RESTRICTED WT/TPR/S/306 1 October 2014 (14-5505) Page: 1/136 Trade Policy Review Body TRADE POLICY REVIEW REPORT BY THE SECRETARIAT HONG KONG, CHINA This report, prepared for the seventh Trade Policy Review of Hong Kong, China, has been drawn up by the WTO Secretariat on its own responsibility. The Secretariat has, as required by the Agreement establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing the World Trade Organization), sought clarification from Hong Kong, China on its trade policies and practices. Any technical questions arising from this report may be addressed to Mrs. Martha Lara Fernández (Tel: 022 739 6033); Mr. Pierre Latrille (Tel: 022 739 5266), and Mr. Xinyi Li (Tel: 022 739 5579). Document WT/TPR/G/306 contains the policy statement submitted by Hong Kong, China. Note: This report is subject to restricted circulation and press embargo until the end of the first session of the meeting of the Trade Policy Review Body on Hong Kong, China. This report was drafted in English. WT/TPR/S/306 • Hong Kong, China - 2 - CONTENTS SUMMARY ........................................................................................................................ 7 1 ECONOMIC ENVIRONMENT ........................................................................................ 10 1.1 Recent Economic Developments.................................................................................. 10 1.2 Trade Performance ................................................................................................... 16 1.2.1 Merchandise trade ................................................................................................. 16 1.2.1.1 Composition of merchandise trade ......................................................................... 17 1.2.1.2 Direction of merchandise trade .............................................................................. 17 1.2.2 Services trade ....................................................................................................... 20 1.3 Foreign Direct Investment ......................................................................................... 21 2 TRADE AND INVESTMENT REGIME ............................................................................ 22 2.1 General Constitutional and Legal Framework ................................................................ 22 2.2 Trade Policy Objectives ............................................................................................. 22 2.3 Trade Agreements and Arrangements .......................................................................... 23 2.3.1 WTO .................................................................................................................... 23 2.3.2 Regional and preferential trade agreements ............................................................... 24 2.3.2.1 Closer Economic Partnership Agreement with New Zealand ....................................... 24 2.3.2.2 Free Trade Agreement with EFTA ........................................................................... 25 2.3.2.3 Free Trade Agreement with Chile ........................................................................... 26 2.3.2.4 Closer Economic Partnership Arrangement (CEPA) with Mainland China ....................... 26 2.3.3 Other agreements and arrangements ........................................................................ 28 2.4 Investment Regime .................................................................................................. 29 3 TRADE POLICIES AND PRACTICES BY MEASURE ........................................................ 31 3.1 Overview ................................................................................................................. 31 3.2 Measures Directly Affecting Imports ............................................................................ 32 3.2.1 Customs procedures and requirements ..................................................................... 32 3.2.2 Rules of origin ....................................................................................................... 34 3.2.3 Tariffs .................................................................................................................. 34 3.2.4 Other duties and charges ........................................................................................ 35 3.2.4.1 Internal taxes collected at the border ..................................................................... 35 3.2.4.2 Other charges..................................................................................................... 36 3.2.5 Customs valuation ................................................................................................. 36 3.2.6 Import controls ..................................................................................................... 36 3.2.6.1 Import prohibitions and restrictions ....................................................................... 36 3.2.6.2 Import licensing .................................................................................................. 37 3.2.7 Contingency measures ........................................................................................... 39 3.2.8 Sanitary and phytosanitary requirements .................................................................. 39 3.2.9 Standards and other technical requirements .............................................................. 42 3.3 Measures Directly Affecting Exports ............................................................................. 43 3.3.1 Export documents and procedures ............................................................................ 43 WT/TPR/S/306 • Hong Kong, China - 3 - 3.3.2 Export taxes, charges, and levies ............................................................................. 43 3.3.3 Export prohibitions, restrictions, and licensing ............................................................ 44 3.3.4 Export assistance and facilitation ............................................................................. 46 3.4 Measures Affecting Production and Trade ..................................................................... 46 3.4.1 Taxation and incentives .......................................................................................... 46 3.4.1.1 Taxation ............................................................................................................ 46 3.4.1.2 Tax incentives .................................................................................................... 47 3.4.1.3 Non-tax incentives .............................................................................................. 48 3.4.2 Competition policy and price controls ........................................................................ 50 3.4.2.1 Competition policy .............................................................................................. 50 3.4.2.2 Price controls ..................................................................................................... 53 3.4.3 State trading and state-owned enterprises ................................................................ 53 3.4.4 Government procurement ....................................................................................... 54 3.4.5 Intellectual property rights ...................................................................................... 57 3.4.5.1 Legislation ......................................................................................................... 57 3.4.5.1.1 Copyright law .................................................................................................. 59 3.4.5.1.2 Patent law ....................................................................................................... 60 3.4.5.1.3 Parallel imports ................................................................................................ 61 3.4.5.1.4 IP trading ........................................................................................................ 61 3.4.5.2 Enforcement ....................................................................................................... 62 4 TRADE POLICIES BY SECTOR ..................................................................................... 65 4.1 Overview ................................................................................................................. 65 4.2 Agriculture and fisheries ............................................................................................ 67 4.2.1 Agriculture ............................................................................................................ 67 4.2.2 Farm support measures .......................................................................................... 68 4.2.3 Rice ..................................................................................................................... 68 4.2.4 Fisheries ............................................................................................................... 69 4.3 Energy .................................................................................................................... 70 4.4 Manufacturing .......................................................................................................... 71 4.5 Services .................................................................................................................. 72 4.5.1 Telecommunication