Report from the Commission to the Council and the European Parliament Hong Kong Special Administrative Region: Annual Report 2003 {SEC(2004) 791}
Date: 2004-06-28
Institutions: European Commission
Subjects: EU relations, Hong Kong, activity report, democratisation

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 28.6.2004 
COM(2004) 414 final 

REPORT FROM THE COMMISSION 
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 

Hong Kong Special Administrative Region: Annual Report 2003 

{SEC(2004) 791} 

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REPORT FROM THE COMMISSION 
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 

Hong Kong Special Administrative Region: Annual Report 2003 

Last  year  was  especially  eventful  for  the  Hong  Kong  SAR.  Hong  Kong  was  affected  by  its 
worse  epidemic  in  decades,  an  outbreak  of  Severe  Acute  Respiratory  Syndrome  (SARS), 
which caused many economic losses and revealed some weaknesses in the health system. On 
the political side, after an unprecedented protest march that gathered half a million persons on 
July 1 and the resignation of the Chairman of the Liberal Party from the Executive Council, 
the  Hong  Kong  Government  withdrew  its  controversial  ‘Article  23’  draft  bill  on  national 
security on 5 September.  

The  EU,  which  issued  three  statements  expressing  concern  over  the  proposed  legislation  on 
15 April, 7 and 16 July 2003, and called for early progress towards universal suffrage in the 
latter statement welcomed the withdrawal of the bill. 

While  the  October  District  elections  reflected  public  dissatisfaction  with  the  government's 
handling  of  the  national  security  bill  and  the  SARS  epidemic,  the  political  debate  rapidly 
shifted  to  democratisation  of  the  Hong  Kong  political  system,  as  a  way  to  improve 
governance,  and  has  since  come  to  the  forefront.  In  this  context,  the  SAR  Government  had 
previously announced a timetable for the launching of a public consultation on constitutional 
development.  The  designation  of  a  Task  Force  on  constitutional  development  by  the  Chief 
Executive  in  January  2004  and  the  starting  of  a  consultation  process  with  the  Central 
authorities of Beijing have however superseded these plans1.  

At  the  same  time,  Hong  Kong  pursued  further  economic  integration  with  Mainland  China, 
notably  through  the  signing  of  CEPA,  a  free-trade  arrangement  that  will  ensure  access  for 
Hong  Kong  products  and  services  to  the  Mainland  market  ahead  of  China's  WTO 
implementation  timetable.  The  economy  rapidly  recovered  from  the  consequences  of  the 
SARS outbreak and resumed encouraging growth in the second half of the year.  

EU-Hong Kong relations were marked by steady development and friendliness. Total bilateral 
trade  slightly  decreased  to  €  27.3  billion,  but  the  EU  remained  Hong  Kong’s  third  largest 
trading  partner  and  foreign  investor.  The  EC-Hong  Kong  readmission  agreement  came  into 
force in March 2004 and perspectives for further contacts in the field for migration bode well 
of the development of our cooperation. 

The European Commission welcomes the passage in 2003 of new legislation in mergers and 
acquisitions  in  the  telecommunications  sector,  but  remains  concerned  about  the  lack  of 
general competition legislation in the SAR. Efforts in combating cross-boundary intellectual 
property rights violations also need to be intensified. 

The Commission welcomes the renewed dynamism of Hong Kong’s people and its economy 
and is encouraged by the greater involvement of citizens in political life, something that was 
facilitated  by  the  various  civil  movements  which  were  active  throughout  2003.  The  EU 

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Further developments in 2004 will obviously be covered in the Annual report for that year. 

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remains fully in support of the preservation of the specific status recognised for Hong Kong 
SAR  under  the  ‘One  country,  two  systems”  principle,  and  the  respect  for  human  rights  and 
freedoms enjoyed by Hong Kong citizens, as enshrined in the Basic Law. It is therefore to be 
hoped that early progress will be made towards the Basic Law’s ultimate aim of election of 
the  Chief  Executive  and  Legislative  Council  by  universal  suffrage,  bearing  in  mind  the 
aspirations of Hong Kong people for further democratisation, as shown by the events of 2003. 

Full  details  of  the  Commission  analysis  is  given  in  the  Commission  staff  working  paper 
SEC(2004) 791. 

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