Communication from the Commission to the Council and the European Parliament - The European Union and Macau: beyond 2000
Date: 1999-11-12
Institutions: European Commission
Subjects: EU relations, Macao, cooperation policy, economic relations, trade agreement

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  12.11.1999 

COM(1999) 484 final 

COMMUNICATION FROM THE COMMISSION 
TO THE COUNCIL AND THE EUROPEAN  PARLIAMENT 

THE EUROPEAN UNION AND MACAU: 
BEYOND 2000 

T HE  EUROPEAN  UNION  AND MACAU:  BEYOND  2000 

Table of contents 

1:  Introduction 

2: The  basis  of EU-Macau  relations 

2.1 Rights, liberties and values 

2.2 A shared legal  system 

2.3 Sound economic relations 

2.4 A promising economy with good links to the mainland 

3: Furthering  EU-Macau  relations 

3.1 Making a success of "one country, two systems" 

3.2  Strengthening economic  relations 

3.3 Promoting multilateral trade 

3.4 Supporting Macau's international  status 

3.5 Macau as a regional hub for training and cultural  exchange 

4:  Conclusions 

1: 

Introduction 

On  20m  December  1999  Macau  will  revert  to  China  after  more  than  four  centuries 
under  Portuguese  administration.  The  EU,  as  one  of  Macau's  major  international 
partners,  has  a  key  role  to  play  in  contributing  to  a  smooth  handover  and  a  stable, 
prosperous  development  of  the  territory  thereafter.  The  links  that  exist  between 
Europe  and Macau -  a similar  legal  system, common  rights, liberties  and values, and 
vibrant trade and investment and in particular the extremely  solid relationship in terms 
of culture and civilisation- make Europe uniquely placed to fulfil  this role. 

The  key  to  Macau's  future  stability  lies  in  the  full  implementation  of  the  Sino-
Portuguese  Joint  Declaration,  which  guarantees  the  rights  and  freedoms  of  the 
Territory.  It  enshrines  the  concept  of  "one  country,  two  systems",  and  guarantees  a 
high  degree  of  autonomy  for  the Macau  SAR within  the People's  Republic  of  China. 
The  EU  will  use  all  the  instruments  at  its  disposal  -  political  dialogue,  trade, 
investment, cooperation and cultural relations -  to help underscore Macau's  autonomy 
within China and its particular way of life which the Joint Declaration  is committed to 
preserve. The EU believes this will  strengthen Macau and the mainland,  rooting them 
both  more  firmly  in  the  world  community.  It  will  also  boost  economic  and  social 
development  in Macau as a vital bridgehead  into neighbouring Chinese regions. 

In  June  1999,  the  European  Council  of  Cologne  stated  very  clearly  the  support  of 
Europe to Macau in following terms: 

"The  European  Council  looks  forward  to  the  transition  process  in  Macau  being 
concluded 
in  the  same  positive  atmosphere  which  has  hitherto  marked  it 
throughout.  It  is  confident  that  full  implementation  of  the  1987  Sino-Portuguese 
joint  declaration  will  ensure  a  harmonius  transfer  of  responsibilities  on  20 
December  1999 and  believes that  a high degree of autonomy  of the  future  Special 
Administrative  Region  and  continuity  of  Macau's  specific  social,  economic,  legal 
and  cultural  identity  will  provide  a  basis  for  its  stability  and  prosperity.  The 
European  Council  is  confident  that  existing  relations  and  ongoing  cooperation 
between 
further 
development  of the area." 

the  Union  and  Macau  will  improve,  thus  favouring 

the 

The basis of EU-Macau relations 

2.1:  Rights, liberties and values 

The  EU  and  Macau  share  similar  rights  and  values.  For  Macau,  these  have  been 
enshrined  in  the  Joint  Sino-Portuguese  Declaration  signed  by  both  Governments  in 
April  1987.  This  calls  for  the  creation  of  a  Special  Administrative  Region  in 
accordance  with  the  "one  country,  two  systems" principle  with  a  distinct  social  and 
economic system for  50 years beyond 20th December  1999. 

The  Joint  Declaration  states  that  the  SAR  of  Macau  will  enjoy  a  high  degree  of 
autonomy,  except  in  foreign  and  defence  affairs;  it  will  retain  executive,  legislative 
and  judicial  power.  The  Government  will  be  run  by  the  people  of  Macau,  its 
Legislative  Council  will make  laws, and the final judicial  Court  of Appeal  will  be  in 
Macau.  The  laws  currently  in  force  will  remain  basically  unchanged.  The  current 
social and economic systems will also remain unchanged, and so will the  life-style. 

The Joint Declaration  also states that:  "The Macau  SAR will guarantee, in accordance 
with the law, all the rights and freedoms  of those living in Macau, including  personal 
liberties,  the  freedom  of  expression,  press  freedom,  freedom  of  association  and  of 
movement,  the  right  to  strike  and  to  choose  a  profession,  freedom  of  academic 
research,  of  religion  and  belief,  freedom  of  communication  and  the  right  to  own 
private property." 

The  terms  of  the  Joint  Declaration  are  embodied  in  the  Basic  Law  -  or  mini-
constitution  - of the future  SAR, approved  by the Chinese National  People's  Congress 
in  1993. It will enter into force  on the day of the handover. 

Cultural  tolerance  and  freedom  of  religion  and  worship  feature  prominently  as  an 
integral part of Macau's identity. Western and Chinese traditions are jointly  preserved. 

All  of these rights, freedoms  and values must be  safeguarded.  Autonomy  and  respect 
for  freedom  and  fundamental  rights  are  inseparable  from  the  "one  country,  two 
systems"  concept,  and  the  EU  will  take  a  close  interest  in  monitoring  its  full 
implementation. 

European presence in the territory and strong personal ties between Europe and Macau 
are  also  some  of the  main  features  which  help to  make  Macau  a natural  springboard 
for the EU in the region. 

2.2:  A shared  legal system 

Macau's  legal  system  is  rooted  in  Europe's  own  continental  law  structure,  which 
recognises  the  primacy  of  the  law.  It  will  be  succeeded  upon  the  handover  by  a 
system, 
localised  after  consultations  with  China  in  the  Joint  Liaison  Group,  which 
directly  transposes  Macau's  law as it was under Portuguese  administration.  The  Joint 
Declaration  and Basic Law state that the laws in force  in Macau before  the transfer  to 
China will not change. 

Macau's  legal  system  also  recognises the primacy  of  international  law  over  domestic 
law.  In  case  of  conflict  the  rule  of  self-sufficient  treaty  will  prevail  over  the  rule  of 
domestic law. This also applies to international  conventions in force  in Macau but not 
in China itself. Local rules cannot limit or impede the implementation  of  international 
ones. 

The  Basic  Law  also  guarantees  the  SAR  a  high  degree  of  autonomy,  and 
independence  for  its  executive,  legislature  and  judiciary.  All  these  important 
principles  must be preserved  in the future  and will be strongly  supported  by the  EU. 

2.3:  Sound economic  relations 

Economic  relations  are  already  firmly  based  on  open  trade  and  investment.  This  is 
underpinned  by  the  EU-Macau  Trade  and  Cooperation  Agreement,  in  force  since 
1993. The EU is Macau's  second  largest trading partner,  and absorbs roughly  30% of 
its  total  annual  exports,  while  11%  of  Macau's  imports  came  from  the  EU  in  1998. 
Macau ran a trade surplus of US$ 447 million with the EU in 1998. 

The EU  is the third  biggest  investor  in Macau,  after  China  and  Hong  Kong.  Portugal 
is  by  far  the  most  active  EU  investor  in  Macau  (27  investing  firms),  followed  by 
France (5) and the United Kingdom (4). 

Macau  enjoys  several  cooperation  programmes  with  the  EU  in  key  areas  such  as 
business management, public administration, financial  services, tourism and  European 
studies. Macau is also eligible for the Asia Invest programme, providing EU  expertise 
and funding  to promote  investment. 

The  continuity  of  the  current  economic  system  is  also  fostered  by  the  renewal,  after 
consultations  in the Joint  Liaison  Group, of the most  important  franchise  contracts  in 
areas  of  public  service,  many  of  which  involve  the  participation  of  European 
companies. 

2.4:  A promising economy with good links to the mainland 

The per  capita income in Macau is around  17,000 Euros a year,  one of the highest  in 
Asia.  Macau  borders  Guangdong  province  and  is  close  to  Hong  Kong.  It  has 
developed  from  a manufacturing  economy  focused  on particular  sectors  like  textiles 
and toys into a service provider dominated by, but not limited to, tourism. It continues 
to develop its specialisation  in services, and acts as a bridgehead  for  foreign  investors 
looking to trade with China. 

China's  investment  in  Macau  is  considerable,  particularly  in  infrastructure,  tourism 
and  trade.  Macau  offers  China  a basis  for  manufacturing,  distribution  and  shipment 
for  export  and  re-export.  Macau  offers  foreign  investors  a familiar  legal  and  cultural 
environment in which to trade with the Chinese mainland. 

It  also  enjoys  political  stability,  a free  port,  low  taxation  and  fiscal  advantages,  low 
operating  costs,  a  large  supply  of housing  and  office  space,  modern  infrastructure,  a 
sophisticated  telecommunications  system,  a  sound  fiscal  and  monetary  system,  and 
well trained personnel, all of which give it a competitive lead over other economies in 
the region. 

3. 

Furthering  EU-Macau relations 

3.1:  Making a success of "one country, two systems" 

In  order  to  help  ensure  that  "one  country,  two  systems"  is  fully  implemented,  the 
European  Union  will  further  develop  and  reinforce  its  relations  with  Macau  in  areas 
which fall  within the responsibility of the SAR government. In these areas the EU will 
continue to deal directly with the Macanese authorities. 

The  European  Union  will  follow  closely  the  implementation  of  the  principles 
enshrined  in  the  Joint  Declaration  and  in  the  Basic  Law,  as  well  as  the  agreements 
reached  in  the  Joint  Liaison  Group.  It will  make  active  use  of  the  instruments  at  its 
disposal,  including  political  dialogue,  joint  actions,  common  positions  and  co 
operation.  The  Commission  intends  to  publish  an  annual  report  on  EU-Macau 
relations across the board, beginning in the year 2000. The issue of Macau will clearly 
figure  in the EU's political dialogue with China. 

All  interested  parties  -  China,  the  EU,  Portugal  and  Macau  - have  already  agreed  to 
extend  the  implementation  of the trade  and  co-operation  Agreement  between  the  EC 
and  Macau  beyond  the handover.  The Agreement  constitutes  a permanent  framework 
for  direct  dialogue  between  the  Macau  SAR and  the  European  Union.  The  structures 
embodied in the agreement,  such as the annual Joint Committee, will be maintained. 

The European Union reiterates the need for the principles of the Agreement to be  fully 
maintained  after  the handover,  including the provision that  "the implementation  of the 
present  agreement  is based  on respect for  the democratic principles  and human  rights 
that inspire the policy of the Community and Macau." 

In particular,  the EU strongly  supports the development  of democracy  in the territory. 
Macau's political  system, as enshrined  in the Basic Law, does not provide for  election 
by  universal  suffrage  of  all  members  of  the  Legislative  Assembly.  The  EU  believes 
that  it  would  ultimately  be  in  the  best  interest  of  Macau  and  of  all  China  that  the 
territory's democratic process be constantly  improved. 

The  successful  implementation  of  one  country  two  systems  requires  the  continued 
development of a well-trained and efficient  public administration. 

The EU is committed to the full  application of the provisions of the UN Covenants on 
Economic,  Social and Cultural Rights, and of the UN Covenant  on Civil  and  Political 
Rights  and  core  labour  standards  set  out  in the  relevant  ILO  conventions  in  Macau. 
The  EU  welcomes  the  fact  that  China  is  committed  to  reporting  regularly  on  the 
implementation of these Covenants in Macau. 

3.2:  Strengthening economic  relations 

The European Union reiterates the Trade and  Cooperation  Agreement's  key  objective 
of  intensifying  and  diversifying  trade  and  bilateral  economic  relations  with  Macau 
mainly  in  favour  of  the  services  sector  in  support  of  the  priorities  fixed  by  the 
Government of Macau. 

The  EU  is confident  that  trade  relations  will  continue  to  improve  after  the  handover. 
Macau is a separate customs territory  as provided  in the Basic Law and will  continue 
to be treated as such by the European Union in its trade relations. 

the  EU supports the creation by Macau of a Trade and Economic Office  accredited to 
the  European  Communities  as  a  means  of  ensuring  a  regular  dialogue  in  trade, 
economic and co-operation issues. 

The  European  Union  takes  note  of  the  economic  potential  that  Macau  offers  in  the 
field  of  services. The EU will  make  efforts  to  encourage  European  investment  in  the 
territory.  To  this  end  it  will  actively  use  the  instruments  currently  at  its  disposal, 
notably  Asia  Invest,  as  well  as  future  instruments.  Direct  dialogue  among  EU  and 
Macau private businessmen will also be promoted. 

Another  important  way  in which  the EU  can recognise  the  autonomy  of Macau  is to 
reaffirm  clearly  that,  for  the  purposes  of  the  common  visa  list,  Macau  should  be 
assessed  after  the  handover  as  it  is  now,  on  its  own  merits.  This  would  reflect  our 
confidence  in  the  arrangements  Macau  is  making  to  ensure  that  the  new  SAR  of 
Macau  passport  is  secure.  Freer  access  for  Macau  residents  into  European  countries 
would  certainly  help  to  reinforce  and  facilitate  economic  and  other  contacts,  and  to 
demonstrate European confidence  in the future  of Macau. It would be in the interest of 
both the EU and Macau. 

3.3:  Promoting  multilateral trade 

Macau,  as a founding  member  of the WTO, can convey  to  China the  advantages  of a 
membership  and provide  experience oh the way in which the rules of the world  trade 
system are applied. The EU encourages Macau actively to participate  in WTO sectoral 
agreements such as those applying to the telecoms and financial  services sectors. 

3.4 

Supporting  Macau's international status 

The  European  Union  will  support  Macau  in  preserving  its  way  of  life  as  it  is 
guaranteed in the Basic Law of the territory. This way of life comprises the continuity 
of a European presence and the reinforcement  of personal ties with Europe. 

The  European  Union  will  also  support  Macau  in  continuing  its  participation  in 
international organisations and fora as it corresponds to its international status. 

3.5:  Macau as a regional hub for training and cultural exchange 

The  European  Union  intends  to  support  Macau  as  a  regional  centre  for  training  and 
cultural  exchange, as well  as in law, tourism, public  administration,  management  and 
European  studies. The EU also encourages Macau to promote knowledge of Europe in 
Asia  and  vice-versa.  This  will  contribute  to  mutual  understanding  and  facilitate 
economic co-operation between the two continents. 

In  addition,  Macau  will  remain  eligible  for  regional  co-operation  projects  involving 
the  EU  and  Asia.  It  will  be  able  to  be  involved  in  bilateral  projects  with  China,  in 
particular  those  that  correspond  to  its  own  particular  characteristics  such  as 
development  of human resources, education  and training, and university  co-operation 
schemes. 

An  EC-Macau  cooperation  officer  will  be  located  in  Macau  in  order  to  assist  the 
coordination  of bilateral  cooperation  for  a limited  period  and under the  responsibility 
of the European Commission Office  accredited to Hong Kong and Macau 

4: 

Conclusions 

The  European  Union  considers  that  Macau  has  a vital  role  as  a bridge  between  Asia 
and Europe, notably in the following  areas: 

•  Democracy, human rights, individual freedoms  and related issues 
•  Economic and trade issues, including WTO 
•  Cultural issues, as a regional hub for training and exchange. 

The  EU  looks  forward  to  maintaining  and  developing  its  friendly  relations  with 
Macau  before  and  after  the  transfer  of  sovereignty.  The  EU  believes  it  has  an 
important  and  distinct  role  to  play  in  helping  Macau  fully  to  implement  the  Basic 
Law,  thereby  securing  a  prosperous  and  stable  future  for  the  territory  after  the 
handover. With this in mind, the EU will: 

•  Continue to deal directly with Macau in areas stipulated by the Basic Law. 

•  Closely monitor and promote the implementation of "one country, two systems" in 
order  fully  to  support  Macau's political, economic  and cultural  autonomy,  and the 
preservation  of  the  rights  and  freedoms  set  out  in  the  Sino-Portuguese  Joint 
Declaration. 

•  Ensure  full  implementation  of  the  bilateral  EC-Macau  trade  and  co-operation 

Agreement as an instrument through which to reinforce  bilateral relations. 

•  Deal  directly  with  Macau  as  an  international  partner,  and  maintain  regular  and 

close contacts. 

•  Facilitate  European  investment  in  the  territory,  in  particular  in  the  field  of 
services,  by  using  existing  or  future  Community  instruments,  and  by  promoting 
direct dialogue between business representatives. 

•  Welcome  the  accreditation  to  the  European  Communities  of  a  Trade  and 
Economic  Office  of  Macau  as  a  means  of  ensuring  a  regular  dialogue  in  trade, 
economic and co-operation issues. 

•  Encourage  Macau to  impart  its experience  of  WTO  membership  to  China  as  and 

when the latter accedes to the WTO. 

•  Follow the implementation  of those international conventions of which Macau is a 

member and encourage it to broaden its participation in other conventions. 

Help  reinforce  Macau's  regional  role  in  the  field  of  human  resources  through 
training,  information  activities  and  exchange,  in  particular  involving  media, 
cultural  exchanges,  civil  society  entities  and  higher  education  institutions.  This 
aim  should  be  fulfilled  through  actions  involving  directly  the  authorities  of  the 
SAR and the EU and through the inclusion of the SAR in regional projects. 

ISSN  0254-1475 

COM( 1999) 484  final 

DOCUMENTS 

EN 

11  02  10  06 

Catalogue number: CB-CO-99-481-EN-C 

Office  for  Official  Publications of the European  Communities 

L-2985 Luxembourg 

[O