RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/REG163/M/2 
7 February 2006 
 
 (06-0509) 
Committee on Regional Trade Agreements 
Forty-First Session  
 
 
 
EXAMINATION OF THE CLOSER ECONOMIC PARTNERSHIP ARRANGEMENT 
BETWEEN CHINA AND MACAO, CH INA, GOODS AND SERVICES 
 
Note on the Meeting of 24 January 2006  
 
Chairman: Mr. A. Egger (Switzerland) 
 
1. The meeting was convened in document WTO/AIR/2734. 
2. Under Agenda Item C.VIII of its 41st Session, the Committee on Regional Trade Agreements 
(hereinafter CRTA or the Committee) took up the second round of examination of the Closer 
Economic Partnership Arrangement  (CEPA) between China and Macao, China, Goods and Services. 
3. The Chairman  noted that the proceedings of the first round of examination of both the Goods 
and Services Aspects of this Agreement, which took place in the 39th Session of the Committee in 
February 2005, could be found in document WT/REG 163/M/1.  Since then, the Parties had provided 
replies to questions put by dele gations which had been circulated  in document WT/REG163/5 and had 
also submitted Supplement II to the CEPA, which had been circulated in document 
WT/REG163/1/Add.2.  
4. The following items were discussed: 
 A. Item C.VIII-A – Goods Aspects 
 B. Item  C.VIII-B – Services Aspects 
 
5. The Chairman  invited delegations to give general comments on the Agreement, considering 
both the goods and services aspects. 
6. The representative of China  observed that the Parties had signed the CEPA and its 
Supplement I in 2004 and had implemented it since 1 January 2005, and recalled that these had been 
reviewed at the CRTA meeting on 18 February 20 05, with the usual exchange of questions and 
answers, also in writing.  The Parties had si gned Supplement II on 21 October 2005, to promote 
further economic and trade cooperation between  them, and had submitted the corresponding 
notification on 13 January 2006, as contained in doc ument WT/REG163/1/Add.2.  He explained that, 
according to Supplement II, Mainland China would apply a zero tariff on goods imported from, and 
originating in, Macao, China, as set  out therein, from 1 January 20 06.  With regard to trade in 
services, China had further reduced or eliminated restrictions in sectors covered by the CEPA and 
Supplement I.  He also emphasized that the CEPA was an open and ever-developing platform for the 
economic and trade cooperation between the Parties.  Both Parties had been and would continue to be 
committed to broadening and enriching its content thr ough concerted efforts to further liberalize trade.  
At the same time, China, as a Me mber of the WTO, would keep on supporting the multilateral trading 
system by fulfilling its obligations and commitm ents, as well as through its involvement in the 
multilateral trade negotiations.  He also stated hi s delegation's readiness to cooperate with Macao, 
China and other Members for an efficient review of the CEPA. WT/REG163/M/2 
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  A. G
OODS ASPECTS  
7. Given that the Committee had already had a round of discussion under each of the headings 
of the Standard Format, document WT/REG163/3, the Chairman  proposed to open the floor for 
comments and questions by broad Section. 
8. Under Section I ("Background Information on th e Agreement"), the representative of the 
United States  said that, in general, her delegation had sim ilar questions to those posed in the context 
of the examination of the China–Hong Kong,  China Agreement (see document WT/REG162/M/2). 
She asked if there was a 100 per cent coverage of all the goods going from Macao, China to Mainland 
China, provided there was a rule of origin in existence, and whether there was a different rule of 
origin for every tariff line of the Harmonized System or only for those products currently traded 
between the Parties.  She also enquired what w ould be the treatment given to a product for which 
there was no rule of origin established. 
9. The representative of Australia  understood from the discussion on the China–Hong Kong, 
China Agreement (see document WT/R EG162/M/2) that significant liberalization had taken place in a 
number of tariff lines where trade actually occurred between the Parties and zero duties were applied 
to those, but for a proportion of tariff lines under the Harmonized System no rule of origin existed, 
which would mean that they were not subject to liber alization.  He asked the Parties to clarify if his 
interpretation was correct, and suggested them to provide a percentage of  the Harmonized System 
lines that were subject to zero duty and for which a rule of origin existed. 
10. The representative of Macao, China  said that from 1 January 2006, all goods of Macao origin 
that satisfied the rules of origin stipulated by th e authorities enjoyed zero tariff entry into Mainland 
China.  Implementation procedures in the Agreemen t provided for the submission of applications for 
zero-tariff treatment to the relevant authorities and the working out of the products' rules of origin; 
once these procedures completed, the commitments fo r zero-tariff treatment would take effect on the 
schedule set up in the Agreement. 
11. The representative of Japan  understood that the mechanism to include new products in the 
coverage of the Agreement was ba sed on applications by Macao, China's enterprises.  She wondered 
whether such applications were being made and being accepted by the authorities.  She requested the 
Parties to provide the number of received, accepted and outstanding applications. 
12. Under Section III ("General Provisions"), the representative of Australia  said that he had 
questions related to safeguards (Article 9 of the C EPA), similar to those posed in the context of the 
examination of the China–Hong Kong, China Ag reement (see document WT/REG162/M/2).  He 
requested information on the time limit for the app lication of the safeguard, the definition the Parties 
used to describe a "sharp increase", whether there were any provisional safeguard measures, and how 
the level of the safeguard was determined.  Since th ese were quite technical issues, he would pose the 
questions in writing as well.  The representative of Macao, China  said that no safeguard mechanism 
had been invoked since the entry into force of th e CEPA and said that his delegation would provide 
the answers in writing. 
13. The Chairman  said that the second round of examin ation had allowed the Committee to 
clarify a number of issues, but that some outst anding questions remained.  He proposed that any 
additional questions be submitted to the Secretaria t by 17 February and that the Parties respond in 
writing by 10 March, so that a further round of examination could be scheduled for a forthcoming 
meeting. It was so agreed . 
14. The Committee took note  of the comments made.  WT/REG163/M/2 
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  B. SERVICES ASPECTS  
15. Given that the Committee had already had a round of discussion under each of the headings 
of the Standard Format, document WT/REG163/4, the Chairman  proposed to open the floor for 
comments and questions by broad Section. 
16. The representative of Australia , under Section I ("Background Information on the 
Agreement"), noted that the Parties had negotiate d the CEPA, Services on a positive list approach, so 
he was interested in having an update of the list of  service sectors that were covered by the CEPA and 
those that were excluded. He had also noted that th e Parties had announced that there would be further 
liberalization, and asked when that might occur a nd the time frame for the full liberalization of the 
services sector.  The representative of the United States  said that she would submit in writing similar 
questions as those raised by Australia. 
17. The Chairman  said that the second round of examin ation had allowed the Committee to 
clarify a number of issues, but that some outst anding questions remained.  He proposed that any 
additional questions be submitted to the Secretaria t by 17 February and that the Parties respond in 
writing by 10 March, so that a further round of examination could be scheduled for a forthcoming 
meeting. It was so agreed . 
18. The Committee took note  of the comments made. 
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