INFORMATION PAPER FOR LEGCO PANEL ON TRADE AND INDUSTRY

At the Panel meeting on 4 March, during the discussion of agenda item VI, the Administration undertook to provide information on the objectives of Hong Kong in relation to the work programme of the World Trade Organisation (WTO).

Work Programme of WTO

2.The work programme of the WTO can be divided broadly into four areas as follows -

administering the implementation and operation of WTO agreements and decisions;
studies, reviews and negotiations with a view to improvingstrenghten the WTO rules in specific areas, or to achieving progressive liberalisation of trade in specific sectors;
policy review of the trade regimes of individual WTO members; and
settlement of disputes brought to the WTO by members.

(A)Implementation of agreements and decisions

3. Hong Kong participates actively in the relevant forums of the WTO to ensure the full and faithful implementation of WTO agreements and decisions by other members. The work involves monitoring the timely implementation of individual WTO members' specific commitments and examining the notifications submitted by WTO members with regard to the consistency of their legislation, programmes and measures with the relevant agreements. We concentrate our efforts on areas of significant trade interest to Hong Kong and on our major trading partners.

(B)Improving trade rules and progressive trade liberalisation

4. Various studies, reviews or negotiations, many of which mandated by relevant WTO agreements, are being or will be conducted in the WTO with a view to establishing new rules or strengthening existing rules in many subject areas. These include agriculture, anti-dumping, competition policy, customs valuation, dispute settlement, environment, government procurement, import licensing, investment, preshipment inspection, rules of origin, sanitary and phyto-sanitary measures, safeguards, services, subsidies and countervailing measures, technical barriers to trade, textiles and clothing, trade facilitation, trade policy review mechanism, and trade-related aspects of intellectual property rights. We play an active part in those areas of particular concern to us.

5. Apart from the further development of global trading rules, the WTO has an ambitious programme of ongoing and future negotiations for progressive liberalisation of trade. The WTO has completed successfully the negotiations on basic telecommunications in February and the Information Technology Agreement in March. The extended (from the Uruguay Round) negotiations on financial services have just resumed in April. The next round of comprehensive negotiations on trade in services will be held before the year 2000, and negotiations on agriculture by the year 1999. Being a staunch advocate of free trade, Hong Kong actively supports this work.

Hong Kong's priorities in specific areas

6. Our priorities in the more important areas under (A) and (B) are highlighted below.

(a)Textiles and Clothing

The Agreement on Textiles and Clothing (ATC) stipulates that quantitative restrictions on textiles and clothing products should be removed in phases by the year 2005. Like other exporting members, Hong Kong is disappointed with the removal of restrictions by importing members in phase one of the programme, which has only minimal impact on the liberalisation of textiles and clothing trade. The phase one programme is scheduled for review this year. We intend to focus our attention on the (unsatisfactory) pace of liberalisation as well as on the impact of changes to rules of origin, anti-dumping actions, and eco-labelling on members' ATC commitments.

(b)Anti-Dumping

Hong Kong plays a very active role participates activelyin the work of the Committee on Anti-Dumping Practices, including monitoring the implementation of the Anti-Dumping Agreement, involvement in relevant dispute cases and, in particular, substantive negotiations relating to anti-circumvention. We will resist any attempt to erode the existing rules.

(c)Negotiations on Financial Services

The interim agreement on financial services concluded in 1995 will expire in December 1997. Negotiations have resumed in April 1997, with a view to reaching a permanent agreement by the end of this year. Our objective is to achieve a successful conclusion of the negotiations with an MFN-based multilateral agreement which provides improved access to overseas markets for Hong Kong's financial industry.

(d)Professional services

A Working Party on Professional Services is tasked to develop disciplines governing measures relating to qualification requirements and procedures, technical standards and licensing requirements in the field of professional services. Work on the accountancyaccountary sector, the first sector being examined by the Working Party, is due for completion by the end of 1997. We will push for solid progress on the accountancy sector and the early commencement of work in other professional service sectors.

(e)Competition and Investment

The WTO Ministerial Conference in Singapore last December decided to establish two working groups to study issues related to the interaction between trade and competition policy, and the relationship between trade and investment respectively. The WTO General Council will keep the work of each body under review, and determine after two years how the work of each body should proceed.

We have a keen interest in the work of the two working groups. Their remits largely cover the substance of a Hong Kong proposal to review existing WTO rules to assess their interaction with globalisation and their inter-relationship with investment and competition policy. One of our key objectives is to set in train a process leading eventually to a fundamental review of the anti-dumping rules of the WTO.

(f)Regional Trade Agreement (RTA)

A RTA is a trading arrangement set up among some economies in a region giving preferential market access to one another. We recognise that RTAs could promote further liberalisation and assist the integration of developing and least developed countries into the international trading system. On the other hand, we are concerned that the proliferation of RTAs will erode the multilateral trading system. Hong Kong will, in co-operation with other like-minded members, engage the Committee on Regional Trade Agreements in 's priority in the WTO CRTA would be an in-depth study of the impact of RTAs on the multilateralmulitlateral trading system, and of the need for strengthening the existing WTO rules governing the formation and operation of RTAs.

(g)Government Procurement

Hong Kong has been accepted for accession to the plurilateral Agreement on Government Procurement (GPA) and will formally sign the agreement by June this year. We shall play a full and active role in the review of the GPA, with particular emphasis on the expansion of its coverage and the removal of all discriminatory elements, namely, reciprocity and sectoral non-application provisions in the schedules of other signatories.

Hong Kong's ultimate objective on government procurement is to establish a multilateral agreement which guarantees a level playing field for all suppliers on a non-discriminatory basis. The WTO Ministerial Conference last December decided to set up a working group to study issues related to transparency in government procurement and to develop elements for inclusion in an appropriate agreement. This is a first step in the right direction. We will actively take part in this working group.

(h)Rules of Origin

Our objectivesWe participate fully in the Committee on Rules of Origin are to ensure faithful implementation of the Agreement on Rules of Origin and to monitor how the new disciplines will work out. Notably we will continue our solid contribution to the Harmonization Work Programme, a three-year programme (scheduled up to July 1998) aimed at drawing up a set of harmonized rules of origin for all non-preferential trade purposes. We will vigorously safeguard the interests of Hong Kong's industries. Upon adoption of the harmonized rules by the WTO, we will implement the harmonized rules in Hong Kong as soon as practicable.

(i)Trade and Environment

Hong Kong fully supports the objective of sustainable development. However, we believe that the pursuit of environmental objectives should not restrict or distort international trade or undermine the fundamental principles of MFN and national treatment. We will continue to participate actively in the work of the Committee on Trade and Environment, including the study of the relationship between multilateral environmental agreements and WTO rules, and the enhancement of transparency of trade-related environmental measures maintained by WTO members.

(j)Technical Barriers to Trade (TBT)

The TBT Agreement seeks to ensure that technical regulations and standards, as well as testing and certification procedures, do not create unnecessary obstacles to trade. Our focus will be on the first Triennial Review of the operation and implementation of the Agreement due to begin this year begin to begin in 1997. A representative of Hong Kong chairs the Committee on Technical Barriers to Trade in 1997.

(k)Trade-Related Aspects of Intellectual Property Rights (TRIPS)

Our intellectual property right regime is already fully compliant with the provisions of the TRIPS Agreement, three years ahead of the stipulated deadline. We will continue to contribute to the discussions in the TRIPS Council to underline the importance that Hong Kong attaches to the protection of intellectual property rights..

(l)New round of overall negotiations on services

The General Agreement on Trade in Services stipulates that WTO members shall enter into a new round of negotiations on services not later than 2000, with a view to achieving a progressively higher level of liberalisation. We support early preparatory work to allow members to better understand the issues involved and identify their interests before undertaking the negotiations.

(C)Trade Policy Review

7.The trade regime of each WTO member is subject to periodic reviews by other WTO members under the Trade Policy Review Mechanism. It aims to provide greater transparency and understanding of the trade policies and practices maintained by individual WTO Members. We are an active participant in these reviews, particularly those on our major trading partners. Hong Kong is subject to a four-year review cycle and the next review on Hong Kong will be held in 1998.

Dispute Settlement

8. To help ensure that the rights and obligations of members under the WTO agreements are fully observed and implemented, the WTO has established a Dispute Settlement Mechanism to adjudicate disputes brought to it over alleged breaches of members' rights and obligations. Hong Kong is always vigilant and defends robustly its rights (as well as any wider systemic implications for international trade) against actions by trading partners that are inconsistent with WTO rules. Where bilateral consultation fails to resolve any such dispute, we will bring the case to the WTO for dispute settlement.

Trade and Industry Branch

April 1997

Last Updated on 21 August 1998