ࡱ> \^[q Cbjbjt+t+ 4`AA0 ]R&<bbbvvvv8<vu.,"":\\\\$\0:.<.<.<.<.<.<.$/1`.b \\  `.bb\\"  b\b\:.vvbbbb :.(bb:.\$62vv.*trade policy regime: framework and objectives Introduction Hong Kong, China's trade policy regime has remained largely unchanged since its previous Trade Policy Review. The former Trade and Industry Bureau and its subsidiary Departments were reorganized in 2000 to assume expanded responsibilities, and new agencies under the Bureau were established. The Basic Law remains the principal constitutional document governing the Hong Kong Special Administrative Region (HKSAR) of the People's Republic of China. The Law stipulates the principle of "one country, two systems"; that is, while being a local administrative region, which comes directly under the Central People's Government of the People's Republic of China, the HKSAR enjoys a high degree of autonomy except in foreign affairs and defence, and has been authorized to conduct relevant external affairs, including foreign trade. The previous market-based system and way of life are to be maintained for at least 50 years after 1997, and the HKSAR's courts are endowed with independent judicial power, including that of final adjudication. Institutional Setting The Government of the HKSAR is headed by the Chief Executive, who is appointed by the Central People's Government following selection by an Election Committee. The Chief Executive is formally empowered to conduct external and other affairs on behalf of the HKSAR Government, as authorized by the Central People's Government; this includes the power to conclude and implement multilateral, regional, and bilateral trade agreements with foreign countries and regions and relevant international organizations. The Chief Executive is accountable to the Central People's Government and the HKSAR in accordance with the provisions of the Basic Law. The Chief Executive is advised by an Executive Council in policy-making. The Council currently consists of 19 Members. The Legislative Council (LegCo) is the HKSAR's legislature. It consists of 60 elected members. The current term of office of the LegCo is four years. The President of the LegCo is elected by, and from among, its members. Members of the LegCo may introduce, individually or jointly, Bills that do not relate to public expenditure or to the political structure or the operation of the Government. All Bills relating to government policies need the written consent of the Chief Executive before being introduced into the LegCo. Bills passed by the LegCo become laws (ordinances) only after being signed and promulgated by the Chief Executive. If the Chief Executive considers that a Bill passed by the LegCo is not compatible with the overall interests of the HKSAR, it may be returned to the LegCo within three months for reconsideration. The primary rules governing Hong Kong's trade in goods are laid down in the Import and Export Ordinance and its subsidiary legislation, together with other relevant ordinances applicable to the specific commodity items. Trade Policy Formulation and Implementation Under the Basic Law, the HKSAR is a separate customs territory; it uses the name "HongKong, China" and participate in the relevant international organizations and international trade agreements, such as the ϲʹ Agreements. The Basic Law stipulates that the HKSAR may, on its own, maintain and develop relations and conclude and implement agreements with foreign States and regions and relevant international organizations in the appropriate fields. The Basic Law also stipulates that the HKSAR shall maintain the status of a free port, pursue a policy of free trade and safeguard the free movement of goods, intangible assets, and capital, and that it may issue its own certificates of origin for products in accordance with prevailing rules of origin. Government bureaux and departments The three most senior officials in the executive branch of the Government, under the Chief Executive, are the Chief Secretary for Administration, the Financial Secretary, and the Secretary of Justice. On 1 July 2002, a new system to appoint principal officials was introduced. Under this system, these three officials and all the Policy Secretaries are no longer civil servants. They are nominated by the Chief Executive and appointed by the Central People's Government; their term in office may not exceed that of the Chief Executive. These principal officials report directly to the Chief Executive; they are also appointed to the Executive Council, and are assisted by permanent secretaries (who are civil servants) within the respective bureau. At the same time, a reorganization cut the number of policy bureaux from 16 to 11. Accordingly, the Commerce and Industry Bureau, the Trade and Industry Bureau until it was reorganized and renamed on 1 July 2000, was merged with the Information Technology and Broadcasting Bureau to become the new Commerce, Industry and Technology Bureau. Under the Commerce, Industry and Technology Bureau, the Trade and Industry Department is responsible for HKSAR's commercial relations with its trading partners, implementation of trade policies and agreements, participation in international trade fora, the conduct of import and export licensing and origin certification, and providing general support services for the industrial sector and small and medium-sized enterprises. Within the Bureau, there is an Intellectual Property Department for matters relating to IP protection, and the Customs and Excise Department covers trade-related enforcement activities in intellectual property rights. A number of statutory bodies are involved in promoting trade and industry at home and abroad, including the Hong Kong Trade Development Council (HKTDC), the Hong Kong Export Credit Insurance Corporation (ECIC), the Hong Kong Productivity Council, and the Hong Kong Science and Technology Parks Corporation (HKSTPC). Their boards are normally composed of government officials and representatives of various private sectors, including manufacturing and services industries, as well as academics and professionals. Advisory and review bodies Various bodies exist to advise the HKSAR Government in specific areas, including economic matters, education, labour, housing, social welfare, transport, consumer rights, and the operation of securities and futures markets. The main advisory bodies within the purview of the Commerce and Industry and Technology Bureau include the Trade and Industry Advisory Board, Textiles Advisory Board, Rice Advisory Committee, and Small and Medium Enterprises Committee. The Consumer Council is a government-financed autonomous body that prepares policy submissions on a wide range of consumer-related issues. The authorities note that the HKSAR Government consults various chambers of commerce in regard to commerce, trade, and industry, whenever necessary. Trade Policy Objectives and Arrangements Since its previous Trade Policy Review, there have been no changes in Hong Kong, China's broad trade policy objectives, which are: to promote a free, open, and stable multilateral trading system; to safeguard its rights and fulfil its obligations under multilateral, regional, and bilateral trade and trade-related agreements and arrangements; and to secure, maintain, and improve access for its exports to foreign markets. Multilateral agreements Hong Kong, China is an original Member of the ϲʹ; it is also a party to the ϲʹ Agreement on Government Procurement (GPA). Hong Kong, China participates in the ϲʹ Working Groups on Transparency in Government Procurement, Interaction between Trade and Competition Policy, and the Relationship between Trade and Investment. In the context of implementing its ϲʹ commitments and in support of multilateral disciplines, Hong Kong, China has made notifications under a number of ϲʹ Agreements (Table II.1). Under the ϲʹ Dispute Settlement Understanding, Hong Kong, China has participated in various panel processes as a third party, involving cases against the United States, Turkey, and Australia. Table II.1 Selected notifications by Hong Kong, China under ϲʹ Agreements, as at October 2002 AgreementDocument reference of most recent notificationRequirement/ContentsAgriculture Articles 10 and 18.2  G/AG/N/HKG/12, 8 February 2002  Export subsidies (outlays and quantities)Article 18.2G/AG/N/HKG/13, 8 February 2002Domestic supportImport Licencing Procedures Article 7.3 G/LIC/N/3/HKG/5, 2 November 2001 Questionnaire; rules and information concerning import licensing proceduresRules of Origin Art. 5 and paragraph 4 of Annex II ad hoc G/RO/N/37, 3 June 2002 Preferential and non-preferentials rules of originSubsidies and Countervailing Measures Art. 25.1-GATT 1994 Art. XVI:1 G/SCM/N/71/HKG, 25 April 2001 Subsidies programmesArt.25.11-semi-annualG/SCM/N/75/Add.1, 17 October 2001Countervailing actions taken Technical Barriers to Trade Art. 10.6 G/TBT/N/HKG/12/Corr.1, 16 September 2002 Technical regulations, standards, and conformity assessment proceduresApplication of Sanitary and Phytosanitary Measures Art. 7, Annex B and Annex B, 6 G/SPS/N/HKG/19, 15 May 2002 G/SPS/N/HKG/18, 29 January 2002 Changes in sanitary and phytosanitary measures and information on measures applied, including emergency measuresTRIPS Art.63.2 P/N/1/HKG/series, 20 March 2000 Laws and regulations.Article 67IP/N/7/REV.2/Add.5, 19 June 2001Contact point for technical cooperationState Trading GATT 1994 Art. XVII: 4(a) and Par.1 of the Understanding on the Interpretation of Art. XVII. G/STR/N/8/HKG, 26 June 2002 Activities of state trading enterprises.Source: ϲʹ Secretariat. The authorities indicated that Hong Kong, China's priorities in the Doha Development Agenda include market access enhancement, rules-related issues in services trade, and non-agricultural tariffs. Regional cooperation initiatives While the HKSAR does not belong to any customs unions, free-trade areas or other preferential regional agreements, it does promote close regional cooperation in the Asia and Pacific region and is a leading member of the Asia-Pacific Economic Cooperation forum (APEC). In this context, the authorities state that the HKSAR has, for example, contributed to the formulation and implementation of the APEC Strategic Plan on Capacity Building, since 2000, with a view to assisting developing APEC members in building their capacity to implement ϲʹ Agreements. Hong Kong, China has been a strong advocate of the primacy of multilateralism and is not party to any free-trade agreements (FTAs) with any of its trading partners to date. However, the Government reviewed its policy stance in mid-2000 and concluded that, in order to safeguard the HKSAR's economic interests, it should adopt a more open-minded approach in pursuing FTAs with its trading partners, while upholding its commitment to the primacy of the multilateral trading system. Accordingly, Hong Kong, China started its first FTA negotiation with New Zealand in May 2001. Hong Kong, China also proposed, in late 2001, to establish a free-trade area between Mainland China and the HKSAR. Bilateral agreements The HKSAR is a party to a number of bilateral agreements with various countries. These include investment promotion and protection agreements, avoidance of double-taxation agreements, and air service agreements. Certain exports from Hong Kong, China enjoy preferential treatment in Australia, Canada, and Norway under GSP schemes. The authorities estimate that, in 2001, Hong Kong, China exported GSP-eligible goods worth HK$14.3 million to Canada, accounting for 0.46% of its domestic exports to Canada, and HK$3.4 million to Norway, accounting for 4% of its domestic exports to Norway. Foreign Investment Regime All businesses in the HKSAR must obtain a Business Registration Certificate from the Inland Revenue Department (IRD) within one month of the commencement of business. Foreign investors in the HKSAR may use all available forms of business entities; private limited companies and branches of foreign companies are the most common. There is no capitalization requirement for a private company. There are no restrictions on foreign exchange transactions, capital movement or repatriation of funds, nor special approval or notification requirements for foreign investments in the HKSAR. The authorities maintain that there is no sector/country-specific incentive on inward/outward FDI.  The power of interpretation of the Basic Law is vested in the Standing Committee of the National People's Congress (Basic Law Article 158).  The term of office of the Chief Executive is five years, with a maximum of two terms. The Election Committee responsible for electing the second-term Chief Executive is composed of representatives from four sectors each with 200 members: industrial, commercial, and financial subsectors; the professions; labour groups, social and religious associations; and members of the LegCo, representatives of district-based organizations, HongKong deputies to the National People's Congress of the People's Republic of China, and Hong Kong members of the National Committee of the Chinese People's Political Consultative Conference. The members of the Election Committee were returned by elections, with the exception of the ex-officio members (LegCo members and Hong Kong deputies to the NPC), and members from the religious subsector, who were returned by nomination.  Members of the Executive Council are appointed from among principal officials of the executive authorities, Legislative Council members, and public figures; their appointment or removal is decided by the Chief Executive, who chairs the meetings of the Executive Council.  The composition of the LegCo is 30 members returned by functional constituencies, six members returned by the Election Committee, and 24 members returned by geographical constituencies through direct elections.  Article 74 of the Basic Law. A LegCo member may introduce "private bills", which do not relate to government policies; a private bill provides primarily for the particular interest or benefit of an individual, association, or corporation rather than the interest or benefit of the public. Since the 1998-99 legislative session, a total of nine member's bills have been introduced into the LegCo, of which six were government policies.  See Articles 49, 50, and 51 of the Basic Law for details.  Including the economic, trade, financial and monetary, shipping, communications, tourism, cultural, and sports.  The Trade Department and the Industry Department were combined on 1 July 2000, to form the Trade and Industry Department. The reorganization also entailed, inter alia, the establishment of: the Innovation and Technology Commission, within the Bureau, to deal with innovation and technology policy development, coordination, and implementation; and a department named Invest Hong Kong, which is in charge of the HKSAR's policy to attract inward foreign direct investment.  Membership lists of these boards are available online at: http://www.tid.gov.hk/english/aboutus/ advcommittee/tiab.html/; /textab.html/; /rac.html/; and http://www.sme.gcn.gov.hk/smeop/english/comm.cfm.  The Council comprises a Chairman, a Vice-Chairman, and not more than 20 other members; they are all appointed by the Chief Executive.  ϲʹ document series: WT/DS234/14; 217/6; 152/12; 58/18; 34/3; and 21/6.  Hong Kong, China has avoidance of double taxation agreements with the Netherlands, the United Kingdom, and the United States (Department of Justice, 2002).  The authorities note that the figures were obtained from the relevant certificates of origin for GSP claims issued by the HKSAR Government, the five government approved certification organizations; they represent only goods eligible for GSP treatment, but not the amount of goods that have actually claimed GSP benefits upon entry into the donor countries. WT/TPR/S/109 Trade Policy Review Page  PAGE 14 Hong Kong, China WT/TPR/S/109 Page  PAGE 13 Page II. 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