Macao, China WT/TPR/S/181 
 Page 15 
 
 
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 
(1) INTRODUCTION  
1. On 20 December 1999, upon China’s resumption of sovereignty over Macao, the Macao 
Special Administrative Region (MSAR) of the People's Republic of China was established1, in 
accordance with the provisions of Article 31 of th e Constitution of the People's Republic of China. 
Under the principle of "one country, two systems", Macao, China enjoys a high degree of autonomy in economic matters and its economic system is to  remain unchanged for 50 years.  Since China's 
resumption of  sovereignty, Macao, China has by an d large maintained a non-discriminatory and open 
trading system for goods, and continues to attach gr eat importance to its membership of the WTO.  
The Government is seeking to diversify the eco nomy by attracting foreign investment and is 
committed to maintaining an investor-friendly envi ronment.  The main change in Macao, China's 
trade policy since its last Review, in 2001, is th e implementation in 2004 of a free-trade agreement, 
the Closer Economic Partnership Arrangement (C EPA), with Mainland China aimed at developing 
joint economic prosperity and deve lopment through liberalization of goods and services trade, and the 
introduction in 2003 of the Individual Traveller Sche me, which relaxed visa restrictions on travel to 
Macao by Mainland Chinese. 
(2) G
ENERAL CONSTITUTIONAL AND LEGAL FRAMEWORK  
2. Under the terms of its Basic Law, which has constitutional value, the MSAR is guaranteed a 
high level of autonomy and independent executive, legislative, and judicial powers.2  The Basic Law 
stipulates that the MSAR maintains an independent taxation system and retains its status as a free port 
and as a separate customs territory and that the Maca o pataca remains the legal currency.  The head of 
the Government, the Chief Executive, is appointed by the Central People's Government after being 
selected by an election or through consultations held locally.3  The Chief Executive, who has 
policy-making and executive powers, appoints the Executive Council of between seven and eleven members to assist in policy-making.  Th e Government, the executive body of the MSAR, must 
abide by the law and be accountable to the Legislat ive Assembly of the Region:  it implements laws 
passed by the Legislative Assembly and already in force, presents regular policy addresses to the 
                                                     
 
1 On 13 April 1987, the Chinese and Portuguese Governments signed a treaty, the Joint Declaration on 
the Question of Macao, affirming that China would resume the exercise of sovereignty over Macao with effect 
on 20 December 1999. Macao, China's status since then  is defined in the Basic Law of the Macao Special 
Administrative Region of the People's Republic of China, promulgated by China's National People's Congress in 
March 1993.  The Basic Law specifies that Macao, Ch ina's social and economic system, the system for 
safeguarding the fundamental rights and freedoms and way of life are to remain unchanged for 50 years.  Under 
the principle of "one country, two syst ems", which is spelled out in this document, Macao, China enjoys a high 
degree of autonomy and independent executive, legislativ e, and judicial powers, maintaining its own separate 
currency, customs territory, immigration and border contro ls, and police force.  The PRC takes responsibility for 
foreign affairs and national security.  
2 Regarding participation in intergovernmental organizations, the MSAR Government participates in 
some economic organizations as a full member of the or ganization concerned, with the identity of a separate 
region that undertakes international obligations and enjoys corresponding rights.  The MSAR has maintained, 
for example, separate status unde r the name Macao, China in 11 organi zations, notably the WTO, UNESCO and 
the ITCB but not in APEC (where membership is pending)  or the financial institutions such as the IMF or ADB 
(where it is not a member). 
3 The Election Committee is composed of 300 member s:  100 from the industrial, commercial, and 
financial sectors;  80 from cultural, educational, and pr ofessional sectors;  80 fr om labour, social services, 
religious, and other sectors;  and 40 from the Legislative Assembly and other organs.  The first Chief Executive was elected to serve a second, and final, consecutive five -year term as the Region's head in August 2004.  The 
Chief Executive appointed ten members to the Executive Council in both the first and second terms of the 
MSAR Government.  The Basic Law does not provide for universal suffrage or direct election of either the legislature or the Chief Executive. WT/TPR/S/181 Trade Policy Review 
Page 16 
 
 
Legislative Assembly, and answers questions raised  by its members.  The MSAR Government is 
responsible for formulating and implementing polici es, conducting administrative affairs, and external 
relations as authorized by the Central People' s Government under the B asic Law, drawing up and 
introducing budgets and final accounts, and drafting bills and laws.  
3. The Chief Executive is supported by a number of secretariats, bureaux/directorates of 
services, departments, and divisions:  there are five secretariats in the Government (Administration 
and Justice;  Economy and Finance;  Security;  Soci al Affairs and Culture;  and Transport and Public 
Works).  Bureaux/directorates of services, which ar e units directly under the secretariats, perform 
designated functions;  departments and divisions are affiliated units res ponsible for operational 
procedures and duties.  The principal officials in the Government are the Secretaries, the 
Commissioner Against Corruption, the Director of Audit, and leading members of the Police and 
Customs.  The Commissioner Against Corruption ( CCAC) is accountable to the Chief Executive and 
is responsible for tackling corruption and fraud.  The CCAC has powers of detention and its budget 
and manpower have been increased in recent years.   Due to these changes, and a public outreach 
campaign, the number of complaints of corruption handled by the CCAC has increased significantly, but its overall effectiveness appears to remain cons trained by legislation limiting the scope of its 
authority to public, but not private sector, corr uption.  The authorities note that according to a 2006 
PERC report, Macao ranked 4th among the 13 Asian countries/regions surveyed, following Singapore, 
Japan, and Hong Kong, China.  According to Transparency International's 2006 Corruption 
Perception Index,  Macao, China ranks 26th out of 163 countries, on a par with Portugal but behind 
Hong Kong, China (15th).4 
4. The legislative organ of the MSAR, the Legislative Assembly5, is a 29-member body 
comprising twelve directly elected members, ten members representing functional constituencies, and 
seven members appointed by the Chief Executive. The Legislative Assembly is responsible for 
general law-making, including taxa tion, the budget, and socio-economic legislation.  Laws passed by 
the Legislative Assembly take effect after they have been signed and promulgated by the Chief 
Executive. 
5. The MSAR is vested with independent judicial  power, including that of final adjudication. 
The judicial system comprises primary courts, intermed iate courts, and a Court of Final Appeal.  With 
the exception of acts of State, such  as defence and foreign affairs, th e MSAR courts have jurisdiction 
over all cases in the Region, including matters of ad ministrative, tax, and customs law.  The Chief 
Executive appoints the judges of the Macao cour ts on the recommendation of an independent 
commission. Judges are chosen on the basis of their professional qualifications.  Qualified judges of foreign nationality may also be employed. The author ities point out that the courts are subordinated to 
nothing but the law and are free from any interference.   
                                                     
 
4 Transparency International (2006).  The CPI ra nks countries in terms of the degree to which 
corruption is perceived to exist among public officials and politicians; it defines corruption as the abuse of 
public office for private gain.  Despite Macao's relativ ely high ranking, on 6 December 2006, it was announced 
in Macao that the Secretary for Tr ansport and Public Works had been  arrested in an anti-corruption 
investigation carried out at the instigation of H ong Kong's Independent Commission Against Corruption 
(ICAC).  According to the Economist Intelligence Unit  (2006), p. 9, the Secretary had been criticized, inter alia,  
for approving infrastructure projects and undervalued land disposals to certain casino interests.  The dismissal of the Secretary, a principal official un der the Basic Law, required the approval of the Central Government on the 
Mainland (EIU, 2006).  See also South China Morning Post , "Developer arrested  in bribery Probe, 
9 December 2006. It was sometimes not clear to the Se cretariat how certain polic ies work, nota bly in the 
allocation of land, which appears to work in an opaque manner.  
5 The Legislative Assembly is currently in its third term (2005-09).  Should there be a need to change 
its composition after 2009, such an am endment can only be made with the endorsement of two thirds of all 
members and the consent of the Chief Executive.  Macao, China WT/TPR/S/181 
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(3) TRADE POLICY FORMULATION AND IMPLEMENTATION  
6. There have been no important changes in  the formulation and implementation of 
Macao, China's trade policy during the period under review.  The Basic Law provides the basic legal 
framework for the trade-related policies of Macao, China which, under the "one country, 
two systems" principle, enjoys considerable autonomy in setting trade policies.  According to the Basic Law, the MSAR will maintain the status of  a free port, pursue the policy of free trade, and 
safeguard the free movement of goods, intangible as sets, and capital.  The MSAR may issue its own 
certificates of origin for products in accordance with pr evailing rules of origin.  Furthermore, it is to 
remain a separate customs territory and may, on its  own, using the name of "Macao, China", maintain 
and develop relations and conclude and implement agreements with foreign states and regions in 
appropriate fields, including economic, trade, fina ncial and monetary, shipping, communications, 
tourism, cultural, science and technology, and sports .  The application to the MSAR of international 
agreements to which China is or becomes a party, is decided by the Central People's Government, in 
accordance with the circumstance s and needs of the MSAR, after seeking the views of the MSAR  
Government.
6 
7. Chapter V of the Basic Law lays out how th e Government is to regulate economic, labour, 
and financial affairs.  The Secretary for Ec onomy and Finance (SEF), appointed by the Chief 
Executive, formulates trade policies and implements relevant laws and regulations. The SEF is also 
responsible for the government budget,  supervision of industry, gaming, certain offshore businesses, 
the currency, foreign exchange, and the financia l system including the insurance sector;  the 
administration of public finances and the tax system; a nd is also responsible for statistical data, labour 
and employment, vocational training, social security, and protection of consumer rights.  In carrying 
out these responsibilities, the SEF is assisted by a number of bodies and funds (Chart II.1). 
8. Macao Economic Services continues to be the main agency advising and assisting the 
Secretary for Economy and Finance and leading offici als in drafting, coordinating, and implementing 
policies on trade, the economy, and intellectual property.7  The agency (Chart II.2) is mandated, 
inter alia,  to:  cooperate in the planning of economi c policies and assist in the development of 
economic activities;  promote and maintain a balanced and non-discriminatory economic 
environment;  administer foreign trade regulations;  issue required licences;  plan and coordinate the 
MSAR's participation and activities in international and regional economic fora;  assist in the drafting 
and implementation of policies governing intellectua l property;  and implement the consumption tax 
regulations in force.  The authorities note that  Macao Economic Services works closely with the 
relevant authorities in charge of the services sector.  It will play a key coordi nating role in the process 
of unifying the negotiating position of Macao, in conj unction with other authorities such as the Macao 
Monetary Authority and the Bureau of Telecommunications Regulation, in the context of GATS-related matters. 
                                                     
 
6 Basic Law, Article 138.  Paragraph 2 of the same Article provides for the continuity of the application 
in the MSAR of agreements previously in force in Macao to which China was not a party.  The authorities 
explain that regarding cases of treaties reserved to so vereign states, China made th e appropriate arrangements 
with the respective depositaries;  that is, China assumed th e rights and obligations of a party to such treaties in 
respect of the MSAR.  For agreements in which the MSAR may enter into by itself, China made a notification to the relevant entity stating its authorization.   
7 The Macao Economic and Trade Office to the WTO, based in Geneva, was established in 
August 2003 (under Administrative Regulation No. 23/2003).  It reports directly to the Chief Executive and represents the MSAR in the WTO and among its Members,  with the support of Macao Economic Services.  The 
Macao Customs Service replaced the Marine and Customs Police in 2001 , under Law No. 11/2001, and is 
responsible for directing, implementing, and supervising customs policy as well as conducting policing functions, such as customs administration and supervision, combating and preventing infringements of IPR.  WT/TPR/S/181 Trade Policy Review 
Page 18 
 
 
Chart II.1
Structure of the Secretariat of Economy and Finance
Source :   Information provided by the authorities of Macao, China.Macao 
Economic 
ServicesConsumer 
CouncilPension FundSocial Security 
FundGaming 
Inspection and 
Coordination 
BureauLabour Affairs 
BureauStatistics and 
Census BureauFinance 
Services 
BureauSecretary for Economy 
and Finance
Supporting Office to the 
Secretariat of China and 
Portuguese Speaking Countries 
Economic Cooperation ForumOffice of the Secretary for 
Economy and Finance
Motor Vehicle 
and Marine 
Guarantee 
FundMacao 
Monetary 
AuthorityMacao Trade 
and Investment 
Promotion 
InstituteIndustrial and 
Commercial 
Development 
Fund
 
 
Chart II.2
Structure of Macao Economic Services
Source :   Information provided by the authorities of Macao, China.Foreign Trade 
DivisionLicensing and 
Consumption 
Tax DivisionIndustry and 
Commerce 
Inspection 
DivisionCertificate of 
Origin Inspection 
DivisionCertificate of 
Origin Issuance 
DivisionDirectorIndustrial and 
Commercial 
Development Fund
Regional 
Economic Affairs 
DivisionInternational 
Economic Affairs 
DivisionForeign Economic 
Relations 
DepartmentInspection of 
Economic Activities 
DepartmentIntellectual 
Property 
DepartmentEconomic Activities 
Development 
DepartmentForeign Trade 
Management 
DepartmentDeputy
Director
Administration and 
Finance DivisionElectronic Data 
Processing Division
 
 Macao, China WT/TPR/S/181 
 Page 19 
 
 
9. The MSAR legal system is based on the co ntinental Roman-Germanic family of law; 
therefore it is mainly based on codification, whic h involves the setting down, in a comprehensive and 
ordered form, of rules of existing law.  The hierar chy of laws depends on their subject-matter.  As 
previous laws were maintained in force, except fo r those that contravened the Basic Law, there are  
laws, decree-laws, administrative regulations, or ders, and executive orders governing all fields, 
including trade.  The Chief Executive may issue administrative regulations, executive orders, and 
decisions in accordance with laws  or decree-laws (Table II.1).  According to the authorities, 
international law and applicable international tr eaties integrate directly into the legal system .8  
International and domestic laws are part of the same general legal order and in the event of a conflict, 
applicable international agreements  take precedence over domestic law.9  During the review period, 
the authorities have been reviewing and, where de emed necessary, amending existing regulations in 
the trade and economic regulatory framework.  Ch anges are aimed at raising the overall economic 
competitiveness of the MSAR.  In particular, th e Macao Foreign Trade Law No. 7/2003, which 
replaced Decree-Law No. 66/95/M and Government Decision No. 158/96/M streamlined import and 
export procedures with a view to expanding the volume and value of foreign trade activities 
(Table II.1).10 
Table II.1 
Main trade-related legislation in Macao, China 
Subject Date Legislation Content 
Foreign trade 26.12.2003 
 17.01.2005 
30.12.2005 Chief Executive's Decision No. 28/2003 and 
its supplements: 
I. Chief Executive's Decision No. 1/2005a 
II. Chief Executive's Decision No. 24/2005b Mainland and Macao Closer Economic 
Partnership Arrangement:  covers trade in 
goods, services, and trade and investment 
facilitation issues 
 23.06.2003  Law No. 7/2003 General principles of foreign trade and 
mechanisms for the import, export, and 
transit to/fro m Macao, China 
 29.01.1996 Decree-Law No. 7/96/M Regula tions for freight forwarders, transit 
activities and delivery of goods 
 22.09.2003 Chief Executive's Decision No. 224/2003 F ees collected on issue of certificates of 
origin 
 22.09.2003  Chief Executive Decision No. 225/2003 Im portation of goods not covered by 
licensing system, customs clearance 
Customs clearance 29.01.1996 Decree-Law No. 7/96/ M Regulations for freight forwarders, transit 
activities, and delivery of goods 
 23.06.2003 Foreign Trade Law No. 7/2003 General principles of foreign trade and 
mechanisms for import, export, and transit to/from Macao, China 
 27.09.1999 Decree-Law No. 51/99/M Re gulation on commercial and industrial 
activities related to computer programs, phonograms and videograms 
 09.12.2003 Chief Executive's Decision No. 272/2003 Pr ohibition of import, export, and transit of 
chemical materials and its precursors 
 16.08.1999 Decree-Law No. 43/99 C opyrights and neighbouring rights 
Table II.1 (cont'd) 
                                                      
8 Articles 3 (6) and 5 (1) of Law No. 3/1999, of 20 D ecember, established that applicable international 
agreements shall be published in the Official Gazette . 
9 Civil Code, Chapter I Article 1 (3).  There is no need to incorporate international law into domestic 
law in order to effect its application.  Nevertheless, reservations and declarations made at the time of the 
assumption of the international obligation or the wording of an international instrument may imply that one or 
more of its clauses cannot be self-executing.  In those cases, domestic legislation needs to be passed.  
10 In 2005, the Government set up an Office for Ju ridical Reforms to oversee the preparation, review, 
and drafting of laws and regulations.  It is supported by the Consultative Committee for Juridical Reforms, 
which is charged with gathering and analysing opin ions from the public as well as practitioners and 
professionals with respect to new and existing laws and regulations.   WT/TPR/S/181 Trade Policy Review 
Page 20 
 
 
Subject Date Legislation Content 
 02.05.2005 Chief Executive' s Decision No. 120/ 2005 Prohibition of imports and manufacture of 
medicines derived fr om bovine materials 
 13.12.1999 Decree-Law No. 97/99/M Industrial Property Code 
 04.04.2005 Chief Executive Decision No. 90/2005c Sanctions and prohibitions of military 
equipment to Ivory Coast under UN 
sanctions 
 11.04.1994 Decree-Law No. 18/94/M Regul ation on sales at duty-free shops 
 21.12.1992 Decree-Law No. 79/92/M Te mporary importation and storage of 
durable commodities for consumption tax purposes 
 08.11.1999 Decree-Law No. 77/99/M Arms and ammunition regulation 
 28.01.1991 Decree-Law No. 5/91/M Regula tion on penalization of  trafficking and 
consumption of narcotic drugs and 
psychotropic substances 
Import prohibitions 
and restrictions 04.12.1995 Decree-Law No. 62/95/M Measures to control and reduce the use of 
substances depleting the ozone layer 
 04.04.2005 Chief Executive Decision No. 90/2005c Sanctions and prohibitions of military 
equipment to Ivory Coast  under UN sanctions 
Import and export 
licensing 23.06.2003 Law No. 7/2003 General principles of foreign trade and 
mechanisms for the import, export, and 
transit to/fro m Macao, China 
 22.09.2003 Chief Executive Decision No. 225/20 03 Importation of goods not covered by 
licensing system, customs clearance 
 04.12.1995 Decree-Law No. 62/95/M Measures to control and reduce the use of 
substances depleting the ozone layer 
 27.09.1999 Decree-Law No. 51/99/M Re gulation on commercial and industrial 
activities related to computer programs, phonograms and videograms 
 09.12.2003 Chief Executive's Decision No. 272/2003 Pr ohibition of import, export, and transit of 
chemical materials and its precursors 
 14.11.1994 Decree-Law No. 53/94/M Licen sing requirements for establishments 
engaged in prescribing and trade of 
traditional Chinese medicine 
 10.07.1995 Decree-Law No. 30/95/ M Regulations on pharmaceuticals 
advertisements 
 19.09.1990 Decree-Law No. 58/90/M Regula tions on the profession of pharmacists 
and related activities  
 31.12.1990 Decree-Law No. 84/90/M Regul ations on licensing requirements for 
providing private health care and nursing services 
 19.09.1990 Decree-Law No. 59/90/M Regi stration of pharmaceutical products 
 08.11.1999 Decree-Law No. 77/99/M Arms and ammunition regulation 
Sanitary and phyto-
sanitary requirements 29.09.1986 Decree-Law No. 45/86/M Re gulations in relation to CITES 
 22.09.2003  
 
 
03.07.2002 Chief Executive's Decisions No. 225/2003  
 
 
Chief Executive's Decisions No. 153/2002 Importation of goods not covered by 
licensing system, customs clearance 
 
Regulations on SPS inspections 
 27.12.2004 Chief Executive's Decision No. 310/ 2004 Regulation on operations of wholesale 
markets 
Labelling 
requirements 17.08.1992 Decree-Law No. 50/92/Md Food labelling 
Environmental 
requirements 04.12.1995 Decree-Law No. 62/95/M Measures to control and reduce the use of 
substances depleting the ozone layer 
 23.01.2006 Executive Order No. 4/2006 Establishing limits on sulphur in gasoline 
 14.11.1995 Decree-Law No. 54/94/M Prevention of certain noise pollution 
Table II.1 (cont'd) Macao, China WT/TPR/S/181 
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Subject Date Legislation Content 
Intellectual property 
rights protection 13.12.1999 Decree-Law No. 97/99/ M Industrial property code 
 16.08.1999 Decree-Law No. 43/99/M Copyrights and neighbouring rights 
 14.03.2005 Chief Executive's Decision No. 57/2005 Regulated activities covered by industrial 
protection regime 
 03.08.1999 Decree-Law No. 40/ 99/M Approved commercial law 
 06.08.2001 Law No. 11/2001 Customs services law 
Banking, insurance 
and securities 05.07.1993 
 
18.10.1999 
 26.02.1983 
30.06.1997 
05.06.1989 15.09.1997 
05.05.1997 
22.11.1999 Decree-Law No. 32/93/M 
 
Decree-Law No. 58/99/M 
 Decree-Law No. 15/83/M 
Decree-Law No. 27/97/M 
Decree-Law No. 38/89/M
e 
Decree-Law No. 38/97/M 
Decree-Law No. 15/97/M 
Decree-Law No. 83/99/M Macao financial system law;  banking 
offshore regime  
Regulation on the business of finance 
companies;  banking Macao insurance ordinance 
Insurance agents & brokers ordinance 
Regulations on money changers Regulations on cash remittance companies 
Regulations on investme nt funds and fund 
management companies 
Telecommunications 14.08.2001 Law No. 14/2001 Basic telecommunications law 
Air transportation 02.07.2003 Executive Order No . 25/2003 Regulation on ai r operation technical 
requirements 
Maritime 
transportation 13.12.1999 Decree-Law No. 109/99/M Regulation on maritime trade 
 29.11.1999 Decree-Law No. 90/ 99/M Law on maritime activities 
 29.03.1999 Decree-Law No. 14/99/M Regulation on maritime pilotage 
Professional services 01.11.1999 Decree-Law No. 71/99/M The statute of registered auditors 
 01.11.1999 Decree-Law No. 72/99/M The statute of registered accountants 
Tourism 30.12.2004 Administrative Regulation No. 42/ 2004 Regulation on travel agencies and tourist 
guides 
 19.08.1996 Law No. 19/96/M Tourism tax law 
 01.04.1996 Government Decision No. 83/96/M Regulation on hotel and similar industries 
 11.12.1989 Decree-Law No. 81/89/M Le gal framework for tourism industry 
 26.10.1998 Decree-Law No. 47/98/M Li censing of specific economic activities 
a Notified to WTO on 31 January  2005:  WT/REG163/1/Add.1. 
b Notified to WTO on 16 January  2006:  WT/REG/163/1/Add.2. 
c Three subsequent amendments:  the latest in 2006. d Last revision is Decree-Law No. 56/94/M of 21 November 1994. 
e Re-published by Administrative Or der No. 27/2001 of 28 June 2001. 
Source:  Information provided by the Macao, China authorities. 
10. Representatives from the private sector, independent institutions or bodies such as trade 
associations and academic institutions provide inpu ts into policy-making and carry out assessments of 
trade policies. The stakeholders include, but ar e not limited to, the Macao Chamber of Commerce, 
Macao Importers and Exporters Association, Industr ial Association of Macao, various services-related 
professional associations, the Macao Economic Scie nce Association, and the Macao Development 
Strategy Research Centre.  The private sector may express its views on trade policy to the Government through a range of communication channe ls, comprising the legislature either in formal 
or informal setting;  media interviews and editorial s;  bilateral meetings;  and public consultations. 
(4) T
RADE POLICY OBJECTIVES  
11. As a small, open economy, the MSAR G overnment recognizes the importance of 
international trade and continues to maintain the obj ectives of structural diversification and a market-
driven, laissez-faire and rules-based trade policy.  As one of  the most liberal economies in the world 
that has applied tariffs of zero on all imports, Ma cao, China is supportive of the multilateral trading WT/TPR/S/181 Trade Policy Review 
Page 22 
 
 
system.  The MSAR Government acknowledges the importance of the evolving trading environment 
and continues to seek diversification away from traditional export products.  In the Doha Round, 
Macao, China has submitted initial and revised o ffers on a wide range of services sub-sectors, 
representing a significant increase compared to its Uruguay Round commitments.  
(5) TRADE AGREEMENTS AND ARRANGEMENTS  
12. Under Articles 112, 136 and 137 of the Basic La w, Macao, China participates in various 
international organizations, including the WTO, as a full member with the status of a separate customs 
territory that undertakes international obligations  and enjoys corresponding rights and interests.  
(i) Multilateral agreements 
13. Macao, China is an original Member of the WT O.  It views the WTO's basic principles as 
important elements in a stable trading environm ent.  The MSAR has made notifications under a 
number of WTO Agreements (Table II.2).  Macao, Ch ina participated in the Textile Monitoring Body 
(TMB) as an alternate on an ad personam basis until the abolition of quotas as of 1 January 2005.  
Prior to that date, Macao, China expressed concern that the integration of the textiles and clothing 
sector could prompt the emergence of alternate forms of protectionism, especially anti-dumping 
actions, and has argued for a more disciplined mechanis m to curb the proliferation of such measures.  
As services are the largest employer and contri butor to its GDP, the MSAR has worked for the 
furtherance of offers in th e current round of negotiations.11  Overall, Macao, China has supported the 
principle of progressive liberalization under the GATS in accordance with its long-term objective of the gradual and systematic opening up of its services sector. 
Table II.2 
Selected notifications by Macao, China under the WTO Agreements, March 2007 
WTO Agreement Requirement/content WTO do cument and date (latest if recurrent) 
Agreement on Agriculture   
Article 18.2 Domestic support  G/AG/N/MAC/18, 10/03/2006 
Article 10 and 18.2 Export subs idies G/AG/N/MAC/19, 10/03/2006 
Agreement on Implementation of GATT Article VI (Anti-dumping)  
   
Article 16.4 Semi-annual reports on anti-dumping 
actions taken during the period G/ADP/N/145/Add.1, 8/10/2006 
G/ADP/N/139/Add.1, 21/04/2006 
Understanding on Interpretation of GATT Article XVII (State trading enterprises)  
Paragraph 1 State trading enterp rises G/STR/N/11/MAC, 13/03/2006 
Agreement on Import Licensing   
Articles 1.4 (a) and 8.2 (b)  G/LIC/N/1/MAC/1/Add.3, 17/09/2003 
Article 7.3 Questionnaire on import li censing  G/LIC/N/3/MAC/9, 05/10/2006 
Agreement on Subsidies and Countervailing Measures  
Article 25.1 Notification of subsid ies G/SCM/N/123/MAC/Add.1,13/03/2006 
G/SCM/N/123/MAC, 09/03/2005 
Article 25.11 Countervailing duty actions  taken G/SCM/N/144/Add.1, 18/10/2006 
G/SCM/N/138/Add.1, 20/04/2006 
G/SCM/N/130/Add.1, 19/10/2005 
G/SCM/N/113/Add.1/Rev.1, 07/04/2005 G/SCM/N/122/Add.1, 07/04/2005 
Table II.2 (cont'd)
                                                      
11 See for example the statements by Macao, Ch ina at the Cancún Mini sterial Conference in 
WT/MIN(03)/ST/139 and at Hong Kong in WT/MIN(05)/ST/158. Macao, China WT/TPR/S/181 
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WTO Agreement Requirement/content WTO do cument and date (latest if recurrent) 
Agreement on Technical Barriers to Trade  
Article 2.9 Notification under Artic le 10.6 G/TBT/N/MAC/1, 09/03/2006 
Agreement on the Application of Sanitary and Phytosanitary Measures  
Article 7 Annex B Emergency m easures G/SPS/N/MAC/9, 20/03/2006 
GATT 1994 Article  XXVIII:5 (Market Access)  
 Notification of Schedule LXXXIX G/MA/185,  10/01/2006 
GATS   
Article III:3 National legi slation S/C/N/347, 27/07/2005 
S/C/N/348, 27/07/2005 
Agreement on Trade Related Aspects of  Intellectual Property Rights (TRIPS)   
Article 63.2 Legislation IP/N/1/MAC/1/Rev.1/Add.2, 25/06/2004 
Article 69 Contact points IP/N/3/Rev.7/Add.3, 06/09/2004 
Source:  WTO Secretariat.  
(ii) Regional agreements 
14. Macao, China does not participate in any plurila teral regional trade arrangements and, with 
the exception of Mainland China under the Closer Economic Partnership A rrangement (CEPA), all 
trading partners are treated on an MFN basis.   
15. Macao, China's 1993 application to join the Asia Pacific Economic Cooperation (APEC) is 
still pending.  In 2001, it applie d for participation in APEC as a guest economy at the working group 
level.12  Guest status was extended until 2006 and Macao, China has applied for renewal of this status. 
(iii) Bilateral agreements 
16. A significant development since its last Review  is that Macao, China signed a Closer 
Economic Partnership Agreement (CEPA) with  Mainland China on 17 October 2003, and 
supplements in 2004, 2005 and 2006.13  The CEPA provides for phased liberalization in trade in 
goods, services and investment facilitation.  On 1 January 2004, Mainland China began the staged 
elimination of tariffs on imports originating in M acao, China and was due to eliminate import tariffs 
fully no later than 1 January 2006.  A total of 625 Macao-origin products and 27 service sectors enjoy 
liberalized access to the Chinese market.14  Service industries appear to have made greater use of the 
opportunities offered under CEPA than the manufacturing sector:  the transport and logistics 
industries were the most active in applying for CE PA certification to expand  in Mainland China.  
Only small quantities of goods ha ve been exported to Mainland China under the arrangement.  
17. The CEPA specifies that:  neither party shall apply non-tariff measures that are inconsistent 
with WTO rules to goods imported from, and origin ating in, the partner's territory;  Mainland China 
will not apply tariff rate quotas on goo ds originating in Macao, China;  neither party can apply anti-
dumping measures no countervailing measures on goods  imported from, and originating in, the 
                                                      
12 The MSAR is active in six working groups:  Small and Medium-Sized Enterprises;  Industrial  
Science and Technology;  Tourism;  Transportation;  Trade Promotion;  and Telecommunications and 
Information. 
13 WTO documents WT/REG163/N/1–S/C/N/265, 12 January 2004;  WT/REG163/1/Add.1, 
31 January 2005;  and WT/REG163/1/Add.2, 16 January 2006.  Summaries and the full version of the CEPA 
were viewed at:  http:/www.economia.gov.mo/page/english/cepa_e.htm. 
14 Mainland China opened 18 services sectors to providers from Macao, Chin a from 1 January 2004.  
Market access restrictions were relaxed fo r additional services on 1 January 2005. WT/TPR/S/181 Trade Policy Review 
Page 24 
 
 
partner's territory;  safeguard measures may be ad opted, after giving written notice, to temporarily 
suspend concessions on imports of the product con cerned from the other party's territory.  Both 
partners must progressively reduce or eliminate ex isting restrictive measures on the others' services 
and service suppliers.  Both parties agreed to promote trade and investment facilitation through 
greater transparency, standards conformity, and en hanced information exchange.  A Joint Steering 
Committee was established between Mainland Ch ina and Macao, China, to supervise the 
implementation of the CEPA, to resolve disputes that  may arise, to interpret the provisions of the 
CEPA and to draft additions or  amendments.  The Committee meets at least once a year, and may 
convene special meetings within 30 da ys, upon request by either party. 
Trade in goods 
18. Mainland China has agreed to apply a zero tariff to all goods imported from Macao, China 
from 1 January 2006 as long as they satisfy the C EPA origin rules and undergo the process to 
establish origin.  Rules of origin have been developed for 625 tariff lines including foodstuffs, 
chemicals, photographic products, textiles and clothi ng, building stone and ar ticles of stone, metal 
products, machinery and electronic products, pharmaceu tical products, plastic articles, optical parts, 
and accessories.  
Services 
19. The CEPA confers preferential treatment to Macao, China service suppliers in:  legal, 
accounting, architectural, medical and dental, real  estate, advertising, management consulting, 
convention and exhibition services, value-added te lecommunications, audiovisual, construction and 
related engineering, distribution, insurance, banki ng and securities, tourism, transport, logistics, 
airport operations, information technology, cultural entertainment, trademark agency, patent agency services, job referral services, job intermediary ser vices, professional qualification examination;  and 
individually owned stores.  
Trade and investment facilitation 
20. The parties undertook various initiatives to prom ote mutual cooperation in several areas:  
trade and investment promotion, customs clearanc e facilitation, commodity inspection, inspection and 
quarantine of animals and plants, food safety, sanitary quarantine, certification, accreditation and 
standardization management, electronic business, transp arency in laws and regulations, cooperation of 
SMEs, industrial cooperation, and prot ection of intellectual property.  
21. Certain exports from Macao, China continue to  enjoy preferential tr eatment in Australia, 
Canada, the EU, Switzerland, Ne w Zealand, and Norway under GSP schemes (Table II.3) although 
such treatment is diminishing.  Macao, China ex ported GSP-eligible goods worth US$2.9 million in 
2005, down from US$10.8 million in 2001, but accordin g to the authorities only 3.37% of its total 
exports of such goods actually benefited from prefer ential access.  Macao, China's footwear exports to 
the EU declined markedly in 2005 due to eroding price competitiveness in footwear production in the 
global market. Macao, China WT/TPR/S/181 
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Table II.3 
Macao, China's exports under GSP treatment, 2001-05 
(U.S. dollarsa) 
 2001 2002 2003 2004 2005 
Textiles and clothing articles 107,525 81,637 78,269 74,753 1,022,467 
Canada 107,525 81,637 78,269 74,753 22,033 
European Union 0 0 0 0 1,000,434 
Toys 23,808 44,883 0 0 0 
Australia 1,286 0 0 0 0 
Canada 0 33,790 0 0 0 
European Union 22,523 11,093 0 0 0 
Footwear 7,053,834 8,327,282 16,746,062 18,423,913 533,227 
Australia 13,787 0 0 0 0 
European Union 7,040,046 8,327,282 16,746,062 18,420,245 533,227 
Norway 0 0 0 29 0 
Switzerland 0 0 0 3,639 0 
Saddlery and harness 1,556,324 1,585,882 659,791 549,512 883,131 
Canada 0 115,377 57,016 61,200 98,722 
European Union 1,453,275 1,392,731 574,867 449,319 773,216 
Switzerland 103,049 77,774 27,908 38,993 11,194 
Electronic products 1,864,672 1,974,954 1,797,120 117,962 4,608 
Canada 1,864,672 1,974,954 1,797,120 117,962 4,608 
Other products 173,741 87,022 1,223,348 430,811 437,612 
Australia 605 0 0 29,382 626 
Canada 0 0 16,899 0 0 
European Union 170,357 84,879 328,007 196,459 436,987 
Switzerland 2,779 2,143 878,441 204,970 0 
Total 10,779,902 12,101,659 20,504,590 19,596,952 2,881,045 
Australia 15,677 0 0 29,382 626 
Canada 1,972,197 2,205,758 1,949,304 253,915 125,363 
European Union 8,686,201 9,815,985 17,648,937 19,066,024 2,743,863 
New Zealandb 0 0 0 0 0 
Norway 0 0 0 29 0 
Switzerland 105,828 79,917 906,349 247,602 11,194 
a US$1 = MOP8. 
b With effect from 1 April 2005, Macao, China was graduate d from New Zealand's GSP scheme. 
Source:  Authorities of Macao, China. 
(6) TRADE DISPUTES AND CONSULTATIONS  
22. The authorities state that Macao, China has ne ver had a trade dispute with Members or 
non-members of the WTO. 
(7) FOREIGN INVESTMENT REGIME  
23. The Government aims to develop Macao, Chin a and diversify its economy by attracting 
foreign investment and maintaining an investor-frie ndly environment.  Corporate taxes are low and a 
proposal to lower the highest rate from 15% to 12%, was passed by the Legislative Assembly and put 
into effect under Law No. 4/2005 of 18 July 200 5.  This means that M acao, China has the lowest WT/TPR/S/181 Trade Policy Review 
Page 26 
 
 
corporate income tax rate in the As ian Region.  Some observe rs believe that this move that could pave 
the way for significant changes in the Macao Offshore Regime with a view to creating a tax effective 
environment to attract more foreign investors.  
24. Macao, China does not have restrictions or co ntrols on inward or outward foreign direct 
investment or on the use of foreign capital in exis ting or newly established companies.  There are no 
exchange restrictions on capital flows and no exchan ge controls.  Profits a nd other funds associated 
with an investment, including investment capital,  earnings, loan repayments, lease payments, and 
capital gains can be converted and remitted freel y.  Although Macao, China imposes no restrictions 
either on capital flows or foreign exchange opera tions, merchandise exporters must convert 40% of 
foreign currency earnings into patacas, a legal requirement that is not applied to services.  Imports of 
capital equipment and raw materials are free of restraint.  Moreover, the MSAR offers the same conditions to foreign and local investors with respec t to the opening of a new business.  Foreign firms 
and individuals are free to establish companies,  branches, and representative offices without 
discrimination or unduly heavy regulation.  There are no restrictions on the ownership of such 
establishments, and company directors are not required to be citizens of Macao, China.  However, the 
board of directors of locally incorporated banks sh ould consist of a minimum of three members, at 
least two of which must be residents of Macao, China.  
25. The Macao Trade and Investment Promoti on Institute, as the Government institution 
responsible for promoting the development of trade and investments, has set up a "One Stop Service" 
to assist investors with the required administ rative procedures to establish a business in Macao.
15  The 
Institute has established its own private notary servi ces to handle all company registration procedures 
for investors.  Also, through the Investment Commit tee, close relationships are maintained with other 
governmental departments involved, in order to assist  in coordination, and provide reliable tracking of 
the investment process.  The objective of the In vestment Committee is to provide guidance and 
assistance with the administrative procedures required for the completion of investment projects in Macao, China. 
26. The tax system has not been substantially cha nged or amended since 2001.  As already noted, 
Macao maintains a low and simple taxation regime  and investors can benefit from, among others, a 
low rate of taxation on company profits and no import duties on general goods.  Besides the 
favourable business operation conditions, the Govern ment provides incentives in certain areas, such 
as tax incentives, financial incentives and land c oncessions, to attract businesses to Macao, China.
16 
27. Tax incentives include full or partial ex emption from profit/corporate tax, business 
registration tax, property tax, stamp duty for the transmission of assets and consumption tax.  
According to the authorities, the tax incentives do not constitute either e xport subsidies or import 
substitution subsidies as defined in the WTO Agre ement on Subsidies and Countervailing Measures.  
Financial incentives include government-funded interest  rate subsidies on bank loans in patacas for 
buying/leasing new equipment or constructing/l easing industrial buildings .  Land concessions are 
granted to investors with a signifi cant investment in Macao, China.  
                                                      
15 Macao Trade and Investment  Institute (2005), p. 36. 
16 Investment incentives, which are contained in Decree Nos. 1/86/M, 23/98/M, and 49/85/M, are 
offered to investors on a national treatment basis provided that companies can fulfil at least one of the following conditions:  contributing to diversification and moderni zation of economic activities;  introducing technological 
innovation and transformation of companies in order to develop production capacity, product quality, 
competitiveness, and reduce environmental damage;  m odernizing factory premises in terms of operation, 
safety, and/or health conditions.  There is no requirement that shares be owned by local citizens.  Macao, China WT/TPR/S/181 
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28. A bilateral agreement on the avoidance of double taxation, signed with Portugal in 1999, was 
confirmed as an international agreement in 2001.  An agreement on the same subject was signed with 
Mainland China in 2003;  it entered into force on 1 January 2004 and is also intended to prevent tax 
evasion.  Macao, China signed a bilateral agreement on investment protection with Portugal in 2000 
and initialled another one with th e Netherlands in 2002.  Macao, China and Mainland China's long-
standing close economic and trade ties have gradua lly become much stronger since the "open door 
policy" of economic reforms in Mainland China.