WORLD TRADE
ORGANIZATIONWT/WGTI/W/90
9 October 2000
(00-4129)
Working Group on the Relationship
between Trade and InvestmentOriginal:  English
COMMUNICATION FROM HONG KONG, CHINA
The following communication, dated 7 October 2000, has been received from the Hong Kong
Economic and Trade Office.
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Transparency of Investment Environment
I. INTRODUCTION
1. Hong Kong, China (HKC) recalls that issues pertaining to transparency of investment regimes
attracted much deliberation at the meeting of this Working Group held on 8 June 2000.  We affirm the
importance of the principle of transparency, be ing one of the most fundamental WTO principles
underpinning trade and investment liberalization.  As HKC's contribution to this Working Group on
the subject of transparency, this paper presents the efforts made by HKC in promoting transparency
and identifies possible pointers for further work by Members.
2. Section II of this paper provides an account of the steps taken by HKC to promote
transparency of its investment environment on various fronts.  We then examine in Section III the
extent to which the WTO and other international organizations have contributed to a more transparent
global investment environment.  Section IV concludes this submission by floating some policyquestions for Members to reflect on how best to achieve transparency on investment within the WTO
framework.
II. STEPS TAKEN BY HKC IN ENHANCING TRANSPARENCY OF ITS
INVESTMENT ENVIRONMENT
3. HKC's investment policy is founded on a free market economy philosophy.  We practise one
of the world's most liberal investment regimes at home.  We recognise that the degree of transparency
of an investment regime is one key determinant of the desirability of an economy as a FDI
destination.  To attract inward investments into Hong Kong, we collate and disseminate information
of interest to overseas entrepreneurs to facilitate them in making well-informed investment decisions.
To maximise investors' accessibility to information about our domestic investment environment, wehave increasingly been relying on the Internet as an information carrier.  The following paragraphs
provide an account of the efforts made by the Hong Kong Special Administrative Region Government
(HKSARG) on five fronts to promote transparency of its investment regime.WT/WGTI/W/90
Page 2
Code on Access to Information
4. Our policy is to make available as much information as possible to members of the public
including the business community so that they can better understand how government policies are
formulated and implemented.  This policy is enshrined in the Code on Access to Information
(http://www.info.gov.hk/access/code.htm ) published in March 1995.  The Code requires all
government institutions to provide, either routinely or on request, information to the public unless
there are valid reasons (e.g. on grounds of security or public safety) not to do so.  Of note is that the
Code is underpinned by a complaints channel through the Ombudsman who is entirely independent of
the government.  The introduction of the Code repr esented a major step forward in promoting greater
openness and accountability in the HKSARG.
Dissemination of Information on the Lega l Infrastructure, Business Environment and
Investment Opportunities in Hong Kong
5. HKC also seeks to maintain a predictable legal environment for investors to operate in. Over
the years, we have put in place a number of measures to enhance public awareness and understanding
of their rights and obligations under the legal infrastructure in Hong Kong,  First, the HKSARGmaintains on the Internet a  database of all statutory laws and major bilateral agreements being
applied in Hong Kong (http://www.justice.gov.hk ).  Included in this database are the full texts of the
14 bilateral investment agreements signed by the HKSARG.  Second, all newly introduced or
amended laws and regulations in Hong Kong, including those relevant to foreign investments such as
legislation on trademark registration, import/export licensing and business incorporation, arepromulgated in the Government Gazette  (http://www.info.gov.hk ) on a weekly basis.  Third, in order
to explain  the legislation in layman terms, brochures and pamphlets  are produced and updated by
various government agencies from time to time for public circulation.
6. Statutes aside, a number of investment-related publications/websites are accessible by foreign
investors.  For example, the Hong Kong Investment Guidebook (http://www.investhk.gov.hk )
contains general information on Hong Kong's investment and business environment including
procedures for setting up a company, trade regulations and taxation system.   The HK Works
Newsletter (http://www.investhk.gov.hk ) features articles on the  investment scene of Hong Kong,
news on FDI activities and foreign company developments. The Small and Medium Enterprise
(SME) Information Centre  (http://www.sme.gcn.gov.hk ) provides information on services and
facilities offered by government departments and industrial support organizations to SMEs; and the
website on Doing Business  in Hong Kong  (http://www.business.gov.hk ) disseminates a variety of
business information to investors and potential investors.
7.  The above mentioned measures introduced by the HKSARG are complemented by the
activities of the Trade Development Council ( http://www.tdctrade.com.htm ), a statutory body
established to promote Hong Kong as an international hub for business.  The Council's Business
InfoCentre provides potential investors with a wide array of information ranging from trade statisticsto sophisticated research on economic and business trends.  It also promotes a positive image of Hong
Kong's business environment by organizing international trade fairs both locally and overseas.
Enhancing Procedural Transparency
8. The HKSARG seeks to alleviate the information-seeking burden on investors by ensuring a
high degree of procedural transparency.  For example, to minimize uncertainty surrounding licence
applications, various government departments have published a series of 'How to apply' booklets
explaining the steps required to obtain business li censes and permits in Hong Kong such as those
relating to business incorporation, certificate of origin, trademark registration and import/export
licensing.  Another business-friendly measure is the publication of Booklets on PerformanceWT/WGTI/W/90
Page 3
Pledges  by departments concerned to spell out the time required for processing licence applications.
All these booklets can be downloaded from the Internet.  Separately, as a one-stop service for
investors starting a new business or expanding an existing one, the HKSARG maintains a Business
Licence Information Database (http:// www.info.gov .hk/licence ) which captures information on
licensing requirements across the full spectrum of business operations.
Faithful Implementation of International Obligations
9. Apart from making efforts to publicise our investment policy, we are party to a number of
binding international agreements which contain transparency provisions on investment matters.  On
the multilateral front, HKC takes its WTO transparency obligations seriously.  We have been
providing information on our investment regime in a timely manner and in accordance with the
notification and disclosure requirements stipulated in various WTO Agreements , notably the
Agreement on Trade-Related Investment Measures (TRIMs) and the General Agreement on Trade in
Services (GATS).  We will continue to comply with the existing transparency obligations and any
additional ones that may emerge in the future.
10. On the bilateral front, the 14 Investment Promotion and Protection Agreements entered
into by the HKSARG invariably contain a transparency clause which obligates the contracting partiesto encourage exchanges of information on relevant investment matters.
Active Participation in International Fora to Advance Worldwide Investment Liberalisation
and Promotion
11. HKC has been participating in investment-related meetings, workshops and symposiums
under the auspices of various international organizations, sharing its domestic experience with
participants every now and then.  We regard intera ction with overseas investment authorities, and
investment experts in these fora as an avenue to enhance transparency of our investment regime.  As
far as the WTO is concerned, we have presented our approach at previous meetings of this Working
Group and during HKC's Trade Policy Review in November 1998.  Similar presentations were madein other international fora notably the APEC Investment Expert Group.  On top of these, we have been
feeding our experience in investment liberalisation to publications published by international
organisations.  The Guide to the Investment Regimes of the APEC Member Economies , which
contains a comprehensive description of HKC's investment regime, is a case in point.
III. STOCK-TAKING OF TRANSPARENCY OBLIGATIONS RELEVANT TO 
INVESTMENT IN THE INTERNATIONAL CONTEXT
WTO Transparency Obligations
12. Past rounds of multilateral trade negotiations have resulted in a number of investment-related
provisions scattered primarily in the GATS and the Agreement on TRIMs .  In the paragraphs to
follow, we take stock of the transparency provis ions in these two Agreements, which are commonly
considered as two WTO instruments most relevant to the interface between trade and investment.  We
have not ventured to list exhaustively all the transparency provisions embedded in existing WTO
Agreements.  Rather, the primary aim of our stocktaking is to shed light on the extent to which
transparency obligations which may be investment-related have found their way to the WTO
framework.  In gist, we find that the GATS and the TRIMs Agreement contribute to enhancing
transparency of investment regimes through five primary means as follows:-
(a) First, WTO Members are required to make publicly available information on
measures which are likely to be investment-related .  Articles III.1 & 2 of the
GATS  provide that Members " shall publish promptly .....  all relevant measures ofWT/WGTI/W/90
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general application which pertain to or affect the operation of this Agreement.
International agreements pertaining to or affecting trade in services to which a
Member is a signatory shall also be published. Where publication ..... is not
practicable, such information sh ould be made otherwise publicly  available."  Article
6.1 of the TRIMs Agreement , through making a reference to Article X of GATT
1994,  requires Members to publish promptly the relevant laws and regulations in
respect of TRIMs.
(b) Second, there are obligations relating to notification of measures introduced by
Members.  Article III.3 of the GATS states that Members "shall promptly and at
least annually inform the Council for Trade in Services of the introduction of any
new, or any changes to existing laws, regulations or administrative guidelines which
significantly affect trade in services covered by its specific commitments under thisAgreement."   Article 6.2 of the TRIMs Agreement  provides that Members "shall
notify the Secretariat of the publications in which TRIMs may be found, including
those applied by regional and local governments and authorities within their
territories."
(c) Third, Members are obligated to establish enquiry points and/or respond to
requests for information.   Article III.4 of the GATS prescribes that "Each Member
shall respond promptly to all requests by any other Member for specific information
on any of its measures of general application ........ Each Member shall also establish
one or more enquiry points to provide specific information to other Members, upon
request ......".  Article 6.3 of the TRIMs Agreement  states that Members "shall
accord sympathetic consideration to requests for information ...... on any matter
arising from this Agreement raised by another Member".
(d) Fourth, there are requirements on transparency of administrative procedures.
Article VI.3 of the GATS  provides that "Where authorization is required for the
supply of service on which a specific commitment has been made, the competentauthorities of a Member shall, within a reasonable period of time after the
submission of an application considered complete under domestic laws and
regulations, inform the applicant of the decision concerning the application.  At the
request of the applicant, the competent authorities of the Member shall provide,
without undue delay, information concerning the status of the application."
(e) Fifth, it is worth noting that since the conclusion of the Uruguay Round negotiations,
Members have attempted to expand the transparency provisions agreed in the
GATS in a sectoral context .  For instance, both the Reference Paper on Basic
Telecommunications (BTRP)  and the Provisional Disciplines on Domestic
Regulations in the Accountancy Sector contain certain provisions which require
Members to ensure that their service suppliers and relevant non-governmental entities
release information crucial to the industry.  Specifically, the BTRP states that "it is
ensured that a major service supplier will make publicly available either its
interconnection agreements or a reference interconnection offer" .  The Accountancy
Disciplines obligates, inter alia, that Members or their competent authorities provide
"information describing, where applicable, the activities and professional titles which
are regulated or which must comply with specific technical standards;....requirements and procedures to obtain, renew or retain any licences and professional
qualifications;.... the rationale behind the measures".WT/WGTI/W/90
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13. Notwithstanding the obligations enumerated above, there are provisions in the GATS and the
TRIMs Agreement which exempt Members from providing confidential information, the disclosure of
which would impede law enforcement, or otherwise be contrary to the public interest, or which would
prejudice legitimate commercial interests of particular enterprises, public or private.  These
exemption provisions  are contained in Article III bis of the GATS , and Article 6.3 of the TRIMs
Agreement .
14. The above-quoted WTO provisions define the legal requirements on transparency to be met
by Members.  Separately, Members may, on a voluntary basis, make use of various WTO channels to
achieve transparency over and above the minimum requirements.  For example, individual economies
may of their own accord deepen public understanding of their investment regimes through written or
oral contributions to this Working Group, the Trade Policy Review mechanism and ad-hoc
seminars/workshops on investment policy organised by the WTO.
Transparency Obligations in Other In ternational Investment Instruments
15. It is worth noting that international organizations other than the WTO have been working on a
number of plurilateral or multilateral instruments with a view to promoting, inter alia, a more
transparent investment environment worldwide.  For example, the APEC Non-Binding Investment
Principles  encourage Members to " make all laws, regulations, administrative guidelines and policies
pertaining to investment in their economies publicly available in a prompt, transparent and readily
accessible manner".   Also, Article 4 of the draft OECD Multilateral Agreement on Investment
provided that each contracting party "shall promptly publish or otherwise make publicly available its
laws, regulations, procedures, administrative rulings , judicial decisions as well as international
agreements which may affect the operation of this Agreement ...... [and] shall promptly respond to
specific questions from ..... other Contracting Parties" .  Another pertinent observation is that
transparency provisions are commonly found in bilateral and regional investment treaties.  In sum, the
transparency commitments or obligations enshrined in the existing web of non-WTO investment
instruments have added up to another significant driving force for advancing world investmentliberalization.
IV. POSSIBLE POINTERS FOR FURTHER WORK BY THE WORKING GROUP
16. The above stocktaking broadly reflects what the WTO has done thus far in precipitating a
more transparent investment environment worldwide.  As HKC sees it, the transparency provisions set
out in paragraphs 12 and 13 serve as a reference point for further collective actions which Members
may consider undertaking down the road.  Without prejudice to this Working Group's decision on
how best to pursue more transparency in the field of investment policies, HKC considers it useful tofloat, on the basis of our findings in Section III, a number of policy questions pertaining to these
important issues for reflection and discussion by Members -
(a) At present, a governmental investment measure is subject to a WTO transparency
requirement to the extent that it also happens to be a measure within the scope of an
area regulated by existing WTO Agreements.  This raises the question of whetherWTO transparency should be extended to investment measures not yet disciplined by
WTO rules such as investment incentives and technology transfer requirements?  In
other words, what should be the optimal scope of investment policies, measures,
practices, laws and regulations to whic h WTO transparency rules should apply?
(b) A related question is at what level of governments WTO transparency
requirements should apply. Theoretically, all levels of governments (i.e. national,
state or provincial, and local) should be covered because if any level of government is
exempted from transparency requirements, there is likely to be proliferation of non-WT/WGTI/W/90
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transparent government practices at the exempted level to the detriment of global
economic efficiency.  The question then arises as to how the balance between
political reality and optimal outcome should be struck- in the short term and in the
long run?
(c) Existing transparency obligations in the GATS and the TRIMs Agreement come into
play only after a governmental investment measure has been adopted formally.  But
what about transparency during evolution of new or amended investment
measures?   Should there be requirements for Members to provide an opportunity for
investors to provide comments before adoption of the new or amended measure?  If
so, what kind of prior consultation requirement (e.g. pre-adoption notifications to the
WTO, public comment procedures implemented domestically, etc.) is most desirable?
(d) Is it desirable and practicable to go for more procedural transparency?  At
present, the only relevant provision is Ar ticle VI.3 of the GATS (see paragraph 12(d))
which requires disclosure of information regarding the status of applications relating
to service provision and the decision of concerned authorities.  To what extent do
such requirements measure up to investors' expectations?  Should the WTO go a step
further to require disclosure of day-to-day procedures or steps adopted by investmentauthorities, considerations behind decisions made by such authorities (e.g. reasons for
denial of FDI application), procedures for re view of investment authorities' decisions,
etc?
(e) Do business realities of the new economy  underline the need for development of
innovative means to promote transparency?  To what extent do presently available
means to pursue transparency (e.g. WTO notifications, local publication/gazettal, and
establishment of enquiry points) meet the needs of investors in a technology-driven
globalised economy?  In pursuit of more transparency, how should the WTO
capitalise on the opportunities brought about by the fast diffusion of Internet
technologies?
(f) should there be exemptions for new tran sparency obligations to be introduced
down the road?   If so, on what grounds should exemptions be granted?  Separately,
is there any merit to review the exemption provisions in the GATS and the
TRIMs Agreement  as spelt out in paragraph 13?  Is there any evidence pointing to
possible abuse of these provisions?  If so, should the existing exemptions be
accompanied by certain disclosure requirements (e.g. need to elucidate the reasons for
rejecting a request for information) to reduce the incidence of abuse?
(g) How would the benefits of introducing ne w WTO measures to promote transparency
compare with their costs, particularly those referred to in paras. 16(c) and (d)?
Bearing in mind the difficulties experienced by developing economies in
implementing existing WTO notification requirements, how should a balance be
struck between pursuing more transparency and avoiding imposition of
burdensome obligations?   How far will transitional arrangements, special and
differential treatment and technical assistance initiatives be able to address
developing Members' concerns?WT/WGTI/W/90
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17. HKC believes the policy questions above may serve as useful pointers for future work by this
Working Group.  It will be for Members to find answers to these questions collectively after thorough
consideration of the issues concerned.  We suggest this Working Group to carry out more exploratory
work on this important subject with a view to identifying the possible orientation of future collective
actions by WTO Members.
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