8 December 1998
POLICY REVIEW BODY: REVIEW OF HONG KONG, CHINA
TPRB'S EVALUATION Back to top
The Trade Policy Review Body of the
World Trade Organization (WTO) concluded its third review of the trade policies of Hong
Kong, China on 7 and 8 December 1998. The text of the Chairperson's concluding remarks is
attached as a summary of the salient points which emerged during the discussion. The
review enables the TPRB to conduct a collective examination of the full range of trade
policies and practices of each WTO member country at regular periodic intervals to monitor
significant trends and developments which may have an impact on the global trading system.
The review is based on two reports
which are prepared respectively by the WTO Secretariat and the government under review and
which cover all aspects of the country's trade policies, including its domestic laws and
regulations, the institutional framework, bilateral, regional and other preferential
agreements, the wider economic needs and the external environment. A record of the
discussion and the Chairperson's summing up together with the reports will be published in
due course as the complete trade policy review of Hong Kong, China and will be available
from the WTO Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
Since December 1989, the following
reports have been completed: Argentina (1992), Australia (1989, 1994 & 1998), Austria (1992), Bangladesh
(1992), Benin (1997), Bolivia (1993), Botswana (1998), Brazil (1992 & 1996), Burkina
Faso (1998), Cameroon (1995), Canada (1990, 1992, 1994 & 1996), Chile (1991 &
1997), Colombia (1990 & 1996), Costa Rica (1995), C˘te d'Ivoire (1995), Cyprus
(1997), the Czech Republic (1996), the Dominican Republic (1996), Egypt (1992), El
Salvador (1996), the European Communities (1991, 1993, 1995 & 1997), Fiji (1997),
Finland (1992), Ghana (1992), Hong Kong (1990, 1994 & 1998), Hungary (1991 &
1998), Iceland (1994), India (1993 & 1998), Indonesia (1991, 1994 & 1998), Israel
(1994), Jamaica (1998), Japan (1990, 1992, 1995 & 1998), Kenya (1993), Korea, Rep. of
(1992 & 1996), Lesotho (1998), Macau (1994), Malaysia (1993 & 1997), Mali (1998),
Mauritius (1995), Mexico (1993 & 1997), Morocco (1989 & 1996), New Zealand (1990
& 1996), Namibia (1998), Nigeria (1991 & 1998), Norway (1991 & 1996), Pakistan
(1995), Paraguay (1997), Peru (1994), the Philippines (1993), Poland (1993), Romania
(1992), Senegal (1994), Singapore (1992 & 1996), Slovak Republic (1995), the Solomon
Islands (1998), South Africa (1993 & 1998), Sri Lanka (1995), Swaziland (1998), Sweden
(1990 & 1994), Switzerland (1991 & 1996), Thailand (1991 & 1995), Trinidad and
Tobago (1998), Tunisia (1994), Turkey (1994 & 1998), the United States (1989, 1992,
1994 & 1996), Uganda (1995), Uruguay (1992 & 1998), Venezuela (1996), Zambia
(1996) and Zimbabwe (1994).
TRADE POLICY REVIEW BODY:
REVIEW OF HONG KONG, CHINA
CONCLUDING REMARKS BY THE CHAIRPERSON Back
The third Trade Policy Review of Hong
Kong, China was conducted by the TPR Body on 7 and 8 December 1998. These remarks,
prepared on my own responsibility, are intended to summarize the main points of the
discussion; they are not intended as a full report. Further details of the discussion will
be fully reflected in the minutes.
The discussion developed under three
main themes: (i) economic environment; (ii) trade policies and measures; and (iii)
Members congratulated Hong Kong,
China on both the smooth transfer of sovereignty and on its reaction to the Asian crisis.
Notwithstanding these two major developments, the present economic regime could be
characterized as "business as usual". Indeed, the Hong Kong, China economy
remained among the most open of WTO Members, a feature which had contributed to Hong Kong,
China having one of the highest standards of living in the world. Despite the current
economic difficulties, notably the contraction of GDP and rising unemployment, Hong Kong
had maintained its traditional openness to both trade and investment and had not taken any
measures directly affecting imports or foreign direct investment, thereby demonstrating
its continuing commitment to the primacy of the WTO, to which Hong Kong, China had
contributed significant leadership.
Members raised a number of questions
particularly with respect to the special role and status of the Hong Kong Special
Administrative Region (HKSAR) in China; the impact of the Asian financial crisis on Hong
Kong, China's macroeconomic performance, its exchange rate system and fiscal policy;
recent stock market intervention; and the change in the economic and trade structure of
Hong Kong, China.
In reply, the representative of Hong
Kong, China thanked Members for their support for Hong Kong, China's policies and for
their confirmation that Hong Kong, China continued to conduct "business as
usual". She added that under the Basic Law the HKSAR had a firm, guaranteed,
framework to pursue free and open economic policies on all fronts.
On Hong Kong, China's macroeconomic
performance, she stated her conviction that the economy's fundamentals were sound and that
Hong Kong, China was well placed to react once local sentiment and external circumstances,
on which Hong Kong, China was heavily dependent, improved. The linked exchange rate system
had served the economy well and its abandonment was not an appropriate response to the
existing difficulties; the link remained essential both to Hong Kong, China's role as a
major international financial centre and to its efforts to promote international trade,
particularly given the external orientation of the economy. In addition, with zero
government debt and high fiscal reserves, the Government maintained a prudent fiscal
stance, which would contribute to a rapid recovery.
On Members' questions about the
Government's recent incursion in the stock market, the representative assured the meeting
that this did not represent a departure from Hong Kong, China's long established policy of
free trade and an open economy; intervention had been exceptional, probably unique,
intended to maintain the stability and integrity of Hong Kong, China's financial system.
The Government did not believe that this intervention conferred any advantage on those
companies whose shares were purchased and the shareholding would be sold in an orderly
manner. On the decline of manufacturing, the representative noted that this was more
apparent than real and was, in any event, not something to try to reverse, but rather
should act as a spur to ensure that the needed skills would be available to meet the
challenges posed by a changing environment.
Trade policies and measures
Members commended Hong Kong, China
on its continued trade-liberalization effort and on the transparency of its trade and
investment regime, which remained one of the most attractive in the world. In particular,
Members welcomed Hong Kong, China's accession to the WTO Agreement on Government
Procurement and its early completion of the necessary legislation implementing the TRIPS
Agreement. Members also expressed their appreciation of Hong Kong, China's industrial
development policy, which involved "minimum intervention and maximum support".
Members raised a number of questions,
particularly with respect to: the prospects of further binding Hong Kong, China's tariff
lines, less than half of which were currently bound; anti-dumping; a bid challenge system
in government procurement practices; the maintenance of the non-interventionist industrial
policy; the continuing problem of forged trade marks and copyright piracy, notwithstanding
strengthened legislation on intellectual property; and the adequacy of Hong Kong, China's
In reply, the representative stated
that Hong Kong, China saw no need to accelerate its schedule to bind tariffs, particularly
as it had already taken significant action in this regard, for example, under the ITA.
Hong Kong, China had no enabling legislation on anti-dumping, countervailing duties and
safeguards because it did not believe in protecting its domestic industries through such
measures. Hong Kong, China's accession to the Agreement on Government Procurement had not
changed the Government's procurement policy, which was open and non-discriminatory. Hong
Kong, China's support programmes were aimed at providing the necessary infrastructure to
move into areas that require innovation and skills, but not to pick special sectors. Hong
Kong, China had effectively implemented the provisions of the TRIPS Agreement and stronger
enforcement actions had been taken. Hong Kong, China was committed to promoting
competition and economic efficiency through a comprehensive, transparent and overarching
competition policy; the introduction of a general competition law was not necessary given
Hong Kong, China's small, externally-oriented, highly competitive economy.
Members congratulated Hong Kong,
China on it's market-driven regime for production and trade in goods and services. In
addition, they complimented Hong Kong, China on its sound regulatory framework, which
provided the right mix of guidance and flexibility. Members also commended Hong Kong,
China on its acceptance of the Fourth and the Fifth Protocols of the GATS, concerning
telecommunications and financial services, respectively, in which Hong Kong, China's
commitments had contributed significantly to the successful outcome of the negotiations.
Members raised a number of questions
particularly with respect to seemingly high mark-ups associated with the rice control
scheme; and restrictions in some service sectors, notably foreign banking
operations, telecommunications and transportation.
In reply, the representative stated
that Hong Kong, China had taken steps to liberalize the rice trade and was actively
considering ways to further enhance competition. Most of Hong Kong, China's markets for
services were free and open. Hong Kong, China remained committed to greater liberalization
of the banking system, where regulation was applied only when essential. The
"one-building" rule had not caused any market access difficulties for foreign
banks; there were no restrictions on foreign direct investment into the sector. On
telecommunications, the Government was in the process of opening the sector well beyond
its commitments under the Fourth Protocol of the GATS. The Basic Law clearly specified
that Hong Kong, China would maintain its previous system of shipping management and
regulation. Hong Kong, China enjoyed no special privileges in the ports of mainland China.
In conclusion, it is my feeling that
this Body strongly commended Hong Kong, China for maintaining its predictable trade and
investment regime following reunification with China and despite the Asian crisis.
Notwithstanding these two major developments, the free-market principles underlying Hong
Kong's trade and investment policies together with its respect for the rule of law had not
changed. Members also expressed their confidence that with these policies Hong Kong,
China's economy would soon resume strong and sustained economic growth. In short, it is my
sense that Members felt that Hong Kong, China remained one of the most open economies in
the world, and that they looked forward to Hong Kong, China's consolidation of this status
by, for example, increasing its bindings and GATS commitments. Members also looked forward
to seeing Hong Kong, China continuing to contribute, by its example and leadership at the
WTO, to the further strengthening of the multilateral trading system.