WORLD TRADE  
ORGANIZATION  WT/TPR/M/173 
16 February 2007 
 (07-0668) 
Trade Policy Review Body 
13 and 15 December 2006   
 
 
TRADE POLICY REVIEW 
 
HONG KONG, CHINA 
 
Minutes of Meeting
 
 
Chairperson:  H.E. Mrs. Claudia Uribe (Colombia) 
 
   Page 
 
I.
 INTRODUCTORY REMARKS BY THE CHAIRPERSON 3  
II. OPENING STATEMENT BY THE REPRESENTATIVE OF  
HONG KONG, CHINA 4  
III. STATEMENT BY THE DISCUSSANT 7  
IV. STATEMENTS BY MEMBERS 8  
V. REPLIES BY THE REPRESENTATIVE OF HONG KONG, CHINA AND ADDITIONAL COMMENTS 15
 
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 21  
 
 
     
 
    
 
    
 
  
Note:   Advance written questions by WTO Member s and the replies provided by Hong Kong, China 
are reproduced in document WT/TPR/M/173/Add.1 and will be available online at 
http://www.wto.org/english/tr atop_e/tpr_e/tp_rep_e.htm.  WT/TPR/M/173 
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 I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The fifth Trade Policy Review of Hong Kong, China was held on 13 and 15 December 2006.  
The Chairperson (H.E. Mrs. Claudia Uribe (Col ombia) welcomed the delegation of Hong Kong, 
China, headed by Permanent Secretary for Co mmerce, Industry and Technology (Commerce and 
Industry), Miss Yvonne Choi, and the discussant Ambass ador Mario Matus (Chile).  As usual, the 
discussant would speak in his personal capacity a nd not as a representative of his country.  In 
accordance with the established proce dures, the discussant had made available, in advance, outlines of 
the main issues he intended to raise (document WT/TPR/D/149). 
2. The Chairperson recalled the purpose of the Trad e Policy Reviews and the main elements of 
the procedures for the meeting.  The report by  Hong Kong, China was contained in document 
WT/TPR/G/173 and that of the WTO Secretariat in WT/TPR/S/173.  As indicated in 
WT/TPR/6/Rev.1, the Member under review should pr ovide written answers, by the beginning of the 
review meeting, to questions submitted at least two weeks before the meeting.  Questions posed 
subsequently should be answered, to the extent possi ble, before the start of the second session of the 
meeting.  Questions left unanswered at the end of the second session should be answered in writing no 
later than one month after the meeting.  Questions by the following delegati ons had been submitted in 
writing at least two weeks in advance of the mee ting and had been transmitted to the delegation of 
Hong Kong, China:  Singapore, Switzerland, Au stralia, Canada, the European Communities, the 
United States, Japan, and Argentina .  Copies of th ese questions and of the answers provided by the 
delegation of Hong Kong, China were  available in the meeting room.  New Zealand, Colombia, Korea 
(Rep. of), Turkey, Brazil, Thailand, and Norway had submitted written questions after the two-week 
deadline.  These questions had also been transmitted  to the delegation of Hong Kong, China;  copies 
of these questions and of the answers provided by the delegation of Hong Kong, China were available 
in the meeting room.  Copies of all advance questions, as well as the responses received from the delegation of Hong Kong, China, are reproduced in WT/TPR/M/173/Add.1. 
3. The Chairperson noted, from the two reports, that since its previous Trade Policy Review, in 
December 2002, the Hong Kong Special Administrative Region (HKSAR) had risen to several 
challenges.  Growth had rebounded,  underpinned by the exceptional openness of the economy to trade 
and foreign investment as well as the favourable external environment, judicious macroeconomic 
policies, structural reforms, strong growth in Ma inland China, and the confidence-building effects of 
the Closer Economic Partnership Arrangement (CEPA ) with China.  The growing integration of 
Hong Kong, China with Mainland China had allowe d it to continue to pursue its structural 
transformation from a manufacturing- to a services-based economy.  Rising per capita income had 
allowed Hong Kong, China to retain its high ranking  in the UN human devel opment index.  Progress 
had been especially noteworthy in several areas, in cluding trade facilitation, rice-trade liberalization, 
corporate governance, and the protection of intellectual property rights.  She thought that Members would welcome further details on, inter alia,  potential downside risks to economic growth (including 
the aging of the Territory's population), the wide ning of the tax base through a goods and services tax 
(GST), opportunities arising under future CEPA liber alization arrangements and the Pan-Pearl River 
Delta initiative, as well as prospects for expanding tariff binding commitments and for introducing a 
cross-sector competition law.  She hoped that the di scussion within the context of this Trade Policy 
Review would help Hong Kong, China's policymakers to meet the challenges ahead and at the same 
time allow WTO Members to acquire a better unders tanding of the outlook for this remarkably open 
economy in several trade and trade-related areas. WT/TPR/M/173 
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II. OPENING STATEMENT BY THE REPRES ENTATIVE OF HONG KONG, CHINA 
4. The representative of Hong Kong, China
 was pleased to share with other Members 
Hong Kong, China's experience in maintaining its fre e and open trade policy over the past few years, 
and how this policy had helped it to emerge  strongly from previous economic hardship.  
5. Various events, including the 1998 financial crisis, the 2001 global downturn, and the 2003 
SARS outbreak, had caused an unprecedented blow to  the economy.  However, it had turned around 
swiftly each time as a result of its high degree of resilience and flexibility in its labour, product, and 
capital markets as well as its long-standing commitment  to the free-trade and pro-market policies.  
The HKSAR Government upheld the guiding princi ple of "big market, small government" in 
formulating economic policies in good times or bad.   For 12 consecutive years, Hong Kong, China 
was voted the freest economy in the world by the He ritage Foundation.  The strength of the Mainland 
economy, coupled with a sanguine external economic  environment, were also important factors 
underpinning Hong Kong, China's strong economic recove ry and high growth in the past three years, 
its best performance in 20 years.  With unemployment down to a 64-month low and consumer price inflation at a moderate level, Hong Kong, China had a generally robust overa ll economic situation.  
6. Hong Kong, China maintained a long-established policy of free and open trade and 
investment.  The cornerstone of Hong Kong, China' s economy rested on free enterprise, free trade and 
free markets.  There were no barriers to trade:  no tariffs, no quotas, no exceptions, no restrictions on 
inward or outward investments, no foreign exch ange controls, and no na tionality restrictions on 
corporate or sectoral ownership.  Its commitment in making Hong Kong, China the best place to do business was reflected in several ways, including the world-class infrastructure, the business-inducing 
setting, efforts in upholding the rule of law, protec tion of intellectual property rights, a corruption-free 
government, and the free flow of information.  De spite the economic downturn and fiscal deficits in 
previous years, Hong Kong, China had been determined in upholding duty-free entry for all merchandise imports.   
7. She recalled that exactly a year ago, the Sixt h Ministerial Conference of the WTO took place 
in Hong Kong.  Hong Kong, China's firm convicti on in the supremacy of the multilateral trading 
system was fully reflected in the way the Confer ence was organized, both in terms of substance and 
logistics.  The multilateral trading system was the cornerstone of Hong Kong, China’s external trade 
policy.  Hong Kong, China was disappointed that the pace of the negotiations under the Doha Development Agenda had since slowed down in 2 006, rather than picked up as anticipated.  It 
remained gravely concerned that few signs of flex ibility from key players were apparent.  A failed 
Doha Round would pose risks to the credibility of  the WTO as an effective, or even relevant, 
institution, and to the future of the multilateral trading system.  As a staunch supporter of the 
multilateral trading system, Hong Kong, China t ook an active role in the DDA negotiations.  
Hong Kong, China's priorities in the DDA nego tiations involved improved market access for 
non-agricultural products and services.  WTO rules s hould remain relevant and conducive to trade and 
investment.  Hong Kong, China would do all it coul d to facilitate engagement amongst Members and 
identify viable solutions, with a view to bri nging the Doha Round to a successful conclusion. 
8. Concerning the absence of a comprehensive competition law in Hong Kong, China, the 
discussant at the previous TPR had concluded that Hong Kong, China was a good example of an economy that had highly competitive elements fo r trade, whilst not having an overarching 
competition law, and a text-book case that could be  used to illustrate many points of a market 
economy at work.  Hong Kong, China maintained an  open and competitive trading system despite the 
absence of a comprehensive competition law, and co mpetition situations were dealt with on a case-by-
case basis, through appropriate sectoral regulations .  Nevertheless, as part  of Hong Kong, China's 
regular review of the market situation and in a bi d to further enhance competition in Hong Kong, the 
Government was reviewing the need for changes to the regulatory framework and considering the 
recommendations by an independent Compe tition Policy Review Committee (CPRC).  In  WT/TPR/M/173 
 Page 5 
 
 
 November 2006, the Government started a three-m onth public consultation exercise on issues related 
to the introduction of a general competition law for Hong Kong, China.  After the consultation 
exercise ended in early February 2007, it would analyse the response of the public and draw up 
proposals for the way forward.  
9. Hong Kong, China was fully committed to protecting intellectual property rights.  With 
Hong Kong Customs' vigorous enforcement action, th e piracy and counterfeiting problem was firmly 
under control.  Since its last TPR, it had introdu ced additional legislative measures including the 
introduction of a "copyshop offence" (as fro m 2004) to facilitate prosecution against illicit 
reproduction of books, magazines and periodicals as we ll as the introduction of a piece of legislation 
to further strengthen its copyright protection regime (2006) in areas such as business end-use 
infringements.  Hong Kong, China remained vigilant  and continued with public education efforts to 
cultivate a culture of respect for IPR in the co mmunity.  Advances in technologies had brought new 
challenges to copyright owners in protecting thei r works.  Hong Kong, China was reviewing the 
efficacy of its copyright protection regime in the digital environment and would shortly launch a 
public consultation on the subject.   
10. Hong Kong, China had concluded and implemen ted (as from January 2004) its first ever 
free-trade pact with China (i.e. C EPA), on the basis of the "one country, two systems" principle.  
Under this principle, the HKSAR is allowed to  engage on its own in bilateral, regional and 
multilateral economic and trade relations in the capac ity of a separate customs territory.  CEPA was 
concluded in accordance with the relevant WTO provis ions;  joint notifications had been submitted to 
the WTO.  
11. CEPA had enhanced the flow of goods, services,  capital, and persons across the border and 
increased the competitiveness of HKSAR products in the Mainland consumer market.  It had also 
provided an impetus to new manufacturing initiatives in Hong Kong, China enabling it to move up the 
value chain of production.  In addition, many local and foreign manufacturers had established or 
expanded their production operations in Hong Ko ng, China.  Enhanced access for Hong Kong, 
China's services to the Mainland market also contri buted to the Mainland's full integration with the 
world economy;  and Hong Kong, China was a "spr ingboard" for Mainland enterprises to reach out to 
the global market.  
12. CEPA was a forward-looking, win-win trad e pact, facilitating new business opportunities, 
closer economic cooperation, and the long-term de velopment of the two economies.  It provided a 
mechanism for progressive liberalization;  and its coverage had expanded.  Hong Kong, China was to 
deepen and broaden the trade and investment  liberalization and facilitation measures.  
13. Hong Kong, China's financial markets had perfo rmed impressively in recent years.  Hong 
Kong, China was the world's 15th and Asia's third largest banking centre with about 70 of the world's top 100 banks operating in the Territory.  It was al so one of the world's most open insurance centres 
with over 180 authorized insurers, of which nearly  90 incorporated outside Hong Kong, China.  All 
these were, inter alia,  attributed to its rapid economic recovery since mid-2003, its enhanced role as 
the premier capital formation centre for Mainland  China, and the successful implementation of 
various government initiatives including the promul gation of the Securities and Futures Ordinance, 
the abolition of estate duty, and the exemption of off-shore funds from profit tax.  In 2007, efforts and initiatives to strengthen Hong Kong, China's positi on as an international financial centre would 
include identifying ways to broaden the source of listed companies, establishing the Financial 
Reporting Council, and implementing the new capital adequacy standards (Basel II) for local banks. 
14. Following the full liberalization of the telecommunications market on 1 January 2003, all 
local and external, services-based and facilities-ba sed telecom services in Hong Kong, China were 
provided by the private sector.  There were no fore ign ownership restrictions and no pre-set limit on WT/TPR/M/173 
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the number of licences unless constrained by physical  limitations (e.g. spectrum availability).  The 
level of investment was a commercial decision under a competitive environment and to be determined 
by the investor. 
15. Regarding rice controls, the local population had a psychological attachment to rice as a 
staple diet and the HKSAR Government thus maintain ed a system of control, including registration of 
rice stockholders, maintenance of reserve stock a nd import/export licensing requirement.  This was a 
minimalist system, aimed solely at ensuring a stable supply of rice and to keep a reserve stock sufficient for the local population for a reasonable period to cater for emergencies or short-term 
shortage of supply.  It had long been the policy of the HKSAR Government to liberalize the rice trade as far as practicable for the overall benefit of th e community.  Liberalization measures had included 
the relaxation of registration criteria for rice st ockholders and the abolition of the rice import quota 
since January 2003.  The number of stockholders ha d increased substantially and at the same time, the 
gap between import and retail prices  of rice had narrowed significantly upon liberalization.  The 
liberalization measures had helped to prom ote competition and benefit consumers.  
16. Hong Kong, China had a relatively narrow tax base and relied heavily on income taxes and 
revenue from land sales and investment earnings to support expenditure.  Income from these sources 
was volatile and subject to variations in econom ic cycles.  The Government launched a public 
consultation on tax reform in July 2006, and broadening of the tax base was its focal point;  at that 
point, the introduction of the GST was considered as  a more attractive option.   At a recent interim 
review of the public consultation, it was found that  the public recognized the importance of planning 
ahead, but the majority did not accept the GST as an option to address the tax base problem.  
Therefore, it was decided that public views on other viable options for broadening the tax base would 
be sought, but the authorities would not recommend GST.  
17. As 2007 would mark the 10
th Anniversary of the establishment of the HKSAR, the 
representative hoped that the three Trade Policy Review s held since its re-unification with China had 
more than amply demonstrated the successful implementation of the "one country, two systems" 
principle.  Reaffirming Hong Kong, China's full commitment to the multilateral trading system, she 
stated that Hong Kong, China would do all it c ould to facilitate engagement amongst Members and 
identify viable solutions, first and foremost with a view to bringing the Doha Round to a successful 
conclusion and would, as always, e ndeavour to be a good WTO citizen.  WT/TPR/M/173 
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 III. STATEMENT BY THE DISCUSSANT 
18. The discussant  (H.E. Mr. Mario Matus) was of the vi ew that Trade Policy Reviews should not 
be conducted in a neutral or impartial way.  It w as hoped that the Member under review would follow 
the recommendations or take into account the views and opinions of the membership.  He referred to 
the statement of the Chairperson of the previous  TPR exercise on Hong Kong, China, which stated, 
inter alia,  that "…Members commended Hong Kong, China for maintaining one of the most open 
economies in the world, one which many Members s hould seek to emulate".  The situation remained 
more or less the same:  Hong Kong, China continued to be an example for the world.  Adam Smith 
and David Ricardo might have been buried in the United Kingdom, but their spirits were still very 
much alive in Hong Kong.   
19. He praised the remarkable outcome of Hong Ko ng, China's policies, in terms of growth 
performance and GDP per capita ranking.  He also referred to its airports, ports, low corruption 
indexes, high economic freedom, world-class competitiveness, quality of life and the surprisingly large motion picture industry.  He emphasized that the reason for this  success was Hong Kong, 
China's long-standing commitment to free trade, whic h was intimately linked with economic growth.   
20. He described Hong Kong, China's trade polic y by citing missing elements, for example, 
customs tariffs, tariff quotas, provisions on cust oms valuation, state-trading, local-content 
requirements, anti-dumping measures, countervailing duties, safeguard measures, export subsidies, 
unilateral unjustified export contro ls, and capital controls.  However, only 42.8% of tariff lines were 
bound, which generated uncertainty.  Taking into acc ount Hong Kong, China's intention to negotiate 
the enlargement of its binding coverage, he wonde red why the authorities would not consider binding 
all remaining tariff lines, as many other Members had already done.  Most import licences were still 
maintained for reasons of health, security and the pr otection of the environment;  those relating to the 
stable provision and the management of the reserves of rice were in the process of being liberalized.  IPRs were highly protected.   
21. At sectoral level, Hong Kong, China maintain ed a policy of minimal intervention, thus 
enabling market forces to allocate resources in a healthy way between the various sectors of the 
economy.  The Government was a facilitator w hose institutional structure promoted market 
development through infrastructure and support services, which promoted, inter alia,  research and 
transfer of technology.  Most importantly, the HKSAR Government invested in human capital. 
22. Hong Kong, China had five strengths.  First, it had clear trade policy objectives, which were 
highlighted in the Government report.  Second, its  economy embodied the concept of "free port" with 
few barriers to trade, thus allowing trade in goods and non-factor services to continue to rise (383% of 
GDP in 2005).  Third, its government was well know n for its governance records, transparency, and 
accountability, as well as for the proper management of  public affairs.  Fourth, Hong Kong, China had 
a deep commitment to the multilateral trading system , as pointed out in the Secretariat Report;  its 
objectives in this area should be the common obj ectives of any small economy, as the rule-based 
system was the most effective means to confront  powerful economies.  Fifth, as a services-based 
economy, Hong Kong, China maintained a competitive climate in the services sector, thus setting a 
good example for developing countries in dealing with the economy of the future.  
23. On the other hand, Hong Kong, China had tw o possible weaknesses:  fiscal policy and 
competition policy.   The economic downturn had exposed certain weak points in its tax structure and 
there had been public consultation on the feasibility of introducing a GST;  certain concerns could 
arise regarding the imposition of import taxes, particularly on agricultural imports.  As for 
competition policy, there appeared to be ground for improvement or adjustments;  it was encouraging 
to know that the authorities were considering the recommendations of the CPRC on introducing a 
cross-sector competition law, a necessary complement  to an open economy and market deregulation.  WT/TPR/M/173 
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IV. STATEMENTS BY MEMBERS 
24. Members commended Hong Kong, China for its eco nomic performance and recovery, and for 
remaining one of the world's most open economies.   They also praised Hong Kong, China for its 
contribution to WTO work in several areas, in cluding the DDA negotiations,  and the successful 
hosting of the 6
th WTO Ministerial Conference.  Some Me mbers recalled that they had submitted 
written questions, thanked Hong Kong, China for th eir advance replies and looked forward to 
responses to remaining questions. 
25. The representative of Singapore, speaking on behalf of ASEAN  recalled that Hong Kong, 
China, aided only by its harbour and its peopl e, had defied British Foreign Secretary Lord 
Palmerston's prediction (to Captain Charles Elliot – "You have obtained a barren island with hardly a 
house on it, that it can never be a mart of trade", 184 0) and had become one of the busiest ports and a 
major trader in the world.  He commended, inter alia,  the steady growth of Hong Kong, China's GDP 
per capita and its world and regional ranking.  Hong  Kong, China was also generally recognized as a 
business-friendly place and ranked high in the World Bank's Doing Business  and the World Economic 
Forum's Global Competitiveness Report , as well as at the UN Human Development Index.  All these 
achievements were largely attributable to its liberal trade and investment policies. 
26. Non-tariff barriers were almost absent, and Hong Kong, China had eliminated several such 
measures since its last TPR.  While ASEAN noted  that the scope of Hong Kong, China's tariff 
bindings remained low, it applauded its willingness to negotiate the binding of more tariff lines in the 
context of the DDA.  Given the increasing contribution of the services sector to GDP, it was not surprising that Hong Kong, China had taken an activ e role in the DDA services negotiations and had 
submitted timely initial and revised offers. 
27. ASEAN strongly believed that the multilatera l efforts to expand global trade were 
complemented by expanding regional commerce.  ASEAN's economic and i nvestment relationship 
with Hong Kong, China, both collectively and indivi dually, was quite significant and could be further 
enhanced.  ASEAN acknowledged Hong Kong, China's stand that further trade liberalization could 
help forestall regression into protectionism and provide the engine for su stained economic growth 
worldwide.  It also acknowledged its ambition for greater market access for non-agricultural products 
and services. 
28. Notwithstanding its stellar pe rformance over the past years, Hong Kong, China still faced 
formidable challenges;  ASEAN believed that th e people of Hong Kong, China would rise to these 
challenges. 
29. The representative of Thailand
 commended the liberalization of Hong Kong, China's rice 
import quota system in 2003.  This change had im proved the conditions of competition in the local 
rice market.  Between 2002 and 2005, exports of Thai fragrant rice to Hong Kong, China had increased by approximately 13%.  Nevertheless, some controls remained in place, including import licensing procedures and minimum stock requirements.  
30. The representative of Switzerland
 noted that bilateral trade and investment relations with 
Hong Kong, China were excellent and had prospered in recent years.  Switzerland attached high 
importance to adequate and effective IPRs protection, which were a prer equisite for a market to attract 
investment and encourage research and developmen t activities.  His delegation therefore welcomed 
the additional efforts to improve transparency and to wards strengthening IPR legislation.  Switzerland 
looked forward to pursuing and furt her enhancing the already close cooperation, both bilaterally and 
multilaterally. 
31. The representative of Australia  indicated the strong and expa nding bilateral commercial and 
investment relationship, as well as Australia's inte rest in the Pearl River Delta Economic Zone, to  WT/TPR/M/173 
 Page 9 
 
 
 which Hong Kong, China had become a gateway.  His country shared Hong Kong, China's 
commitment to global and regional trade liberali zation and working towards an inclusive and open 
multilateral trading system.  Both countries also worked to promote regional development and cooperation through the Asia-Paci fic Economic Cooperation Forum. 
32. Hong Kong, China had one of the world's most lib eral trading regimes, which was backed by 
sound economic policies.  Nevertheless, Australia sought further background information to Hong 
Kong, China's wine excise tax of 80%, which had im peded the growth of its local wine market.  His 
delegation had asked questions rela ting to various services, including with the aim of encouraging 
Hong Kong, China to make GATS commitments in some specific sectors. 
33. The representative of the Republic of Korea
 highlighted several aspects of the important and 
prosperous bilateral trade and i nvestment relationship between H ong Kong, China and his country.  
Hong Kong, China’s economic openness was one of the principal driving forces in its impressive economic rebound and growth.  Hong Kong, China was the "best student" in WTO, perhaps along with Singapore.  Despite being the most libera lized economy, Hong Kong, China had taken further 
steps in trade liberalization and other trade-related re forms.  He noted in particular progress in the area 
of trade facilitation, the enhanced competitiv e climate in the services sector, including 
telecommunications, and the improved enforcement of  IPRs.  Nevertheless, he encouraged Hong 
Kong, China to further strengthen its enforcement ac tivities against imports of pirated or counterfeit 
products in particular from Mainland China.  Korea highly appreciated Hong Kong, China’s 
prominent leadership to the multilateral trading syst em and hoped that it would continue to play an 
active role in realizing the collective commitment for a successful conclusion of the Doha Round by 
the end of 2007. 
34. The representative of Canada
 congratulated Hong Kong, China for the successful hosting of 
the 6th WTO Ministerial Conference;  his delegation was also pleased with the outcome of the ITU 
World Telecom 2006, which had also been held in Hong Kong, China.  Bilateral cooperation was not 
only in regional fora like APEC, but also in the WTO itself to advance common interests.  
Hong Kong, China was one of Canada's key trade and investment partners in Asia, and there was the 
potential for great deal more.  Canada had bene fited from close cooperation with Hong Kong, China 
on communications and information technology, a nd the environment, and had recently signed a 
number of memoranda, including a cooperation me moranda on biotechnology.  Hong Kong, China's 
considerable advantages included:  a level playi ng field for enterprises doing business with Mainland 
China; an open trade and investment climate;  the ru le of law; and a high degree of personal freedom.  
As a result, over 160 Canadian companies used  Hong Kong, China as a base for developing their 
business with Mainland China, and many of them also  used Hong Kong, China as a platform for all of 
Asia.  CEPA was "nationality-blind", which was a nother good reason for foreign firms to establish in 
Hong Kong, China. 
35. As Hong Kong, China has been cited recently by  Canada's Fraser Institute as the most open 
economy in the world for the tenth consecutive year , Canada was confident that the Government 
would continue to strengthen the economy while fully  respecting both the letter and the spirit of its 
WTO obligations.  It was still unclear how anti-comp etitive practices could be identified if there were 
no statutes defining them.  His delegation welcomed the CPRC initiative to review competition policy and encouraged Hong Kong, China to consider th e Committee's recommendations.  Canada also 
appreciated the open manner in which Hong Kong , China was promoting the understanding of its 
competition policy by the international community. 
36. The representative of the European Communities (EC
) said that trying to criticize 
Hong Kong, China's trade policy was a challe nge because it was a textbook case in both good 
administration and the benefits of an open tradi ng regime.  She congratulated Hong Kong, China for 
its robust economic performance and positive outlook as well as for continuing to demonstrate the WT/TPR/M/173 
Page 10  
 
benefits of an open trade regime underpinned by th e principle of non-intervention.  Hong Kong, China 
was the most positive example of the benefits of  multilateral trade liberalization and all Members 
could learn a lot from it.  As Hong Kong, China ha d a notable record of attracting foreign direct 
investment and private companies had shown great ad aptability in the structural reform process, she 
urged the authorities to maintain the currently favo urable trading environment for all entrepreneurs 
and service providers ensuring market access cond ition without discrimination including access under 
the CEPA.  The EC remained Hong Kong, China's biggest trading partner for merchandise goods after 
China. 
37. A number of elements of Hong Kong, China's economic and trade policy merited scrutiny by 
the review meeting.  Her delegation was interested  in hearing more on the extent to which economic 
and trade performance was impacted by, on the one ha nd the long time pegging of the currency to the 
U.S. dollar and, on the other hand, increasing inte grated with and dependence upon Mainland China, 
which did not have a fully convertible currency.  
38. As a result of its domestic policies and geogra phical location, Hong Kong, China had become 
an important trader of higher value goods and, con sequently, attached greater importance to effective 
IPRs protection, which now ranked high on the domestic agenda.  Nonetheless, several problems 
remained in IPR enforcement, and the EC was k een to learn more about any recent or planned 
measures to tackle the seemingly widespread circ umvention or the transiting of counterfeit goods 
through the Territory.  In light of the lack of a comprehensive competition legislation and criticism in 
the WTO report, the IMF, the Legislative Council of Hong Kong, and its Consumer Council, the EC 
looked forward to learning more about the envisag ed timeframe for completing improvements to the 
competition policy regime.  Given Hong Kong, China' s fast process of development, the EC asked 
about the extent to which renewed emphasis on envi ronmental protection was having a positive effect 
on economic growth and the activities of companies. 
39. The representative of the United States
 praised Hong Kong, China's commitment to 
free-market principles underlying its trade and invest ment policies, an example for the liberalization 
efforts of countries in the region and around the world.  He highlighted aspects of their strong and 
growing bilateral trade and investment relations hip as well as Hong Kong, China's leadership in 
economic cooperation initiatives at regional and multilateral level.  His delegation welcomed the 
position that Hong Kong, China had taken on the im portance of industrial market access as a NAMA 
"Friend of Ambition" and an active advocate of sectorals. 
40. Despite this commendable record, there were so me areas in which continued efforts would 
increase efficiency in the Hong Kong economy and strengthen the basis for sustained economic 
growth.  He welcome Hong Kong, China's suppor t for 100% tariff bindings.  Although Hong Kong, 
China was a model for IPR protection in the Asia region in many respects, he urged it to continue 
strengthening its IPR regime including the promul gation of the Copyright Amendment under review, 
and enforcement efforts at the border to guard agai nst imports of pirated or  counterfeit products for 
transhipment or sale in Hong Kong.  He al so urged Hong Kong, China to streamline its 
pharmaceutical approval policy to allow marketing of new medicines on a timely basis.  While commending Hong Kong, China’s services sector liberalization, the United States looked forward to the withdrawal of its interconnection policy fo r local fixed-line telecommunications services by 
30 June 2008, which would allow the negotiation of  interconnection charges between the operators 
concerned. 
41. The representative of Japan
 highlighted Hong Kong, China's main contributions to the WTO:  
pressing forward the DDA negotiations in various fields, and having convened a very successful 
WTO Ministerial. 
42. He praised Hong Kong, China on its macroecono mic, IPR, investment, and services policies 
and raised some related issues.  He asked the Hong Kong, China delegation to elaborate on measures  WT/TPR/M/173 
 Page 11 
 
 
 taken to mitigate adverse effects from external econom ies, in other words, "built-in stabilizers" such 
as the widening of the tax base.  Despite efforts to  protect IPRs, unlawful goods remained on offer in 
street markets.  While it was vital to promote cooperation with neighbouring countries, especially 
Mainland China, he asked Hong Kong, China to elabor ate on the policy in this regard.  In light of 
more competition with rapidly developing entities su ch as in Shanghai and Shenzhen, he asked how 
the Government was attempting to "co-habitate" w ith these cities and to maintain and increase FDI 
inflows to Hong Kong, China.  Following the introduction of the "Quality Migrant Admission 
Scheme", Japan was interested to know about pl ans to maintain this strength in the economy. 
43. The representative of Argentina  noted that despite the favourable economic developments in 
recent years, and similar prospects, the level of tariff bindings was rather low; his delegation was 
convinced that the Doha Round represented an opportuni ty to correct this situation.  He acknowledged 
Hong Kong, China's active participation in, inter alia,  the NAMA, trade facilitation, and the services 
negotiations.  Despite a liberal free port imports regime, there were excise duties that affected especially imported products, for example the 80% tax on wine, and increased their retail price.  Similarly the lack of an overall competition policy represented a challenge for the achievement of full 
benefits from free trade, and that these benefits trickled down to consumers.  
44. Hong Kong, China was highly dependent on ser vices, and its proximity to Mainland China 
was important for its potential growth and deve lopment.  These conditions , which had enabled Hong 
Kong, China to maintain a totally open trade policy, could not always be replicated elsewhere and in 
different circumstances, for example when industr ial employment was highly important and the main 
markets were far away.  The great merit of Hong Ko ng, China was that it had been able to find the 
appropriate political responses for its own geographi cal and economic situation.  Hong Kong, China 
would meet the challenges of its development mode l through a deepening of its structural changes 
towards more value added servi ces and knowledge-based activities. 
45. The representative of New Zealand
 stated that Hong Kong, China and her country shared a 
commitment to the multilateral trading system and the liberalization of world trade.  She inter alia  
welcomed Hong Kong, China's consideration of me asures in respect of competition law and looked 
forward to further developments in this area.  Her delegation had submitted written questions but 
there were few trade issues on which they disagreed. 
46. The representative of Colombia  expressed appreciation for Hong Kong, China's role in the 
WTO, and noted that bilateral trad e relations had considerable room for growth and Colombia had an 
increasing trade deficit with Hong Kong, China.  Ho ng Kong, China had relie d on the opening up of 
its market and foreign investment as instrume nts for economic growth and development.  Its 
achievements through these policies demonstrated that  the multilateral trade rules were an effective 
development tool.  In general, small economies vi ewed globalization and free trade as a threat, but 
Hong Kong, China was an example of the contrary;  it showed how a small place could grow through 
specialization and by taking advantage of globali zation.  His delegation asked Hong Kong, China to 
remain faithful to its commitment to the multilate ral trading system without prejudice to its 
preferential relationship with China, and to con tinue taking on more WTO commitments, particularly 
in agriculture.  
47. The representative of Turkey  noted that Hong Kong, China's economic performance showed 
that the repercussions of the Asian financial cris is and the SARS outbreak had been well managed and 
had not left an adverse impact on the economy.  As  well as the favourable external environment and 
structural reforms, continued openness of the economy to trade and foreign investment had 
contributed to this progress.  With its increased external competitiveness, improved fiscal balance, 
and successfully transformed services-based economic  structure, Hong Kong, China was among the 
world's leading economies. WT/TPR/M/173 
Page 12  
 
48. The representative of Brazil
 stated that Hong Kong, China's impressive economic 
performance since its last Review  stemmed from a wide range of commercial, economic, financial, 
labour, and social indicators.  His delegation encourag ed the efforts being made to deal with relatively 
high unemployment among low-skilled workers. 
49. Hong Kong, China had moved into a new phase  of economic expansion;  its economic 
prospects were highly dependent on external conditio ns.  Brazil took note of the absence of significant 
changes since 2002 in the broad institutional and po licy framework of Hong Kong, China, and of its 
more open-minded approach to free-trade agreements, such as the CEPA.  The CEPA and the great manufacturing capability of the Pan-Pearl River Delta, could contribute to the continued shift towards 
higher-valued-added services and more knowle dge-based activities.  Hong Kong, China's 
participation in the DDA reaffirmed the credibility and relevance of the WTO, and its confidence in 
the longer-term development of the world economy, a nd sought of help lift tens of millions of the 
world's citizens from poverty.  Bilateral tr ade between Brazil and Hong Kong, China was 
concentrated in a few items and c ould be increased and diversified.  
50. The representative of Uruguay
 praised Hong Kong, China' s broad participation and 
constructive position in the Doha Round, as well as its constant contributions to the multilateral 
trading system.  Indicators showed that the eco nomic recovery was due to a large extent to 
Hong Kong, China's continuing open economy and foreign investment.  She noted Hong Kong, 
China's favourable growth outlook as well as the c ontinuous structural change towards higher value 
added value services and more knowledge-based activities. 
51. The representative of China  was very pleased to see Hong Kong, China's strong economic 
expansion and prosperity in the past four years.   It should also be commended for its trade policy 
regime, which was a success story and an excellent example of a free, open, and stable trading system.  Based on the principle of "Market leads, Governme nt facilitates", the HKSAR Government had taken 
an active role to create a favourable environment for business and to facilitate economic development.  
All its bound tariffs were at zero,  non-tariff border measures were almost absent except those imposed 
for safety, health, and environmental purposes.  There was no government control on exports and 
investment, nor restrictions on foreign ex change transactions and capital movement. 
52. Hong Kong, China's peculiar image of being both a proponent and beneficiary of trade 
liberalization enabled it to be an active and indispen sable participant in the WTO, particularly in the 
current Doha Round negotiations.  To further promote trade and economic cooperation under the 
principle of "One country, Two systems", and as tw o separate and independent Members of the WTO, 
Hong Kong, China and the Mainland of China had spared no efforts in bringing into full play the complementarity of each other's comparative advant age for the benefit of all, through the CEPA 
process.  Bilateral trade had increased rapidly an d steadily.  Mutual investment had also been 
promoted to a new level.  Both sides were read y to work out further measures to cement such 
cooperation.  
53. The representative of El Salvador
 recalled that the General Council decision on an 
amendment to the TRIPS Agreemen t and a commitment to the work programme for small economies 
had been taken one year ago at the 6th Ministerial Conference in Hong Kong, China.  His delegation 
was very pleased to note that Hong Kong, China ha d for many years occupied first place in the 
ranking of economic freedom, confirming its leadersh ip and perseverance;  through this TPR his 
delegation could see that Hong Kong, China had an  open and competitive economy, which was based 
on solid rules that offered the right balance of guidance and flexibility.   
54. Hong Kong, China had a prosperous market economy with few barriers and targeted the 
opening up of the economy to services and the conso lidation of strategic economic alliances; despite 
its limited natural resources it w as an example to be followed.  The trade regime of Hong Kong, 
China was liberal.  The property market had been  particularly prosperous due to the tremendous  WT/TPR/M/173 
 Page 13 
 
 
 demand and the scarcity of land;  the situation was sim ilar to that of El Salvador where developing an 
economic growth strategy had beco me a challenge.  He noted the strengthening of IPR protection 
since the last review through the introduction of el ectronic registry services and the authorization of 
parallel imports of computer programs.  Services were an essential element of the multilateral system and a key pillar in the development of econo mies.  He noted the improvements brought by 
liberalization measures in the financial and tel ecommunications services sectors, which were being 
examined at his country's TPR too, and Hong K ong, China's active participation in the service 
negotiations.   
55. The representative of the Separate Customs Te rritory of Taiwan, Penghu, Kinmen and Matsu
 
(Chinese Taipei) noted that by removing entry barri ers and adding value in the form of high quality 
services Hong Kong, China’s dynamic and progressive  economy had established itself as the main 
logistics and financial centre of East Asia.  Hong Ko ng, China offered itself as a shining example of a 
laissez-faire trade regime.  While acknowledging Hong Kong, China's efforts in formulating a 
comprehensive competition legislation, he believed that such legislation should enhance the economic 
efficiency and encourage more active participati on of small and medium-sized enterprises in the 
economic development of Hong Kong,  China.  Chinese Taipei had had some interesting experience in 
this area and would be happy to share it with Hong Kong, China.  
56. The representative of India  recalled the wide-ranging bilateral ties between India and 
Hong Kong, China, including the Indian community's participation in creating some of its most well 
known institutions.  He emphasized that the Rice Control Scheme had not been eliminated in 2003 
because rice remained subject to import licensing proce dures;  these procedures restricted the free sale 
of Indian rice, except for small quantities of Basm ati rice that were being brought in with special 
permission.  He hoped that Hong Kong, China would take speedy and effective remedial measures to 
facilitate the free sale of Indian rice in the local market.  Delays by the Food and Hygiene Department 
in processing certification requirements for the im port and sale of meat, meat products, and seafood 
from India constituted another concern; he hoped that the authorities would take steps to expedite this 
certification process.  
57. The representative of Norway  commended Hong Kong, China's predictable environment for 
trade and investment, its legal security, and its transp arent society with free flow of information;  it 
would be important to safeguard these assets.  In light of Hong Kong, China’s relatively low share of 
tax revenue to GDP and excise duties falling disp roportionately on imports, he encouraged the 
authorities to broaden the tax base with a GST-type  tax.  He commended the work on strengthening 
competition policies, and awaited the follow-up by th e Government.  Norway encouraged reforms for 
more competition in the electricity market.  Norway and Hong Kong, China, as relatively minor economies with a high dependence on extensive trad e in a rules-based multilateral system, shared 
positions in many parts of the Doha Round, in cluding in promoting commitments on maritime 
transport. 
58. The representative of Pakistan
 stated that Pakistan wished to reach Hong Kong, China's stage 
of openness before the end of the century.  By comp aring Hong Kong, China's indicators to those of 
his country he found that the tax rate to GDP ratios and tariff bindings coverage  were very similar.  
Despite its previous high standings Hong Kong, Ch ina had been able to build further in several 
macroeconomic and trade indicators, therefore Pa kistan agreed with Switzerland and some other 
Members that it was time for Hong Kong, China to graduate from the developing country club.  He 
praised Hong Kong, China's leadership role in al most all areas of the Doha Round negotiations in 
areas such as trade facilitation, anti-dumping, rul es, and TRIPS.  Although Hong Kong, China was not 
a major producer of wine and had moved from a te xtiles and clothing producer to a services-based 
economy, it continued to strongly support an open re gime for all sectors, including textiles and 
clothing.  WT/TPR/M/173 
Page 14  
 
59. The representative of Mexico
 noted that the wide-ranging changes in Hong Kong, China's 
economic policies had guaranteed economic success; its  liberalization policies were of the highest 
standard.  Mexico understood that Hong Kong, China was seeking trade stability and multilateral 
trade liberalization through its active participation in the various WTO fora.  He praised Hong Kong, 
China's actions in the services sector and its polic y response to globalization-induced unemployment.  
Hong Kong, China was one of Mexico's key partners  in the Far East, and cooperation was not only 
within the WTO but also in the OECD and the Asia Pacific Economic Co-operation (APEC) fora.  
60. The representative of Nigeria  praised Hong Kong, China's judicious initiatives, policies, and 
measures, which would go a long way in raising the living standard of its people.  Improved 
enforcement of IPRs would reassure foreign invest ors and strengthen local producers.  He wondered 
whether Hong Kong, China had a policy on technology tr ansfer to developing countries, in particular 
to least-developed countries and, if so, how the polic y was implemented.  In light of the generally 
excellent bilateral political and economic relati ons, Nigeria hoped to bene fit from the tremendous 
growth of the Hong Kong economy through incre ased trade and as a source of foreign direct 
investment in domestic manufacturing.  Nigeri a also looked forward to collaborating with 
Hong Kong, China in the DDA negotiations.  
61. The representative of Hong Kong, China  indicated that Members' positive remarks would 
without doubt strengthen Hong Kong, China's faith and efforts in pursuing a policy of free and open 
trade and investment.  A free and open trade polic y remained Hong Kong, China's top priority, to 
ensure that it would remain competitive and pr ovided the best environment to do business.  
Hong Kong, China was ready to further strengt hen its trade and economic ties with all WTO 
Members, bilaterally, regionally, and multilaterally.  WT/TPR/M/173 
 Page 15 
 
 
 V. REPLIES BY THE REPRESENTATIVE OF HONG KONG, CHINA AND 
ADDITIONAL COMMENTS 
62. The representative of Hong Kong, China  stated that she would address the more general 
points underlying the written questions, and some of  the concerns Members highlighted in their 
interventions at the first session.  Detailed replies to  all the written questions had already been tabled.  
She would group her responses under three main head ings:  (i) macroeconomic environment;  (ii) 
trade policies by measure;  and (iii) sectoral policies. 
 (i) Macroeconomic environment 
63. A number of Members had asked directly or  indirectly how Hong Kong, China saw the 
challenge presented by China’s rapid economic growth.  The simple answer was that it represented an 
enormous opportunity.  Concerning the issue of competition with other major cities in China, she 
asked, by way of reply:  did Tokyo compete with Os aka?  Did New York compete with Chicago?  Did 
London, Paris and Frankfurt compete with one anothe r?  To a degree they all did, but geography and 
history also played a part.  As the economic pie expa nded in size, there were potentially larger slices 
for all.  To get a fair share, the Government shoul d not interfere in business decisions;  rather, its role 
was to offer the best possible e nvironment, for example by provid ing world-class infrastructure and a 
business setting that nurtured entrepreneurship, for businesses to prosper.  The HKSAR Government 
had every confidence in the ability of businessmen and women to take decisions that made most 
market sense for Hong Kong, China leveraging on its comparative advantages. 
Foreign direct investment (FDI)  
64. Notwithstanding the keen competition for FD I among cities and economies in the era of 
globalization, Hong Kong, China had been able to attract high FDI inflows by establishing itself as a 
leading business hub, a two-way platform for business between Mainland China and the rest of the world and a pivotal city in the Greater Pearl Ri ver Delta.  The CEPA had further enhanced the 
attractiveness of Hong Kong, China to foreign invest ors who might leverage on CEPA to gain greater 
access to the Mainland market.  To  promote the combined advantages offered by Hong Kong, China 
and the Mainland China, in particular the Pan P earl River Delta region, the Government had made 
new strides in its promotion efforts in key overseas markets, including a series of joint seminars with 
Mainland provinces and cities (Guangdong, Fujian, etc.). 
65. At the end of 2005, the stock of Hong Kong's inwa rd direct investment had leaped by 15.2% 
over a year earlier, to HK$4.1 trillion at market valu e.  Its ratio to GDP was 293%.  According to the 
UNCTAD World Investment Report 2006, Hong Kong, China ranked sixth in the world in FDI 
inflows in 2005, and was the second largest recipien t of FDI in Asia, after the Mainland of China. 
Linked exchange rate system (LERS)  
66. Despite the increasing economic integration be tween Hong Kong, China and Mainland China, 
there was no intention on the part of the HKSAR Go vernment to change the LERS.  The U.S. dollar 
was still the most commonly used currency for conducting international trade and financial 
transactions.  Linking the HK dollar to the U.S.  dollar remained favourable to the long-term 
development of Hong Kong, China as an interna tional trade and financial centre.  This was 
particularly the case after taking into account relevant factors, inter alia,  the different stages of 
economic development of Hong Kong, China and th e Mainland China, and the non-convertibility of 
the renminbi. WT/TPR/M/173 
Page 16  
 
Challenges of external shocks 
67. The HKSAR Government adhered to the principl e of "big market, small government".  By 
maintaining a high level of resilience and flexibilit y in its labour, product and capital markets, the 
Hong Kong economy had been able to weather extern al shocks successfully and swiftly, as evidenced 
by its strong economic recovery since mid 2003.  Its free-trade and free-market policies were its best 
assets for mitigating the impact of external shocks. 
68. The HKSAR Government recognized that in the event of external shocks, its fiscal position 
could be adversely affected.  The community genera lly agreed on the need to broaden the tax base, 
although the majority did not accept GST as an option to address the problem.  The HKSAR Government would continue to expl ore other viable options to broa den the tax base with a view to 
strengthening its capability to weather the impact of such future external shocks.  In the 2006-07 
Budget, the Government forecasted fisca l surplus over the coming five years. 
Competition policy 
69. Hong Kong, China's competition policy aimed to enhance economic efficiency and free trade, 
thereby benefiting consumers.  Although the ex isting competition policy had served Hong Kong, 
China well, efforts to further develop the competiti on regime would continue so that it would better 
respond to evolving global trends and the need  of the business sector.  As a good WTO citizen, 
Hong Kong, China took Members' views on this matte r seriously.  Liberalization efforts in rice 
control were a case in point. 
70. In early 2006, the CPRC recommended introducin g a new cross-sector competition law and 
establishing a Competition Commission.  A public co nsultation exercise, launched in November 2006, 
would last until early February 2007.  The wa y forward for the regulation of competition in 
Hong Kong, China would be drawn up by taking into account feedback received from the public. 
(ii) Trade policies by measure 
NAMA and services 
71. In light of several Member's comments on H ong Kong, China's current level of tariff 
bindings, the representative of Hong Kong, China i ndicated that Hong Kong, China had entered the 
Doha Round negotiations with  high ambitions for NAMA and services.  Hong Kong, China 
appreciated the importance of certainty to its trading partners.  Hong Kong, China had all along 
maintained a zero-tariff regime and all bound tari ffs were at zero.  Hong Kong, China had made 
unilateral efforts to increase bindings over the years and the proportion of bound tariff lines for 
chemicals, textiles and clothing had increased during the past five years.  Moreover, Hong Kong, 
China's status as a free port and its continued pursuit of free trade policy were enshrined in the Basic 
Law. 
72. Hong Kong, China was ready to work with Members on expanding the scope of tariff 
bindings and commitments on trade in services in  this Round.  Hong Kong, China also looked 
forward to substantial tariff reduction and elimination by othe r Members under the DDA negotiations. 
Excise duty on wine 
73. Ad valorem  duty rates for spirits, wine, and alcoholic  beverages were levied as a single duty.  
The levy was based on ex-factory price, rather than  on its higher retail price.  Compared with some 
other jurisdictions, which levied multiple taxes (including sales tax) on wine, the average tax 
incidence on a bottle of wine in Hong Kong, China was not high.  There was no evidence that the duty  WT/TPR/M/173 
 Page 17 
 
 
 had impeded market development.  Indeed, the dut y seemed to have done nothing to deter the local 
consumption of wine, including imports from th e emerging and promising New World producers. 
Enforcement of IPR protection  
74. Hong Kong Customs maintained close lia ison and cooperation with neighbouring 
administrations, especially its enforcement count erpart in the Mainland China, to combat 
cross-boundary counterfeiting activities.  Through the World Customs Organisation, Hong Kong 
Customs also maintained close cooperation with other overseas customs administrations.  Frequent 
intelligence exchanges among various enforcement ag encies on the import, export, and transhipment 
of counterfeit goods had helped the detecti on of counterfeiting cases both locally and overseas. 
75. Hong Kong Customs maintained full vigilance at  all border control points to guard against 
counterfeit import and export shipments, including transhipments.  Risk profiling techniques were 
used with the aid of intelligence in cargo selection and examination to secure effective control against 
the movement of counterfeit goods amid the trem endous flow of cargo in and out of Hong Kong, 
China.  Significant enforcement r esources were used to curb the flow of infringing goods.  Some 
2,000 Customs officers were stationed at control poi nts to intercept contraband, including counterfeit 
and pirated goods, through the intelligence-based sel ection of baggage, cargo, vehicles and vessels for 
examination.  They also conducted anti-counte rfeit inspections at cargo loading areas where goods 
were transhipped via Hong Kong, China.  These in spections were also intelligence-led for increased 
effectiveness. 
Company registration system 
76. As an international financial centre, it was important for Hong Kong, China to provide an 
efficient company registration system.  The current sy stem was similar to that in comparable common 
law jurisdictions where trade mark registration and company registration were two distinct systems. To address the concerns on the company registrati on system, Hong Kong, China aimed to put in place 
a number of administrative measures in early 2007, such as displaying on the Companies Registry's 
website a list of companies directed to change names, and educating further the business community 
and law enforcement authorities about the trade mark  registration and company registration systems in 
Hong Kong.  In early 2006, the HKSAR Governme nt had commenced a major legislative review 
exercise to re-write and modernize the Companies Ordinance;  proposals to tackle the company name 
problem would also be considered.   
Sustainable development and environmental protection 
77. Hong Kong, China fully supported the objectives of achieving sustainable development and 
enhancing the mutual supportiveness of trade and e nvironment.  It was also aware that measures 
aimed at achieving the sustainable development obj ective would not inadvertently create obstacles to 
trade.  In the context of the ongoing discussion on this subject in the WTO, Hong Kong, China would work with others to achieve a satisfactory outcome.  
78. New initiatives on environmental protection th at were announced at the 2006-07 Policy 
Address on 11 October 2006 were:  to earmark HK$3.2 billion over three years to encourage owners 
of 74,000 older diesel vehicles to replace them with new models meeting Euro IV emission standards;  
and to reduce first registration tax by 30% (up to HK$50,000) for low-emission, high fuel-efficiency vehicles.  Hong Kong, China continued to deal with vehicle emissions (through tighter vehicle 
emission standards (Euro IV)), emissions from th e power plants (through emission caps on power 
companies) and volatile organic compounds (thr ough a new regulation in 2007 controlling VOC 
emissions).  It had recently launched the "Action Blue Sky Campaign" with the Government taking 
the lead in energy conservation.  A Pearl Rive r Delta Regional Air Quality Management Plan had WT/TPR/M/173 
Page 18  
 
been drawn up jointly with neighbouring Guangdong.  No effort would be spared in the protection of 
the environment. 
(iii) Sectoral policies 
Rice Control Scheme 
79. While reiterating the policy objective for the rice trade, she indicated that since the 
liberalization in 2003 the Government's control sy stem had been minimal.  It did not discriminate 
among origin of the product or sources of imports.  In a market driven by consumer preferences, the 
consumers stood to benefit from a wider choice of rice at lower prices. 
Import licensing requirements 
80. The import/export licensing and certification system was essential for health, safety, 
environmental and security reasons, and to fulfil international obligations.  Hong Kong, China was 
mindful that licensing and certification requirements should not constitute barriers to trade.  More 
importantly, they were non-discriminatory to su ppliers of goods and services, domestic and foreign 
alike.  It was part of Hong Kong, China's business -friendly culture to strive continuously to introduce 
new trade facilitating initiatives to encourage trade compliance, whilst safeguarding the interests of 
the community as a whole.  
Quality Migrant Admission Scheme 
81. Under the Quality Migrant Admission Scheme, launched on 28 June 2006, talented people 
from the Mainland and overseas, who met specific e ligibility criteria, would be allowed to stay in 
Hong Kong, China for a certain period of time, without the requirement of securing a prior offer of local employment.  An initial annual quota of 1, 000 was set.  From the launch of the scheme up to 
2 December 2006, the Immigration Department ha d received 532 applications, of which 427 were 
mainlanders.  The authorities aimed to review th e Scheme after one year, and would make suitable 
adjustments to the Scheme, including the quota, in accordance with the latest situation of Hong Kong, 
China.  To enhance competitiveness in the globalized  economy, it was necessary to be more proactive 
in attracting talent from the Mainland China as well as overseas. 
82. The discussant
 stated that there were basically four  major institutions within the WTO that 
were the real system of looking for systemic inte rests: the General Council; the Dispute Settlement 
Mechanism; the Committee on Regional Trade Agre ements;  and the TPRM.  These institutions 
allowed an across-the-board view or perspective of  the systemic implications of any policy or any 
measure taken by individual Members.  The TPR  of Hong Kong, China, a Member without major 
trade policy problems, provided a good opportunity to think about the future of this Mechainism as well as of the need for some sort of more pr ecise follow-up on the measures, response or comments 
by the membership. 
83. Regarding tariff bindings, there was no doubt about Hong Kong, China's commitment to 
continue to be a free port.  The question w as whether Hong Kong, China could become a good 
example to the world by binding its entire tariff or  committing to zero.  This was precisely the kind of 
example needed, at a time when the Doha Round was facing problems.  Concerning anti-dumping and 
anti-competitive practices, he inter alia  indicated that the former were a legitimate tool in the WTO 
system and had become one of the main means of pr otecting markets in an abusive manner.  In light 
of the clear relationship between anti-dumping and competition law or competition rules, he 
suggested that competition rules and regulations coul d be thought of as an alternative to anti-dumping 
measures.  Along these lines, he considered  that the decision to eliminate the issue of competition 
from the Doha Round was wrong.  The competition rules were the only means available to small 
developing countries against anti-competitive action or measures taken by the big markets.  He noted  WT/TPR/M/173 
 Page 19 
 
 
 that the World Wine Trade Group, which was promot ing wine comsumption worldwide, was a club of 
both producers and consumers, and that Hong Kong,  China might consider becoming a member as a 
consumer. 
84. The representative of Japan  said that the TPRM continued to be a valuable forum for 
achieving transparency.  In the Asia-Pacific area,  24 Members had been examined 63 times (1998 to 
2006), one of the highest figures among the 4 regions (Europe-Middle East, Africa, America and 
Asia-Pacific);  Hong Kong, China had already been  through five TPRs.  He wondered whether there 
were legal provisions to restrict the liability of  internet service providers (ISPs) for disclosing 
personal data of copyright infringers  or for deleting information on th e distribution of pirated goods in 
the Internet.   
85. The representative of th e European Communities  had taken note of the measures against the 
increasing pollution in Hong Kong, China.  In the light of the reply to one of the EC's written 
question, she enquired about the initial effects or  experiences of implementing these environmental 
policies.  Concerning the reliability of the export licensing system for textiles and garments, she asked whether the triple digit percentage increase in exports of these items to the EC could be verified.  To 
better assess the efficiency of the surveillance and joint intelligence operations and rates of IPR 
enforcement action, her delegation would be interested to learn more about the quantities sold and 
seized in the centres and showrooms of counterfeit goods. 
86. The representative of the United States
 praised Hong Kong, China's commitment to free-trade 
principles, thus remaining an excellent example of  the benefits of trade liberalization to all WTO 
Members.  The United States applauded the significant efforts to eliminate the production of pirated 
and counterfeit products.  Regarding the review of the company registration system, the United States 
was looking forward to a solution to the company name issue.  It also hoped that this TPR would help Hong Kong, China build further on its strong record of contributions to the world trading system and to the WTO.  
87. In reply to the question raised by Jap an, the representative of Hong Kong, China
 said that 
under the present legal framework there was no express legal provision in Hong Kong, China that 
restricted the liability of ISPs for disclosing pe rsonal data of online infringers or for deleting 
information on the distribution of pirated goods in  the Internet; nevertheless, a common law remedy 
could addresse that particular question.  In additi on, Hong Kong, China was seeking a remedy in the 
context of its current public consultation exerci se on the protection of copyright in the digital 
environment.  The forthcoming public consultation exercise, details of which were to be published 
shortly, was to cover any limitations to the liabilities of ISPs under specified circumstances.  A 
detailed reply on this matter would be circulated to all Members. 
88. She proposed to provide more detailed answer s to the EC's questions on the environment 
policy experiences and IPR enforcement later.  Concerning the integrity and credibility of 
Hong Kong, China's textile control system, she emphasized strongly that Hong Kong, China was 
vigilant in combatting any illegal transhipment.  The Te rritory took a serious view of its obligations to 
ensure origin compliance of Hong Kong, China's te xtiles and clothing products and to maintain the 
fine reputation of the Hong Kong  origin control system so that these products enjoyed continued 
access to overseas markets.  Customs had also been  pursuing vigourous enforcement efforts at the 
border; other action included intensive factory and consignment checks together with police 
operations.  The HKSAR Government had been mon itoring the export trends of all sensitive textiles 
and clothing items, along with the export activities of traders, for any signs of irregularities.  There 
were obviously ups and downs in textiles and clothing production capacity and exports from 
Hong Kong, China as a result of the eliminati on of quotas and the implementation of CEPA. WT/TPR/M/173 
Page 20  
 
89. The representative of Singapore
 said that his delegation would follow with keen interest the 
follow-up to the public consultation period on compet ition policy, which ended in February 2007.  He 
wondered whether the Hong Kong, China delegation could share with Member s any specific timeline 
for moving forward after the end of the public consultation or any further information. 
90. The representative of Benin  praised Hong Kong, China's macroeconomic, structural, and 
social achievements, which were the outcome of dynamic policies based on a free, open, and stable 
multilateral trading system.  He noted Hong Kong, China's great deal of autonomy in conducting its 
foreign trade policies as well as its liberal trade regime.  Hong Kong, China had prioritized the 
creation of an FDI-friendly environment.  In the context of aid for export and trade, Hong Kong, 
China had set up appropriate fiscal measures that  promoted R&D, the concept of innovation, and 
technological modernization.  Hong Kong, China's services-based economy was complemented by 
manufacturing, which was focused on trade marks and brands with added value to take advantage of 
the enormous Chinese market.  The hosting of the 6th Ministerial Conference and the dynamic 
leadership in all WTO activities demonstrat ed that Hong Kong, China was committed to, inter alia,  
fulfilling its objectives within the WTO. 
91. The representaive of Hong Kong, China  repeated that upon conclusion of the public 
consultation exercise on competition policy, the G overnment would draw up a proposed way forward, 
taking into account the feedback from the public.  She could not specify any timeline but the process would be carried out as quickly as possible. 
92. The Trade Policy Review meeting offered Hong K ong, China an opportunity to foster a better 
understanding among Members of its liberal trade polic ies and practices.  It also demonstrated its 
unwavering commitment to the practice of free trade.   Free and open trade policy would remain the 
cornerstone of Hong Kong, China's economy.  WT/TPR/M/173 
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 VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
93. The fifth Trade Policy Review of Hong Kong, China has given us a much better 
understanding of the Hong Kong Special Administrative Region's (HKSAR) trade policies and practices together with the challenges that it faces.   I thank Miss Yvonne Choi and her delegation as 
well as the Discussant, Ambassador Mario Matus of Chile, and Members of the TPRB for 
contributing to our fruitful exchange of views.  H ong Kong, China's response to the large number of 
questions was also appreciated. 
94. Members noted that Hong Kong, China continu es to be one of the most open economies in 
the world and a business friendly place, while at the same time scoring high in relation to 
socio-economic benchmarks.  Since the last Tr ade Policy Review, its economy has bounced back 
rapidly as a result, inter alia,  of sound economic policies and a fa vourable external environment.  
Nevertheless, some Members noted that given the openness of the economy, risks are largely exogenous.  Some Members noted strong indications of a stable growth outlook in the years ahead.  To address tax revenue concerns, certain Members en couraged the authorities to broaden the tax base 
with a more general tax on consumption. 
95. Members commended Hong Kong, China's long-est ablished active and constructive role in 
the WTO and its positive contribution to the DDA nego tiations.  They welcomed Hong Kong, China's 
commitment to the primacy of the rules-based multilateral trading system;  they also noted the 
benefits from and prospects under the Closer Ec onomic Partnership A rrangement (CEPA)-driven 
liberalization, marking the closer bilateral ties with  the Mainland China.  CEPA enhanced the flow of 
goods, services, capital, and persons across the border. 
96. Members appreciated the absence of trade restri ctive measures, but noted that the scope of 
Hong Kong, China's tariff bindings remains low;  they urged Hong Kong, China to expand bindings 
coverage in the context of the Doha Round of ne gotiations.  Several Members expressed concern over 
the impact of the excise duties on imports, including those of wine.  Certain Members indicated that, 
although Hong Kong, China had liberalized its rice trade regime by eliminating the import quota in 
2003, some control measures remain in place. 
97. Members noted Hong Kong, China's wide-ra nging improvements in the protection of 
intellectual property rights, but en couraged further efforts in areas such as transparency, the legal 
framework as well as enforcement in, inter alia , production, street vending and transit of counterfeit 
goods. 
98. Members noted the lack of a comprehensive competition policy law and commended recent 
initiatives for improving this situation.  Some Me mbers encouraged Hong Kong, China to further 
open its government procurement system.  Concerni ng environmental protection, a Member enquired 
about Hong Kong, China's experience in implementing the "polluter pays" principle. 
99. Members noted that Hong Kong, China has become increasingly a services-oriented 
economy.  Certain Members encouraged Hong Kong,  China to make GATS commitments in some 
specific sectors.  They also acknowledged liberali zation in the financial and telecommunications 
sectors and encouraged further opening e fforts in several other services sectors. 
100. This Review has been very useful in giving us all an overview of Hong Kong, China's trade 
policies and practices and the challenges it faces.  I would once again like to thank the Hong Kong, 
China delegation for their effort s, the Discussant for his insight ful comments, and Members for 
contributing to what has been a very enlightening two days of discussions.  We look forward to receiving the remaining outstanding responses within the next month. 
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