. /.   WORLD TRADE  
ORGANIZATION  WT/REG163/7 
30 May 2006 
 
 (06-2598) 
Committee on Regional Trade Agreements Original:   English 
  
 
CLOSER
 ECONOMIC  PARTNERSHIP  ARRANGEMENT 
BETWEEN CHINA AND MACAO, CHINA 
 
Questions and Replies  
 
 
 The following communication, dated 29 May 2006, is being circulated at the request of the 
Delegations of China and Macao, China.   This document reproduces the questions addressed  to the Parties and the responses submitted.  
The questions and replies set out below are orga nized in accordance with document WT/REG163/3.  
 
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GOODS ASPECTS
 
 
I. BACKGROUND INFORMATION ON THE ARRANGEMENT 
 
3. Scope 
 
1. In response to question 4 of WT/REG163/6, the Parties report that approximately 7% of 
trade from Macao into China is not duty free. A re those products for which rules of origin do 
not exist, or products which failed to  meet the CEPA origin requirements? 
Pursuant to Article 5 of CEPA, the Mainland ag rees to apply zero tariff to all imported goods 
of Macao origin from 1 January 2006, so long as they satisfy the origin rules under CEPA and go 
through the process required by CEPA establishing their origin. From the inception of CEPA on 
1 January 2004, the Mainland has implemented by stages zero tariff on imported goods of Macao 
origin. In 2004, Macao's domestic exports to th e Mainland amounted to USD19.8 million and about 
USD18.65 million worth of them enjoyed tariff free access, which made up about 94% of the total 
exports of Macao to the Mainland. The remaini ng 6% covers goods excluded from the scope of 
"imported goods" under CEPA because of the Mainland's laws/regulations or in ternational obligations 
and goods for which the CEPA rules of origin ha ve yet to be drawn up. For the latter, Macao 
manufacturers may apply to the authorities of M acao which, together with their Mainland 
counterparts, will jointly work out the rules of or igin for the goods concer ned in accordance with the 
provisions in CEPA. Thereafter, goods which meet th ese origin rules will also enjoy tariff-free entry 
into the Mainland. In accordance with Article 1(1)  of the Supplement II to the CEPA, imported goods 
shall exclude goods prohibited form importing as sti pulated in the Mainland laws and regulations, 
those banned from importing due to the Mainland's implementation of international treaties, and 
special products committed by the Mainland in inte rnational agreements. Examples of these products 
include used or waste electrical machinery a nd medical/surgery products, chemical residual, 
municipal waste, tiger bone and rhinoceros horns. 
 WT/REG163/7 
Page 2  
 
  II. TRADE PROVISIONS 
 
3. Rules of Origin 
 2. Could the Parties please explain the meaning of the final sentence in response to 
question 8: "Due consideration has been paid to  Macao's production capacity and the need on 
exporting to the Mainland." These do not appear to be standards typically used in determining 
country of origin. 
The production capacity of Macao producers and the need on exporting to the Mainland are 
elements to be considered during the implementati on procedures stipulated in paragraph 5 of Annex 1 
to CEPA and do not constitute standa rds in determining rules of origin . Rules of origin for goods shall 
be established by two sides through consultation in accordance with the principles and criteria set out 
in Annex 2 to CEPA. 
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