WORLD TRADE  
ORGANIZATION  WT/REG163/3 
28 January 2005 
 
 (05-0365) 
Committee on Regional Trade Agreements Original:   English 
  
 
CLOSER ECONOMIC PARTNERSHIP ARRANGEMENT 
BETWEEN CHINA AND MACAO, CHINA 
 
GOODS ASPECTS
 
 
Communication from the Parties  
  The following communication, dated 26 January 2 005, is being circulated at the request of the 
Delegations of China and Macao, China.  
_______________ 
 
 
I. BACKGROUND INFORMATION ON THE ARRANGEMENT 
1. Membership And Dates Of Signature, And Coming Into Effect 
The Parties to the Mainland and Macao Cl oser Economic Partnership Arrangement 
(hereinafter referred to as the “CEPA”) are the Peopl e’s Republic of China (hereinafter referred to as 
the “Mainland”
1) and Macao, China (hereinafter referred to as “Macao”2). The Mainland and Macao 
signed the Main Text and the six A nnexes of the CEPA on 17 October 2003 3. The CEPA entered into 
force on 1 January 2004.   
The Mainland and Macao signed the Supplem ent to the Mainland and Macao Closer 
Economic Partnership Arrangement (h ereinafter referred to as the “Supplement to the CEPA”) on 29 
October 2004 on further trade liberalization under the second phase of the CEPA.  The major 
liberalization measures set out in the Supplement to the CEPA took effect on 1 January 2005.  
The CEPA was notified on 27 December 2003 purs uant to paragraph 7(a) of Article XXIV of 
the GATT 1994 and the Understanding on the Interpreta tion of Article XXIV of the GATT 1994, and 
in accordance with paragraph 7(a) of Article V of the GATS. The Notification of the CEPA can be 
found in the double symbol document WT/REG163/N/1 – S/C/N/265. The text of the CEPA can be 
found in document WT/REG163/1. The Supplement to  the CEPA was notified on 26 January 2005. 
                                                      
 1 In the CEPA, "Mainland" refers to the entire cust oms territory of the People’s Republic of China. 
 2 In the CEPA, "Macao" refers to th e Macao Special Administrative Region  of the People’s Republic of 
China.  
 3 The CEPA (including the Supplem ent to the CEPA) are signed in the Chinese language, and only the 
Chinese text is authentic. The original full texts of th e CEPA (including the Supplement to the CEPA) and the 
English translation are available on the following websites: www.mofcom.gov.cn , www.economia.gov.mo . WT/REG163/3 
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 2. Type Of Arrangement  
 The CEPA creates a free-trade area between th e Mainland and Macao within the meaning of 
Article XXIV: 8(b) of GATT 1994.  Article 1 of the CEPA specifically states that the objectives of the CEPA are to strengthen trade and investment c ooperation between the Mainland and Macao and to 
promote joint development of the Mainla nd and Macao through the implementation of, inter alia , 
progressive reduction or elimination of tariff and no n-tariff barriers on substantially all the trade in 
goods between the two sides.  
3. Scope 
 Chapter 2 of the CEPA and Annex 1 to the C EPA cover trade in goods.  Chapter 3 of the 
CEPA and Annexes 2 and 3 to the CEPA concern the ru les of origin related to trade in goods.  Article 
3 of the CEPA provides that the Mainland and M acao will broaden and enrich the content of the 
CEPA through continuous and further reci procal liberalization between them.   
 
            The CEPA also covers trade in serv ices.  The aspects of the CEPA related to trade in services 
are notified in a separate document (WT/REG163/4).  In addition, the CEPA contains provisions on 
trade and investment facilitation in its Chapter 5 and Annex 6.  
 
             The Supplement to the CEPA aims at  further liberalizing trade in goods and trade in services 
in the Mainland for Macao.  It comprises three annex es, namely, the list of additional products that are 
given zero tariff preference, the schedule on rules of origin for these products, and further 
liberalization measures on trade in services.  C onsequently, Supplement to the CEPA contains 
supplements and amendments to Annexes 1, 2, 4 and 5 to the CEPA. In this Communication, 
references to the CEPA or any of its Annexes incl ude, where the context permits, references to their 
respective supplements and amendments as set out in the Supplement to the CEPA. 
 
4. Trade Data 
For the year 2003, the Mainland’s total im ports from Macao amounted to US$185.8 million 
and Macao’s total imports from the Ma inland totalled US$ 1,186 million.  
   More detailed trade data can be fo und in Annex to this Communication. 
 II. TRADE PROVISIONS  
1. Import Restrictions  
 1.1 Duties And Charges 
  Macao will continue to apply zero tariff to a ll imported goods of Mainland origin [Article 5.1 
of the CEPA].  The Mainland has applied zero tari ff to the imports of Macao origin (covering 273 
tariff lines under Mainland 2001 harmonized system codes)  listed in Table 1 of Annex 1 to the CEPA 
as from 1 January 2004 and has extended the zero ta riff treatment to the imports of Macao origin 
(covering products under 190  tariff lines in Mainland 2004 harmonized system codes
4) listed in the 
supplement to Table 1 of Annex 1 to the CEPA (i .e. Annex 1 to the Supplement to the CEPA) with 
effect from 1 January 2005.   No later than 1 Ja nuary 2006, the Mainland w ill apply zero tariff to the 
                                                      
 4 The 273 tariff lines in Mainland 2001 harmonized system and 190 tariff lines in Mainland 2004 
harmonized system were subsequently converted to a total of 509 tariff lines in Mainland 2005 tariff codes as a 
result of the annual adjustment exercises in a ccordance with the harmonized system principles.  WT/REG163/3 
 Page 3 
 
 
 import of goods of Macao origin. Detailed implemen tation procedures are set out in Annex 1 to the 
CEPA.    1.2 Quantitative Restrictions 
 
 Neither side will apply non-tariff measures in consistent with the provisions of the WTO 
Agreements to goods imported and originated from the other side [Article 6.1 of the CEPA].   
 
 1.3 Common External Tariff   Not applicable to the CEPA.   2. Export Restrictions  
 2.1 Duties And Charges 
  The CEPA does not contain any specific provisions on export duties and charges.   
 2.2 Quantitative Restrictions 
   The CEPA does not contain any specific provisions on export quantitative restrictions.  
3. Rules Of Origin  
 The rules of origin are set out in Chapter 3 of the CEPA and elaborated in Annex 2 to the 
CEPA.  
            Goods are treated as originating in th e Mainland or Macao for the purpose of the CEPA if they 
are wholly obtained in the Mainland or Macao respectively.  For goods which are not wholly 
obtained, they are considered as originating in th e Mainland or Macao only if they have undergone 
“substantial transformation” in the Mainland or Macao  respectively.  No cumulation rule is provided. 
 
            Depending on the individual product, “substantial transformation” is defined by either one of 
the following criteria: 
 
(a) manufacturing or processing operations;  
 (b) change in tariff heading;  
 
(c) 30% value-added content;  
 
(d) other criteria: criteria agreed by both sides other than (a), (b), and (c); or 
(e) mixed criteria: the use of two or more of the criteria in (a) - (d). 
 
            Simple diluting, mixing, packaging,  bottling, drying, assembling, so rting or decorating is not 
regarded as substantial transformation.   
 
            Based on the above principles, sp ecific origin criterion has been drawn up for each product 
and included in Table 1 of Annex 2 to the CEPA.  G oods meeting the origin requirements are eligible 
for zero tariff preference under the CEPA. 
             The procedures for the issuing and verification of certificates of origin are set out in Annex 3 
to the CEPA.  WT/REG163/3 
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 4. Standards  
 4.1 Technical Barriers to Trade  
   The two sides will promote cooperation in comm odity inspection, quality and standardization 
[Article 17.1.3 of the CEPA].   
             The two sides will urge their respec tive organisations to strengthen cooperation with a view to 
promoting conformity assessment (including testi ng, certification and inspection), accreditation and 
standardization management  [Item 5.2.4 of Annex 6 to the CEPA].   
 4.2 Sanitary And Phytosanitary Measures  
             The two sides will promote cooperation in commodity quarantine and food safety [Article 17.1.3. of the CEPA].  The two sides will make us e of the existing co-ordination mechanism to step 
up cooperation in inspection and quara ntine of animals and plants as well as in food safety, so as to 
enable both sides to enforce their respective regulations more effectiv ely  [Item 5.2.2 of Annex 6 to 
the CEPA].  5. Safeguards 
 If the implementation of the CEPA causes shar p increase in the import of a product included 
in Annex I to the CEPA originating from the othe r side which has caused or threatened to cause 
serious injury to the affected side’s domestic industry that produces like or directly competitive 
products, the affected side may, after giving written notice, temporarily suspend the concessions under the CEPA on the import of the concerned product from the other si de, and will, at the request of 
the other side, promptly commence consultations under  Article 19 of the CEPA in order to reach an 
agreement  [Article 9 of the CEPA].  
 
6. Anti-Dumping And Countervailing Measures 
 6.1 Anti-Dumping 
  The two sides undertake that neither si de will apply anti-dumping measures to goods 
imported and originated from the other side [Article 7 of the CEPA].  
  6.2 Subsidies And Countervailing Measures 
 
 The two sides reiterate their observan ce of the WTO “Agreement on Subsidies and 
Countervailing Measures” and Article XVI of the GATT 1994, and undertake not to apply 
countervailing measures to goods impor ted and originated from each other [Article 8 of the CEPA].   
 
7. Subsidies And State-Aid 
            The CEPA does not contain an y specific provisions on subsidies or state-aid.  
 8. Sector-Specific Provisions 
The CEPA does not contain any sector-specific provisions. 
9. Other 
 9.1 Competition, Customs Valuation, Government Procurement, and Import Licensing  WT/REG163/3 
 Page 5 
 
 
           The CEPA does not contain any sp ecific provisions on competition, customs valuation, 
government procurement, and import licensing.  
 
III. GENERAL PROVISIONS OF THE ARRANGEMENT 
1. Exceptions And Reservations 
            The CEPA and provisions in its Anne xes will not affect the ability of the Mainland or Macao 
to maintain or adopt exception measures consiste nt with the provisions of the WTO Agreements 
[Article 18 of the CEPA]. 
 
2. Accession  
The CEPA does not contain any specific provisions on accession. 
 
3. Dispute Settlement Procedures 
 The two sides have set up a Joint Steering Committee to, among others, supervise the 
implementation of the CEPA, interpret the provisi ons of the CEPA, and resolve disputes that may 
arise during the implementation of the CEPA.  The two sides will resolve any problems arising from 
the interpretation or implementation of the CEPA through consultation in the spirit of friendship and 
cooperation.  The Joint Steering Committee will make its decisions by consensus. [Article 19 of the 
CEPA]   4. Relations With Other Trade Agreements 
Article 2.2 of the CEPA provides that the c onclusion, implementation and amendment of the 
CEPA will be consistent with the pr ovisions of the WTO Agreements.  
 The two sides agree that Articles 15 and 16 of the “Protocol on Accession of the People's 
Republic of China to the WTO”
5 and paragraph 242 of the “Report of the Working Party on the 
Accession of China”6 will not be applicable to trade between  the Mainland and Macao [Article 4 of 
the CEPA].  
 Any action taken under the CEPA will not affect or  nullify the rights and obligations of either 
side under other existing agreements to which it is a contracting party, except as otherwise provided in 
the CEPA [Article 20.1 of the CEPA]. 
 
5. Institutional Framework [Article 19 of the CEPA]  
 The two sides have set up a Joint Steering Committee, which will comprise senior 
representatives or officials designated by the two sides. 
 
Liaison Offices will be set up under the Joint Steering Committee.  Working groups may be 
set up as the need arises.  The Liaison Offices will be set up respectively in the Ministry of 
Commerce of the Mainland and the Office of the Secretary for Economy and Finance of Macao. 
 
                                                     
 
 5 The Article 15 of the Protocol  is on “Price Comparability in Determining Subsidies and Dumping” 
whereas Article 16 is on “Transitional Product-Specific Safeguard Mechanism”. 
 6 Paragraph 242 of the Report contains provisions applicable to trade in textiles and clothing products . WT/REG163/3 
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 The functions of the Joint Steering Committee f unctions to supervise the implementation of 
the CEPA, interpret its provisions, resolve disputes that may arise during its implementation, draft 
additions and amendments to its content, steer the wo rk of the working groups and deal with any other 
business relating to its implementation.  
The Joint Steering Committee will meet at least once a year, and may convene special 
meetings within 30 days upon request by either side.  
The two sides will resolve any problems arisi ng from the interpretation or implementation of 
the CEPA through consultation in the spirit of friendship and cooperation.  The Joint Steering 
Committee will make its decisions by consensus. 
 
OTHER 1. Trade And Investment Facilitation  
            The two sides will promote trade and investment facilitation through greater transparency, 
standard conformity and enhanced informa tion exchange [Article 16 of the CEPA]. 
             The two sides will promote cooperation in seven areas, namely, (1) trade and investment 
promotion; (2) customs clearance facilitation; (3) commodity inspection, inspection and quarantine of 
animals and plants, food safety, sanitary quarantin e, certification, accreditation and standardization 
management; (4) electronic business; (5) transparen cy in laws and regulations; (6) cooperation of 
small and medium enterprises; and (7) industrial coop eration [Article 17 of the CEPA].  Details on the 
respective areas of cooperation are set out in Annex 6 to the CEPA.   
 
  
 
  
 
   
 
     
 
    
 
     WT/REG163/3 
 Page 7 
 
 
 ANNEX 
 
 Detailed trade statistics is as follows:  
  
BILATERAL TRADE DATA BETWEEN MAINLAND AND MACAO 
 
Mainland ’s Imports from Macao  
 (Value in US$ thousand) 
 
 
  2001 2002 2003 2004 
Imports 119,120 142,274 185,755 215,760 
Share in China's total imports (%) 0.049 0.048 0.045 0.038 
Exports 743,459 876,095 1,281,480 1,611,897 
Share in China's total exports (%) 0.279 0.269 0.292 0.272 
Imports + exports 862,579 1,018,369 1,467,235 1,827,657 
Share in China's total trade (%) 0.169 0.164 0.172 0.158 
Source : Customs General Administration of China 
 
 
 
Macao’s  Imports from Mainland, Year 2001 – 2003 & 2004 (Q1-Q3) 
(Value in US$ thousand) 
 
Year Total Imports 
2001 1,020,588
2002 1,059,648
2003 1,186,241
2004 (Q1-Q3) 1,142,189
   Source: Macao Statistics and Census Service  
 WT/REG163/3 
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 Top 20 Mainland ’s Imports from Macao, Year 2001-2004 
(Value in US$ thousand) 
 
HS Code Product Description 2001 2002 2003 2004 
        R a n k    
6204 Women's or girls' suits, ensembles, jackets, 
blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts 
(other than swimwear) 6,684 11,667 26,344 39,531 
6006 Other knitted or crocheted fabrics  N.A. 16,309 22,105 13,352 
6110 Jerseys, pullovers, cardigans, waistcoats and 
similar articles, knitted or crocheted 11,745 18,810 16,552 22,762 
6109 T-shirts, singlets, and other vests, knitted or 
crocheted 4,126 6,118 9,184 10,531 
6104 Women’s or girls’ suits, ensembles, jackets, 
blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts 
(other than swimwear), knitted or crocheted 2,848 6,217 8,353 13,171 
5209 Woven fabrics of cotton, containing 85% or 
more by weight of cotton, weighing more than 
200g/m2 7,350 7,161 6,334 4,700 
6203 Men’s or boys’ suits, ensembles, jackets, 
blazers, trousers, bib and brace overalls, breeches and shorts (other than swim wear) 2,498 3,843 6,064 6,554 
6108 Women's or girls' slips, petticoats, briefs, 
panties, nightdresses, pajamas, negligees, 
bathrobes, dressing gowns and similar articles, knitted or crocheted 942 2,819 5,254 8,663 
5407 Woven fabrics of synthetic filament yarn, 
including woven fabrics obtained from 
materials of heading 5404 3,710 2,916 4,534 1,388 
5107 Yarn of combed wool, not put up for retail 
sale 6,382 4,355 4,521 2,614 
5208 Woven fabrics of cotton, containing 85% or 
more by weight of cotton, weighing not more 
than 200g/ m2 2,680 2,761 4,442 2,869 
6205 Men’s or boys’ shirts 3,290 3,774 4,289 5,504 
6210 Garments, made up of fabrics of heading 
5602, 5603, 5903, 5906 or 5907 1,706 2,561 4,190 2,967 
6001 Pile fabrics, including “long pile” fabrics and 
terry fabrics, knitted or crocheted 3,313 2,188 4,080 3,292 
5205 Cotton yarn (other than sewing thread), 
containing 85% or more by weight of cotton, 
not put up for retail sale 4,238 4,320 3,766 4,472 
6103 Men’s or boys’ suits, ensembles, jackets, 
blazers, trousers, bib and brace overalls, breeches and shorts (other than swimwear), 
knitted or crocheted 793 1,870 3,516 5,395 
7410 Copper foil (whether or not printed or backed 
with paper, paperboard, plastics or similar backing materials) of a thickness (excluding 
any backing) not exceeding 0.15mm 15 510 2,896 15,189 
6206 Women’s or girls’ blouses, shirts and 
shirtblouses 1,781 2,824 2,835 2,660 
7019 Glass fibers (including glass wool) and 
articles thereof (for example, yarn, woven 1,930 3,808 2,814 2,858  WT/REG163/3 
 Page 9 
 
 
 HS Code Product Description 2001 2002 2003 2004 
        R a n k    
fabrics) 
5509 Yarn (other than sewing thread) of synthetic 
staple fibers, not put up for retail sale 1,224 1,850 2,635 3,877 
Sub-Total for top 20 products  67,255 106,682 144,707 172,348 
Mainland’s Imports from Macao (US$ mil.) 119,120 142,274 185,755 215,760 
Top 20 as % of Total Imports from Macao, China  
   56.5% 75% 77.9% 79.9%
Source : Customs General Administration of China 
 
 
Macao’s Imports from Mainland, Year 2001 – 2003 & 2004 (Q1-Q3) 
(Value in US$ thousand ) 
 
Macao  
HS 2002 Description 2001 2002 2003 2003/2002
% change2004 
(Q1-Q3) 
    Rank   
6006 Other knitted or crocheted fabrics - 106,735 105,052 -1.6 81,546 
2710 Petroleum oils and oils obtained from bituminous 
minerals, other than crude and prep. n.e.s., containing by weight 70% or more of petroleum oils 
or of oils obtained from bituminous minerals being 
the basic constituents 74,827 76,219 90,270 18.4 83,179 
6004 Knitted or crocheted fabric of a width exceeding 30 
cm, containing by weight 5% or more of elastomeric 
yarn or rubber thread, other than those of heading 
60.01 - 57,018 72,070 26.4 55,854 
6110 Jerseys, pullovers, cardigans, waistcoats and similar 
articles, knitted or crocheted 66,969 67,524 64,580 -4.4 61,825 
6204 Women's or girls' suits, ensembles, jackets, blazers, 
dresses, skirts, divided skirts, trousers, bib and brace 
overalls, breeches and shorts (other than swimwear) 28,509 42,407 39,633 -6.5 49,472 
8525 Transmission apparatus for radio-telephony, radio-
telegraphy, radio-broadcasting etc., whether or not 
incorporating reception appa ratus or sound recording 
or reproducing apparatus; television cameras; still 
image video game 22,457 31,010 34,451 11.1 30,946 
5208 Woven fabrics of cotton, containing 85% or more by 
weight of cotton, weighing not more than 200 g/m2 27,822 28,184 33,576 19.1 29,140 
5106 Yarn of carded wool, not put up for retail sale 77,897 33,313 32,458 -2.6 34,358 
5107 Yarn of combed wool, not put up for retail sale 3,245 23,040 28,331 23.0 22,274 
5209 Woven fabrics of cotton, containing 85% or more by 
weight of cotton, weighing more than 200 g/m2 26,475 27,008 26,324 -2.5 29,345 
0103 Live swine 14,588 19,451 20,208 3.9 15,568 
6406 Parts of footwear (including uppers whether or not 
attached to soles other than outer soles), removable in-soles, heel cushions and similar articles; gaiters, 
leggings and similar articles, and parts thereof 42,496 28,913 20,044 -30.7 21,948 
5205 Cotton yarn (other than sewing thread), containing 
85% or more by weight of cotton, not put up for retail sale 29,150 24,673 19,241 -22.0 18,146 
5407 Woven fabrics of synthetic filament yarn, including 
woven fabrics obtained from materials of heading 11,722 9,867 18,951 92.1 23,270 WT/REG163/3 
Page 10  
 
 Macao  
HS 2002 Description 2001 2002 2003 2003/2002
% change2004 
(Q1-Q3) 
    Rank   
54.04 
8473 Parts and accessories (o ther than covers, carrying 
cases and the like) suitable for use solely or 
principally with the machines of headings 84.69 to 84.72 2,686 2,964 18,685 530.4 24,698 
8471 Automatic data proces sing machines and units 
thereof; magnetic or optical  readers, machines for 
transcribing data onto data media in coded form and machines for processing such data, not 
elsewhere specified or included 4,544 8,102 18,120 123.6 26,317 
6106 Women's or girls' blouses, shirts and shirt-blouses, 
knitted or crocheted 19,063 22,402 18,004 -19.6 10,765 
6108 Women's or girls' slips, petticoats, briefs, panties, 
nightdresses, pajamas, negligees, bathrobes, 
dressing gowns and similar articles, knitted or 
crocheted 6,073 10,553 17,182 62.8 19,170 
2716 Electrical energy 18,058 19,123 17,008 -11.1 11,445 
6109 T-shirts, singlets, and other vests, knitted or 
crocheted 10,442 15,788 16,843 6.7 16,913 
       
  Sub-Total for Top 20 Products 48 7,023 654,294 711,031  8.7 666,179 
 Top 20 Products as % of Total Imports from 
Mainland  47.7 61.7 59.9 - 58.3 
  Macao’s Total Imports from Mainland  1,020,588 1,059,648 1,186,241 11.9 1,142,189 
Source: Macao Statistics and Census Service 
 
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