WORLD TRADE  
ORGANIZATION  WT/REG163/5 
24 May 2005 
 
 (05-2100) 
Committee on Regional Trade Agreements Original:   English 
  
CLOSER ECONOMIC PARTNERSHIP ARRANGEMENT 
BETWEEN CHINA AND MACAO, CHINA 
 
Questions and Replies
 
 
The following communication, dated 29 April 2005, is being circulated at the request of the 
Delegations of China and Macao, China. 
This document reproduces the questions ad dressed to the Parties and the responses 
submitted. The questions and replies set out be low are organized in acco rdance with document 
WT/REG163/3 for the goods aspects of the Agreem ent, and WT/REG163/4 fo r the services aspects 
of the Agreement. 
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GOODS ASPECTS  
I. BACKGROUND INFORMATION ON THE ARRANGEMENT  
3. Scope  
What is the timeframe for negotiation of future CEPA agreements, and eventual duty 
free access for all goods and coverage of all services? 
For trade in goods, Macao1 has agreed to continue to appl y zero tariff to all imported goods of 
Mainland2 origin.  No later than 1 January 2006, the Mainland shall apply zero tariff to all imported 
goods of Macao origin so long as they satisfy the origin rules under CEPA and go through the process 
required by CEPA establishing their origin.  For trade in services, there is no a priori  exclusion of any 
sector or modes of supply under CEPA.  The two sides will continue the discussion with a view to 
further liberalisation of trade in services.   
Regarding Article 2.5 in both of the two CEPA, we would appreciate further 
explanation and clarification from the Parties of  the phrase “to take progressive action, dealing 
with the easier subjects before the more difficult ones.” 
It is one of the principles guiding the conc lusion, implementation and amendment of the 
CEPA.  In accordance with this principle, the two sides agreed to progressively achieve liberalisation 
of trade in goods and services through continued consultations, and promote trade and investment 
facilitation.   
                                                      
1 In the CEPA, "Macao" refers to the M acao Special Administrative Region of the People’s Repub lic of China.  
2 In the CEPA, "Mainland" refers to the entire cust oms territory of the People’s Republic of China. WT/REG163/5 
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 II. TRADE PROVISIONS 
1. Import Restrictions
 
What percentage of bilateral trade is currently covered by CEPA?  What percentage of 
tariff lines is covered by the Agreement? 
All Mainland exports to Macao, in terms of valu e and tariff lines, are covered by CEPA.  The 
aggregate volume of Macao’s exports to the Main land under CEPA accounts for more than 94% of 
Macao’s total exports to the Mainland in 2004.  No later than 1 January 2006, the Mainland shall 
apply zero tariff to all imported goods of Macao orig in so long as they satisfy the origin rules under 
CEPA and go through the process required by CEPA establishing their origin.   
At the meeting on February 17-18, the Macao delegation stated that in the China-FTA, 
zero tariffs is applied to 509 products.  We would like to know under which HS Chapters (2-
digit HS code basis) these products fall. 
No later than 1 January 2006, the Mainland sh all apply zero tariff to all imported goods of 
Macao origin so long as they satisfy the origin rules under CEPA and go through the process required 
by CEPA establishing their origin.  A list of 509 items of goods of Macao origin that enjoy zero tariff 
is available on the following websites:  www.mofcom.gov.cn, www.economia.gov.mo.   
Can the Parties explain the mechanism of how new products can be included in the 
coverage of the agreement? 
The detailed implementation procedures are stipul ated in Article 5 of Annex 1 to the CEPA 
text signed on 17 October 2003 and in Article 3(1)  of the Supplement to the CEPA signed on 29 
October 2004.  It is essentially a rolling mechanis m which involves an annual application process by 
Macao enterprises and consultation on the rules of orig in by the two sides for the additional products.   
What proportion of trade does agriculture and fisheries represent?  What percentage of 
this is covered by CEPA? 
No later than 1 January 2006, the Mainland sh all apply zero tariff to all imported goods of 
Macao origin so long as they satisfy the origin rules under CEPA and go through the process required 
by CEPA establishing their origin, including agriculture and fisheries products.   
Is further liberalization of agricultural trade expected?  Is there a timeframe for this? 
According to CEPA, no later than 1 January 2006, all Macao’s imports into the Mainland 
would enjoy zero tariffs as long as they go through the process required  by CEPA and satisfy the rules 
of origin.  The detailed implementation procedures are stipulated in Article 5 of Annex 1 to the CEPA 
text signed on 17 October 2003 and in Article 3(1)  of the Supplement to the CEPA signed on 29 
October 2004.   
5. Safeguards  
Have any safeguard measures been invoked? 
No safeguard measure has been invoked since the implementation of CEPA.   
What are the significant differences between the safeguard provisions in the agreement 
and the WTO Safeguards Agreement?  WT/REG163/5 
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 Is the application of global safeguard measures envisaged under the agreement, either 
explicitly or implicitly? If it is, what legal or administrative instruments exist in order to ensure 
that such measures are undertaken in a manner consistent with the WTO Agreement? 
Concerning the application of global safeguard measure, could the Parties to the CEPAs 
confirm whether the Parties would exempt ea ch other from such measure in the future?3  
Article 9 of CEPA contains the provisions for safe guards.  As stipulated in this Article, if the 
implementation of the “CEPA” causes sharp increas e in the import of a product included in Annex 1 
originating from the other 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 concessions on the import of the concerned product 
from the other side, and shall, at the request of the other side, promptly commence consultations under 
Article 19 of the “CEPA” in order to reach an agreement.   
These requirements are aimed at ensuring a successful implementation of CEPA, which is in 
line with the description of the rights and obligations of the Mainland or Macao under WTO.   
III. GENERAL PROVISIONS OF THE ARRANGEMENT  
3. Dispute Settlement Procedures  
According to Art. 19 of the Agreement the Joint Steering Committee will make its 
decisions by consensus.  Could the Parties explai n whether they have foreseen any arbitration in 
case of consensus cannot be rea ched in the joint Committee. 
Under Article 19.3 of CEPA, one of the functi ons of the Steering Committee is to resolve 
disputes that may arise during the implementation of the CEPA.  Both parties believe that any 
problems arising from the interpretation or impl ementation of CEPA will be resolved through 
consultation in the spirit of friendship and coope ration as well as under the principle of mutual 
benefits.   
4. Relations With Other Trade Agreements  
As far as we understood from the provisions of CEPA, it seems there is no article which 
deals with the relationship between CEPA and th e other FTAs.  We would like to know how the 
CEPA will affect other FTAs which China or Macao has concluded with other countries. 
Article 20.1 of CEPA stipulates that unless pr ovided otherwise under CEPA, any action taken 
under CEPA shall not affect or nullify the rights an d obligations of either side under other existing 
agreements to which it is a contracting party. 
IV. OTHER 
1. Trade And Investment Facilitation  
What steps have been taken to further trade and investment facilitation? 
Under CEPA’s framework of trade and investme nt facilitation, the Mainland and Macao will 
promote cooperation in the following seven areas:  (1 ) trade and investment promotion;  (2) customs 
clearance facilitation;  (3) commodity inspection, inspection and quarantine of animals and plants, 
                                                      
3 As all three questions are related to the Safeguard issue, one answer will be provided in this regard. WT/REG163/5 
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 food safety, sanitary quarantine, certification, accr editation and standardization management;  (4) 
electronic business;  (5) transparency in laws and regulations;  (6) cooperati on of small and medium 
enterprises;  and (7) industrial cooperation.  Si nce the implementation of the CEPA, relevant 
authorities of the two sides have been discussi ng and pursuing trade and investment facilitation 
measures in the above areas on an ongoing basi s, through existing or where necessary newly 
established forums. 
SERVICES ASPECTS
 
I. BACKGROUND INFORMATION ON THE ARRANGEMENT 
3. Scope  
Are services commitments based on a positive or negative list? 
The list of services commitments made under the CEPA adopts a positive list approach. 
The Standard Format (Section 2) refers to th e progressive liberalization of trade in 
services?  Can the Parties provide their liberalization plan for these sectors? 
The CEPA is an open platform.  The two sides will continue the discussion with a view to 
further liberalisation of trade in services.   
How will the CEPAs eliminate the substantially  all discriminatory me asures in service 
sectors where specific commitments are undertaken?  Is there any transitional period to be set 
up for the implementation?  How many sectors,  volume of trade and modes of supply are 
covered by the CEPAs?  On what basis? 
There is no a priori  exclusion of any sector or modes of supply under the CEPA.  Pursuant to 
Article 1.2 of the CEPA, one of the objectives of the Arrangement is to achieve progressive 
liberalization of trade in services through reduction or  elimination of substantially all discriminatory 
measures between the Mainland and Macao.  The tw o sides will continue the discussions under the 
CEPA framework with a view to further expanding the sectoral coverage of services in the future.  It 
is completely consistent with the re quirements set by Article V of GATS. 
II. PROVISIONS AFFECTING TRADE IN SERVICES 
1. Provisions Of The Arrangement Relating To Th e Elimination Of Article XVII Inconsistent 
Measures.  
Article 11 of CEPA is different from Article 16.2 of the GATS in the sense that CEPA 
does not have any exhaustive listing of the meas ures restricting market access.  Can we take it 
that Article 11 of CEPA applies to all restrictive market access measures? 
The principles and commitments with regard to  services set out in CEPA are consistent with 
that in WTO.  Article 11 of CEPA serves as a ground on which either side will progressively reduce 
or eliminate existing restrictive measures against se rvices and service suppliers of the other side in 
accordance with the content and timetable set out in Annex 4 to the CEPA.  WT/REG163/5 
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 2. Rules of Origin  
We would like to know whether CEPA has some effects on the services/services 
suppliers of the third countries.  If so, we woul d appreciate to hear what exactly those effects 
are.  We are especially interested in whether Ar ticle 13 of CEPA will affect the foreign banks 
which operate in Macao. 
Article 13 of the CEPA is on financial coope ration between the Mainland and Macao, e.g. 
supporting Mainland financial ins titutions in establishing business in Macao and strengthening 
cooperation and information sharing between fi nancial regulators of the two sides.   
CEPA imposes no extra restrictions on foreign ba nk operators.  All relative bank operators are 
entitled to preferential treatments under Annex 4 to  the CEPA if they can meet the requirements 
stipulated in Annex 5.   
7. Sector-Specific Provisions  
It is stipulated in Article 14 of CEPA that “the Mainland will allow residents in Beijing, 
Shanghai, Guangzhou, Shenzhen, Zhuhai, Dongguan, Zhongshan, Jiangmen, Foshan, and Huizhou of Guangdong Province to visit Macao individually”.  We are interested to learn the 
extent of coverage included under the definition of “residents” under this Article.  Are the 
residents under this Article limited only to tho se engaged in “tourism”, or do “the residents” 
also include those persons engaging in business ac tivities?  We would also like to have an 
explanation regarding the relationship between the coverage of the concept of “residents in Beijing, Shanghai, Guangzhou, Shenzhen…” and the CEPA’s scope of person. 
As stipulated in Article 14 of CEPA, this article is about the cooperation between the 
Mainland and Macao in the tourism field.  It aims at the facilitation of tourists from the Mainland to 
visit Macao individually.   
This measure has been implemented firstly in Dongguan, Zhongshan and Jiangmen since 28 
July 2003.  It has now covered the areas of Beijing, Shanghai, Tianjin, Chongqing, the entire 
Guangdong province and nine cities of Fujia n, Jiangsu and Zhejiang provinces.   
The two sides will continue the discussion with a view to further liberalisation of this field. 
 
 
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