical changes to the Companies Ordinance 
in 2010 to remove the existing legal limitations that compel the issue or use of paper documents of 
title and transfer.  To operationalise the scripl ess securities market, the Government has been 
working with the working group in mapping out further legislative amendments tentatively 
scheduled to be introduced into the Legislative Council in 2011. 
66. As a responsible player in the international arena, we will continue to ensure that our 
regulatory regime is in keeping with the evolving in ternational standards.  Fo r instance, we plan to 
introduce a licensing framework for credit rating ag encies and credit analysts.  We are working 
towards consulting the market in the third quarter  of 2010 and introducing the relevant legislative 
amendments in the fourth quarter of 2010. 
(iii) Insurance  
67. The insurance industry in HKC is a cosmopolita n and competitive one.  A level playing field 
is maintained for all insurers and insurance interm ediaries irrespective of their country of origin.  
This is evident from the large number of authori sed insurers (170 as at 31 May 2010) and the strong 
presence of foreign companies.  About 47% of the authorised insurers were incorporated outside 
HKC in 21 places, with Bermuda (14) taking the lead. 
68. The Office of the Commissioner of Insurance (OCI) has been implementing a number of 
measures  to further enhance the regulatory regi me in respect of the insurance sector .  Among them 
are step-up monitoring of the financial and solv ency position of all insurers in HKC, enhanced 
disclosure requirements and enhanced policyholder education.  To ensure the institutional 
independence of OCI and enhance its flexibility to  respond to market developments, we are also 
studying the proposal of turning OCI into a regulator independent of the Government.  In addition, the OCI is preparing proposals for the establishmen t of a Policyholders' Protection Fund in HKC to 
improve market stability and safeguard the interest of  policyholders in the event of insolvency of an 
insurer.  
(iv) Mandatory Provident Fund System  
69. HKC implemented the Mandatory Provident Fund (MPF) System in December 2000.  It is a 
privately managed, mandatory system of provident  fund schemes to assist members of the workforce 
to accumulate financial resources for their retirement.  The MPF System operates under a free market competition environment.  There is no barrier  to entry, quantitative or qualitative, for foreign 
institutions intending to participate in the MPF ma rket.  MPF schemes are governed by trust.  Any 
institution, irrespective of its place of origin, th at meets the eligibility requirements (including paid 
up capital and net asset requirements) may apply for approval as a trustee, or to provide services for 
MPF schemes such as investment management and custody of assets.  There is no fixed quota on the 
number of approved trustees, which stood at 19 as at 30 March 2010. 
70. The Mandatory Provident Fund Schemes (Amend ment) Bill 2009 was passed on 8 July 2009.  
The legislation would allow more than 2.2 m illion MPF scheme members (as at 30 March 2010) to 
transfer accrued benefits derived from their mandatory contributions during their current 
employment to a MPF scheme of their own choice at least once a year.  It would also allow 
employees to have access to a broader spectrum of MPF service providers, MPF schemes and funds Hong Kong, China WT/TPR/G/241 
 Page 19 
 
 
 for investment.  Upon implementation, the propo sal will enable around 60% of MPF benefits to be 
portable between trustees and hence promote greater market competition. 
(v) Corporate Governance  
71. Enhancing HKC's corporate governance (CG) regime is a priority of our work.  The 
Government, together with other relevant par ties, attaches much importance to uphold our CG 
standards in line with international standards.  We have been working on the rewrite of our 
Companies Ordinance, Laws of Hong Kong, sin ce 2006 with a view to modernising our legal 
framework for companies in HKC, and enhancing CG is  one of the key objectives of the exercise.  In 
this context, we are consulting the public on a draft Companies Bill, which contains a number of 
proposals to strengthen the accountability of direct ors, improve disclosure of company information, 
strengthen auditors' rights, enhance shareholders ' engagement in the decision-making process and 
foster shareholder protection.  We aim to introdu ce the Bill into the Legislative Council before the 
end of 2010.  Ahead of that, the Companies (A mendment) Ordinance 2010 which was passed by the 
Legislative Council on 7 July 2010 c ontains improvements to the area of statutory derivative actions.  
The statutory derivative action procedure in th e Companies Ordinance allows a member of a 
company to bring an action or intervene in the pr oceedings on behalf of the company in respect of 
"misfeasance" committed against the company.  The Amendment Ordinance expands the scope and 
allows a member of a related company to commen ce or intervene in statutory derivative action on 
behalf of the company as well, thus enhancing the protection of shareholders in a corporate group.  
The Amendment Ordinance will come into effect by phases starting from late 2010.  
(b) Telecommunications  
72. HKC has one of the most sophisticated and successful telecommunications markets in the 
world.  This has been an important factor in HKC's development as a leading business and financial 
centre. 
73. All sectors of HKC's telecommunications market  have been liberalised, with no foreign 
ownership restrictions.  Our regulatory regime is  pro-competition and pro-consumer.  The objectives 
are to provide a level playing field in the teleco mmunications market and en sure that consumers get 
the best services in terms of capacity, quality, speed and price.  
(c) Broadcasting 
74. The objectives of the broadcasting policy ar e to promote programme choice and quality 
through competition, to facilitate the introductio n of new and innovative broadcasting services, as 
well as to enhance HKC's position as a regional broa dcasting hub.  HKC has a vibrant broadcasting 
sector offering a wide range of services to local viewers and listeners.  HKC's viewers and listeners have access to over 700 local and overseas television channels in various languages through 
free-to-air terrestrial and satellite reception or  pay television services, and 13 radio channels 
provided by two commercial broadcasters and Radio Television Hong Kong, the public service 
broadcaster.  At the same time, it is a regional br oadcasting hub with 18 li censees uplinking over 200 
satellite television channels for the regional market.   
75. On 31 December 2007, the two domestic fr ee television programme service licensees 
launched digital terrestrial television.  Apart fro m simulcasting the existing 4 free-to-air analogue 
terrestrial television channels in digital format, th e stations introduced a total of five new standard 
definition television channels a nd two new high definition televisi on channels, all of which are 
offered to viewers free of charge.  In February 2010, the Government invited interested parties to WT/TPR/G/241 Trade Policy Review 
Page 20 
 
 
 submit applications for the provision of a digital audio broadcasting (DAB) service.  It is expected 
that the DAB service will be launched by late 2010 or  early 2011 at the earliest.  In June 2010, HKC 
carried out an auction of one multiplex for the provision of a broadcast-type mobile television 
service which is expected to be launched by the end of 2011.  The Government continues to keep 
track of the development and application of ne w technologies in the broadcasting sector and will 
update the regulatory regime as necessary in th e light of technological and market convergence. 
(C) PROTECTION OF INTELLECTUAL PROPERTY RIGHTS IN HONG KONG, CHINA  
76. HKC is committed to protecting intellectual pr operty rights (IPR).  This commitment is 
underpinned by our respect for private economic rights and our recognition of the importance of 
robust IPR protection to our economic growth. 
77. We achieve this through comprehensive legisl ation, vigorous enforcement action, sustained 
public education, and close cooperation with right s owners and other law enforcement agencies. 
(a) Comprehensive Legislation   
78. HKC has comprehensive legislation for the prot ection of patents, trade marks, copyright, 
registered designs, layout-designs (topographies) of integrated circuits and plant varieties.  Our 
intellectual property laws comply fully with the requirements of the WTO Agreement on 
Trade-Related Aspects of Intellectual Property Rights (TRIPS). 
79. We constantly review our inte llectual property laws to ensure they remain appropriate in 
present-day circumstances.  Since the last Trade Policy Review in 2006, we have introduced, or 
proposed, a number of additional legislative measures to further strengthen the protection of IPR.  
The major ones are: 
 (a) The Copyright (Amendment) Ordinance 2007 was passed by the Legislative Council 
in June 2007.  It (i) provides new civil and criminal liability to enhance copyright 
protection (including a new business end-user copying/distribution offence for four types of printed works as well as civil a nd criminal liability against activities relating 
to circumvention of technological measures used for copyright protection);  (ii) 
makes our copyright exemption regime more flexible;  (iii) relaxes the restrictions on 
parallel importation of copyright works;  and (iv) strengthens enforcement of rights.  
Most of the above amendments took effect on 6 July 2007.  
 (b) The Patents Ordinance was amende d in November 2007 to implement the 
compulsory licensing scheme under Paragraph 6 of the Doha Declaration on the 
TRIPS Agreement and Public Health a nd the Protocol amending WTO's TRIPS 
Agreement.  This facilitates access to gene ric versions of patented pharmaceutical 
products for addressing public health probl ems.  The amendments took effect on 
22 February 2008.  
 (c) The Copyright (Amendment) Ordinance 2009 was passed in November 2009.  It 
prescribes the numeric limits in relation to  the copying and di stribution offence 
(enacted in 2007 as mentioned in (a) above ).  The offence as well as the numeric 
limits came into operation on 16 July 2010. 
  (d) To meet the challenges posed by advances in technology, we are embarking on a 
review of how best to strengthen copyright protection in the digital environment.  The Hong Kong, China WT/TPR/G/241 
 Page 21 
 
 
 refined proposals we released in November 2009 include enhancing copyright 
protection for works transmitted through el ectronic media, strengthening the role 
played by online service providers (OSPs) in combating online piracy, and providing specific exceptions for OSPs and user s to enhance flexibility in electronic 
transmission and use of copyright works.  The Government is working closely with 
stakeholders on the amendment legislation. 
(b) Rigorous Enforcement Action  
80. Rigorous enforcement actions are taken by the Customs and Excise Department (C&ED) 
against piracy and trademark counterfeiting activ ities.  We have a strong enforcement team 
comprising some 400 officers.  The infringement si tuation in HKC has been brought under firm 
control. 
81. The Anti-Internet Piracy Teams and Computer  Analysis and Response Team of C&ED are 
playing a vital role in tackling Internet piracy .  The use of advanced investigation skills and 
technology, including a Lineament Monitoring System that tracks the uploading of BitTorrent "seeds", enables us to monitor illegal piracy activ ities round-the-clock and track down the identity of 
those taking part in such activities. 
82. In June 2009, C&ED effected the first case in Asia which involved an international piracy 
syndicate using high-speed Internet servers (gener ally called "Top-site") to distribute infringing 
items including movies, music, computer software and video game software.  We successfully dismantled the syndicate's setup in HKC. 
(c) Sustained Public Education  
83. The Intellectual Property Department (IPD) promotes awareness of and respect for IPR in the 
community through on-going and sustained public education programmes.  These include school 
visits and programmes for school children, and te rritory-wide publicity campaigns (e.g. seminars, 
exhibitions, printed and electronic advertisemen ts, No Fakes Pledges Scheme and I Pledge 
Campaign) targeted at the business community ( both in HKC and the Mainland cities where HKC 
enterprises have a strong presence) and the genera l public.  An annual budget of about HK$8 million 
is set aside every year for this purpose. 
84. IPD launched an Intellectual Capita l Management Consultancy Programme
9 in March 2009, 
offering a free consultancy service to help enterp rises, especially small and medium enterprises, 
capitalise on and manage their intellectual assets, with  a view to effectively exploiting and protecting 
these assets for the long-term economic benefits  of both the enterprises themselves and HKC. 
85. Since September 2006, C&ED has collaborated w ith the business software industry to launch 
a range of initiatives to raise the awareness of lo cal businesses on software piracy and promote the 
use of genuine business software, including the Bu siness Software Legalisation Scheme and the 
enhancement of the reward scheme s ponsored by the software industry. 
                                                      
9 Intellectual Capital Management is a set of simple management tools which helps enterprises to 
strengthen business management to enhance productivity and sustainable development.  It provides tools to identify intellectual capita l, estimate its importance, id entify the risks inherent in each  asset, and then determine 
a strategy to reduce the risk and exploit each asset. WT/TPR/G/241 Trade Policy Review 
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 86. Since 2006, C&ED, IPD, the IPR industry and eleven local uniformed youth groups have 
worked together and established the 'Youth Amba ssador Against Internet Piracy' Scheme.  By 
encouraging local young people to report online pi racy, the Scheme helps heighten awareness of the 
importance of IPR protection and secure their commitment to serving the community.  Various 
educational activities including IPR workshops, vi sits to production companies and competitions 
were organised for the 200,000 members of the Scheme. 
(d) Close Cooperation with Rights Owners and Other Law Enforcement Agencies  
87. We liaise closely with IPR owners to solicit th eir assistance in fighting IPR infringement.  For 
example, C&ED has taken the lead in forming an Intellectual Property Rights Protection Alliance 
(IPRPA).  Membership encompasses individual comp anies and stakeholders in the IPR industry, 
such as the proprietors of copyrights/trademarks, th eir authorised agents and legal representatives.  
The IPRPA serves as a platform for voluntary monitoring by the IPR owners of IPR infringement activities in the retail market.  Members will report to C&ED on finding any suspected IPR 
violation. 
88. C&ED has  also launched a number of c ooperation campaigns jointly with the IPR industry.  
The 'E-auctioning with Integrity Scheme' was launche d in 2005 with local auction site operators and 
various IPR owners to combat the sale of infri nging items on the Internet.  Under the Scheme, 
auction site operators agree to step up screening and remove items suspected to be IPR infringing 
goods.  The 'Fast Action Scheme ' was launched in 2006 with th e Hong Kong Brands Protection 
Alliance to combat infringing activities during la rge scale trade exhibitions and fairs.   
89. We also maintain regular liaison with other enforcement agencies in the region to prevent 
cross-boundary infringing activities. 
(D) E
LECTRONIC COMMERCE  
90. The Government recognises the importance of promoting the development of electronic 
commerce to sustain HKC's competitiveness on a global scale.  The Government first promulgated the Digital 21 Strategy in 1998 focusing on buildin g HKC’s information infrastructure and creating 
an enabling environment for e-business to prosper.   The Strategy was updated in 2001, 2004 and 
2007 to take into account technological advanc ement and changing needs of the economy. 
91. To provide an environment that is conducive to the development of electronic commerce, the 
Government has put in place appropriate measures in the promotion of information security and 
protection of privacy and intellectual property rights , including relevant regulat ions and legislations.  
The Government is reviewing the Personal Data (Privacy) Ordinance, Laws of Hong Kong, to 
examine whether the existing provisions of the Ordina nce afford adequate protection to personal data 
having regard to developments, including advancem ent in technology, over the last decade.  The 
Government is also considering how best to strengthen copyright protection in the digital 
environment while promoting the development of HKC as an Internet service hub.  In November 
2009 the Government released its latest proposals, which would form the basis for preparing the 
relevant amendment legislation. 
92. To promote electronic commerce, improve effi ciency and maintain HKC's competitiveness as 
an international trading centre, the Government in troduced Government Electronic Trading Services 
(GETS) in 1997.  GETS refer to the front-end el ectronic services operated by the service providers 
appointed by the Government for the trading community to submit six commonly used trade 
documents to the government departments concer ned for the purposes of customs control, trade Hong Kong, China WT/TPR/G/241 
 Page 23 
 
 
 declaration, trade control and statistics compilati on.  By 2009, around 60,000 traders and carriers had 
registered with the service providers as G ETS users and the transaction volume was about 
20.3 million.  The Government has increased the number of service providers from two to three from January 2010.  The appointment of the third service provider has given users a wider choice and 
brought added room for healthy competition in the market.  Technical enhancements have also been 
introduced to the GETS System to facilitate the possible switching of service providers. 
93. An e-Procurement Pilot Programme for low-value purchases was launched in 2009 which 
allowed suppliers to share procur ement-related information with three pilot departments of the 
Government and submit quotations and proposals onlin e.  As mentioned in paragraph 59 above, in 
2010, the Government launched a Road Cargo System  for traders and truck drivers to enjoy seamless 
customs clearance at the land boundary control points by submitting advance cargo information to the Government for electronic customs clearance of road cargoes . 
94. In the area of supply chain management, th e Government has esta blished the Hong Kong 
Logistics and Supply Chain Management Enabling Technologies R&D Center (LSCM) to help the 
industry to improve operational efficiency, par ticularly through the use of Radio Frequency 
Identification (RFID) technology.  During the period from 2004 to 2009, the Government has 
supported more than 31 RFID projects, involving a to tal funding of over HK$190 million.  On top of 
our continuous support for research  and development projects, the Government has been driving 
wider application and more extensive utilisati on of research and development results through 
commercialisation. 
95. The Government has been providing support th rough launching Sector-specific Programmes 
(SSP) to enhance the adoption of information and communication technology by SMEs.  The SSP 
has so far covered thirteen business sectors, namely travel agencies, medical and health, drugstores, 
logistics, accounting, beauty service,  trade, social service, watches and clocks, supply chain, social 
enterprises, Chinese medicine practitioners and manufacturing sectors. 
96. In 2005, APEC assessed the status of development in Paperless Trading in APEC economies 
through which HKC was recognised as one of the two economies at the highest advanced level. 
(E) G
OVERNMENT PROCUREMENT  
97. The Government adopts an open, fair, competitiv e and transparent system in the procurement 
of goods and services.  Local and overseas suppliers a nd contractors are treated on an equal footing.  
The principles underlying the procurement system of  the Government are consistent with the spirit 
and objectives of the WTO Agreement on Governme nt Procurement, to which HKC is a party.  
There has not been any change to the procuremen t policy since the last Trade Policy Review in 
2006. 
(F) COMPETITION POLICY   
98. A free and competitive market has always b een the backbone of HKC's economy.  The 
HKSAR Government’s competition policy is to enhance economic efficiency and the free flow of 
trade through promoting sustainable competition, thereby bringing benefits to both the business 
sector and consumers.  Backed by the aspirations  of society for a cross-sector competition law as 
revealed in the results of the public consu ltation exercises conducted in 2006 and 2008, the 
Government introduced the Competition Bill into the Legislative Council in 2010 for scrutiny with a 
view to establishing a legal framework to ensure  the effective implementation of our competition 
policy.  The proposed competition law will adopt a judicial enforcement model and provide for WT/TPR/G/241 Trade Policy Review 
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 general prohibitions on all anti-competitive conduct which has the object or effect of preventing, 
restricting or distorting competition in HKC. 
99. Pending the enactment and implementation of the competition law, the Competition Policy 
Advisory Group (COMPAG), chaired by the Financ ial Secretary, reviews competition issues that 
have policy or systemic implications.  CO MPAG regularly examines existing policies and 
investigates practices alleged to be anti-competiti ve.  It also considers initiatives to promote 
competition. 
V. DOHA DEVELOPMENT AGENDA   
(A) HONG KONG, CHINA 'S OVERALL POSITION IN THE DOHA DEVELOPMENT AGENDA (DDA)   
100. HKC strongly supports the multilateral trade negotiations under the DDA and believes that 
further trade liberalisation can help forestall regre ssion into protectionism and provide the engine for 
sustained economic growth worldwide.  The successf ul conclusion of the DDA will benefit the entire 
WTO membership.  To this end, we have been sp aring no efforts in working with all WTO Members 
towards bringing the DDA negotiations  to a successful conclusion.  
(B) HONG KONG, CHINA 'S PRIORITY AREAS IN THE ROUND  
101. As a small, open and externally oriented ec onomy, HKC's priorities in the DDA negotiations 
are naturally market-access related issues, notably  market access for non-agricultural products and 
for services.  Furthermore, we see the need to clar ify and improve WTO rules to ensure that they 
remain relevant and conducive to trade and investment .  In parallel, we also attach much importance 
to other negotiating areas in the DDA. 
(a) Services 
102. HKC sees services as one of the three underpinning  market access pillars of the Doha Round 
negotiations and together with the rule-making part of the negotiations , part and parcel of the overall 
deal.  To this end, we attach great importance to the ongoing services negotiations and strongly believe that progress has to be made on this importa nt pillar to achieve a truly balanced outcome for 
the Round. 
103. Being a strong exporter of services trade, HKC is keen on the progressive liberalisation of 
trade in a wide range of services sectors, in pa rticular telecommunications, maritime transport, 
logistics, audio-visual and financial services.  We aim to seek comprehensive and commercially 
meaningful services commitments from our trading partners so that our service providers may compete on a par with their overseas counterparts.  To this end, HKC has been participating actively 
and constructively in the market access negotiatio ns.  HKC tabled its initial and revised offers on 
further liberalisation of services in accordance with the stipulated timelines.  Our commitments and 
offers are substantive, all without most-favoured-n ation treatment (MFN) exemptions, foreign equity 
caps or numerical quotas.   
104. In parallel, HKC considers it paramount to stre ngthen the rules in the area of services and put 
in place a proper regulatory structure for services li beralisation, particularly with respect to the 
adherence to the MFN principle, development of robust disciplines on domestic regulations, and 
enhancing the legal certainty of Me mbers' specific commitments.  For this purpose, we have been 
providing constructive input for the multilateral discu ssions of these rules issues to help advance the 
discussions in the relevant subsidiary bodi es and bridge the differences amongst Members. Hong Kong, China WT/TPR/G/241 
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 105. In the spirit of pushing forward the services ne gotiations, HKC participated actively in the 
Signalling Conference on Services in July 2008.  We consider it imperative for Members to build on 
the hard-earned achievements, including those of th e Signalling Conference;  and not to backtrack.  
Despite the difficulties of the negotiations, HKC remains committed to engaging intensively and 
constructively in the services negotiations and is pr epared to work closely with Members to help 
bring the negotiations to a fruitful conclusion. 
(b) Non-agricultural Market Access 
106. In the area of non-agricultural market access,  HKC's objective is to seek significant market 
access improvements through substantial and early reduction/elimination of tariffs and non-tariff 
barriers (NTBs).  To this end, we support a simp le Swiss Formula with ambitious coefficients, for 
developed and developing Members respectively, to reduce or as appropriate eliminate tariffs.  
Together with some other Members, HKC put forw ard a "middle-ground" proposal for reduction of 
tariffs for industrial goods.  The proposal has been largely taken up in the fourth revision of the draft modalities for NAMA.  We also support voluntary participation in sectoral initiatives eliminating or reducing tariffs beyond what would be achieved by the Swiss Formula.  To date, HKC has 
co-sponsored five sectoral initiatives.
10 
107. As regards NTBs, HKC has been participating actively and constructively in the negotiations 
to eliminate or reduce NTBs.  In this connection,  we have worked with a number of developing 
country Members to offer a compromise proposal11 in relation to the role of WTO Committees under 
the proposed Horizontal Mechanism, which seek s to address concerns regarding NTBs.  The 
compromise proposal has been well-regarded by Me mbers as an effort to bridge the gap between 
existing proposals on the table.   
(c) Trade Rules  
108. HKC firmly supports the negotiations on rul es which aim at clarifying and improving the 
Agreements on Anti-dumping (AD) and Subsidie s and Countervailing Measures, as well as 
disciplines and procedures under the existing WTO provisions applying to regional trade agreements 
(RTAs). 
109. As a staunch supporter of free trade, HKC  has never taken any AD or countervailing 
measures against other economies.  We are committe d to strengthening the AD discipline to make it 
more competition-friendly and more compatible with the globalised economy.  Being a strong 
advocate of the rules-based multilateral trading system , it is our long-held belief that strong and clear 
rules free of abuse are essential to safeguard the hard-earned market access commitments and 
prevent abuse of trade remedies.  This is par ticularly important in the midst of an economic 
downturn in which strengthened multilateral rules would serve as an effective insurance against 
protectionism.  We have been participating activ ely and constructively in the AD negotiations, and 
will continue to work closely with Members a nd the Chair of the Negotiating Group on Rules to 
achieve a substantive and meaningful outcome. 
110. On negotiations relating to rules on RTAs, HKC c onsiders it important to ensure coherence of 
RTAs with the multilateral trading system so as  to make them building blocks for further 
liberalisation of the multilateral trading system.  We also support the RTA Transparency Mechanism 
                                                      
10 The five sectoral initiatives are (i) electronics and elect rical products;  (ii) fish and fish products;  (iii) 
forest products (including paper products);  (iv) gems and jewellery;  and (v) toys. 
11 The compromise proposal is in JOB/MA/35 dated 9 July 2010. WT/TPR/G/241 Trade Policy Review 
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 which has been very useful in shedding light on the key elements of individual RTAs and we call for 
its permanent adoption as part of the overall result of the Doha Round. 
(C) OTHER AREAS IN THE DOHA DEVELOPMENT AGENDA  
(a) Intellectual Property Rights 
111. On the establishment of a multilateral system of  notification and registration of geographical 
indications (GIs) for wines and spirits, HKC has been  playing a constructive role to bridge Members' 
differences in the negotiation process.  We aim at having a system simple to operate, with minimum 
financial and administrative burde ns, which facilitates the protectio n of GIs for wines and spirits. 
112. As regards the Decision of the General Council of 6 December 2005 on an Amendment of the 
TRIPS Agreement, which gives permanent effect  to the arrangement agreed under the Doha 
Declaration on the TRIPS Agreement and Public Hea lth, we notified HKC's formal acceptance of the 
Protocol Amending the TRIPS Agreement in November 2007.   
(b) Trade Facilitation  
113. HKC attaches much importance to the negotia tions on trade facilitation.  Expeditious and 
seamless movement of goods in international tr ade would be conducive to economic growth and 
development in this era of globalisation.  We fi rmly believe that a set of multilateral commitments 
on trade facilitation, with clarified and impr oved rules and streamlined customs and trade 
procedures, will bring significant benefits to all WTO Members by reducing costs for both businesses and governments, as well as promoting efficiency. 
114. HKC has been actively participating in the discussions under the Negotiating Group on Trade 
Facilitation with a view to developing a set of multilateral commitments on all elements of the 
mandate contained in Annex D of the July package in  2004.  Together with some other Members, we 
have put forward a number of proposed trade facilit ation measures.  In addition, we have organised 
activities including technical workshops and smal l group discussions in order to help build 
consensus and take forward the negotiations. 
(c) Trade and Environment 
115. HKC fully supports the objective of sustainabl e development and will continue to work 
constructively with Members in the negotiations to  enhance the mutual supportiveness of free trade 
and the environment.  We will also actively work  with Members to explore other environmental-
related trade issues in the Doha Development Ag enda to forestall the abuse of environmental 
measures as protectionist tools in disguise. 
(d) Dispute Settlement Understanding Review  
116. HKC agrees with other Members on the systemic importance of strengthening the dispute 
settlement mechanism without upsettin g the rights and obligations of Members.  We share the view 
that there is room for improving and clarifying th e Dispute Settlement Understanding, for example, 
in the area of sequencing of the compliance dete rmination and suspension of concession procedures 
in Articles 21 and 22 respectively.  We also support the enhancement of third party rights.  We will 
continue to work actively and constructively w ith other Members towards a timely and satisfactory 
conclusion of the negotiations. Hong Kong, China WT/TPR/G/241 
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