Panel on Trade and Industry (Minutes) 7 June 99

LC Paper No. CB(1)50/99-00
(These minutes have been seen by the Administration)

Ref: CB1/PL/TI/1

Legislative Council

Panel on Trade and Industry

Minutes of meeting held on
Monday, 7 June 1999, at 2:30 pm
in the Chamber of the Legislative Council Building Members present :

Hon CHAN Kam-lam (Chairman)
Dr Hon LUI Ming-wah, JP (Deputy Chairman)
Hon Kenneth TING Woo-shou, JP
Hon James TIEN Pei-chun, JP
Hon NG Leung-sing
Prof Hon NG Ching-fai
Hon Mrs Selina CHOW LIANG Shuk-yee, JP
Hon MA Fung-kwok
Hon CHEUNG Man-kwong
Hon HUI Cheung-ching
Hon CHAN Kwok-keung
Hon SIN Chung-kai
Dr Hon Philip WONG Yu-hong

Members attending :

Hon Fred LI Wah-ming, JP
Hon James TO Kun-sun
Hon LAU Kong-wah
Hon CHOY So-yuk

Members absent :

Hon David CHU Yu-lin
Hon Cyd HO Sau-lan
Hon Mrs Sophie LEUNG LAU Yau-fun, JP

Public officers attending :

For Agenda Item IV
Miss CHEUNG Siu-hing: Deputy Secretary for Trade and Industry
Mr Peter CHEUNG: Acting Director of Intellectual Property
Mr Vincent POON: Assistant Commissioner for Customs and Excise
For Agenda Item V
Miss Yvonne CHOI: Acting Secretary for Trade and Industry
Ms Salina YAN: Principal Assistant Secretary for Trade and Industry
Mr Edward YAU: Deputy Director General of Trade

Attendance by invitation :

Movie Producers and Distributors Association of Hong Kong Limited (MPDA)
Mr Raymond WONG: Chairman
Mr Joseph LAI: Vice-Chairman
Mr Tony SHU: Committee/Executive Secretary
Hong Kong, Kowloon & New Territories Motion Picture Industry Association Limited (MPIA)
Mr Albert LEE: Vice Chairman
Mr Woody TSUNG: Chief Executive
Hong Kong Film Director Guild Limited
Mr CHEUNG Tung Joe: Executive Committee Member
Anti-privacy Alliance
Mr Peter LAM: Member of Central Committee
Ms Terry LAI: Co-convenor, Lobbying Sub-group
International Federation of the Phonographic Industry (Hong Kong Group)
Mr FUNG Tim-chee, Ricky: Chief Executive Officer
Mr Sean MOK: DeputyDirector/IFPI Asian Regional Office
Motion Picture Association
Mr Jeffrey HARDEE: Vice President
Mr Sam HO: Director, Hong Kong Film and Video Security
Blockbuster Hong Kong Limited
Mr John SKINNER: Managing Director
Business Software Alliance
Mr Tom ROBERTSON: Chair, Asia Committee
Software Publishers Association
Ms Grace H W CHU: Legal Advisor for Hong Kong

Clerk in attendance :

Ms Estella CHAN: Chief Assistant Secretary (1)4

Staff in attendance :

Miss Anita HO: Assistant Legal Adviser 2
Mr Daniel HUI: Senior Assistant Secretary (1)5

I Confirmation of minutes and matters arising
Draft Report of the Panel on Trade and Industry for Submission to the Legislative Council
(LC Paper No. CB(1)1435/98-99(01))

Members approved the draft report of the Panel on Trade and Industry for submission to the Legislative Council at its meeting on 30 June 1999. Members also authorized the Chairman to revise the draft report to incorporate developments relevant to the Panel between then and 30 June 1999 as necessary.

II Information papers issued since last meeting
(LC Paper No. CB(1)1268/98-99 - Special Finance Scheme for Small and Medium Enterprises

LC Paper No. CB(1)1424/98-99 - Applied Research Fund

LC Paper No. CB(1)1425/98-99 - Regulatory Regime for Outbound Travel Industry)

2. Members noted the information papers issued since last meeting

III Date of next meeting and items for discussion

3. The Chairman said that as requested by the Administration, a special meeting of the Panel would be held on 14 June 1999 to discuss the proposed establishment of the Innovation and Technology Fund. An item on "Reports by three venture capital companies on Applied Research Fund" deferred from a previous Panel meeting would also be included in the agenda for the special meeting.

4. Members agreed to meet the heads of Hong Kong's Overseas Economic and Trade Offices at the regular meeting of the Panel scheduled for 5 July 1999.

IV Report on public consultation on "Combating Intellectual Property Rights Infringement in the HKSAR"
(LC Paper No. CB(1)1435/98-99(05) - Information paper provided by the Administration)

Meeting with Deputations

5. The Chairman invited representatives of deputations to present their comments on the Administration's proposed short term and long term measures to combat intellectual property right (IPR) infringements in HKSAR.

Movie Producers and Distributors Association of Hong Kong Limited (MPDA)
(Submission issued under LC Paper No. CB(1)1315/98-99)

6. Mr Raymond WONG informed members that MPDA supported the three short term measures proposed by the Administration to combat IPR infringements as set out in paragraphs 5 to 8 of the information paper provided by the Administration. He further opined that the Administration should actively consider implementing two other options, namely, applying closure orders to premises used for piracy or counterfeiting activities and licensing retail outlets selling optical discs, which would have the effect of imposing additional costs/barriers for those engaging in IPR infringement activities.

7. Mr Joseph LAI supplemented that the Administration would need to revise its legislative framework including, for example, amendments to the Copyright Ordinance to enhance effective enforcement actions against IPR infringements. He hoped that the Administration would consult MPDA on the relevant legislative amendments.

Hong Kong, Kowloon & New Territories Motion Picture Industry Association Limited (MPIA)
(Submission issued under LC Paper No. CB(1)1435/98-99(04))

8. Mr Woody TSUNG advised that MPIA supported the proposed short term and long term measures proposed by the Administration to combat IPR infringements, and highlighted the following views :

The proposal to shift the evidential burden of proof to the accused on having a licence to deal in copyright articles could create technical difficulties to some owners of retailing outlets who might not have a formal contract with the copyright owner and therefore would not have a licence to deal in such items.
MPIA supported the proposal on licensing of retail outlets selling optical discs because this would be an effective means to assist the Customs officers in curtailing infringement activities at retail outlets.
MPIA hoped that there would be more active involvement of the Police in combating IPR infringements.

Hong Kong Film Director Guild Limited

9. Mr CHEUNG Tung Joe said the Hong Kong Film Director Guild Limited considered that the Police should deploy more resources in combating IPR infringements.

Anti-piracy Alliance

10. Mr Peter LAM said that the Anti-piracy Alliance had the following major comments :

Hong Kong could make reference to the experience of Macau in which different Government departments shouldered different responsibilities in combating IPR infringements. In the case of Hong Kong, the Police could be made responsible for actions against IPR infringements at retail outlets as part of their duties in patrolling the streets. The Customs and Excise Department would be responsible for combating the production, import and export of infringing goods.
As regards proposals on introducing consumer liability, the Alliance supported less severe penalty on consumers of infringing works, such as confiscation at the point of purchase without any further sanction. Introducing consumer liability would also have the effect of educating consumers on the importance of protection of IPR.
The proposal that a sample, such as 10%, of seized copies proved to be infringing could be regarded as prima facie evidence that the remaining category of seized inventory was also infringing was considered too harsh.
The Alliance shared the view of MPIA on the proposal to shift the evidential burden of proof on the issue of licensing of copyright articles due to the technical problem of some retail outlets not having a formal contractual relationship with the supplier of copyright articles.

International Federation of the Phonographic Industry - Hong Kong Group (IFPI)
(Submission issued under LC Paper No. CB(1)1447/98-99(01))

11. Mr Ricky T C FUNG highlighted the following comments of the IFPI :

In view of the rampant retail privacy in HKSAR despite increasing Customs enforcement efforts, IFPI considered that the most effective way to root out retail piracy was to assign police officers the active role of anti-piracy enforcement.
The option of applying closure orders to premises used for piracy or counterfeiting activities after a first conviction might not achieve a timely deterrent effect because it could take a long period of time from arrest to prosecution and conviction. A temporary closure order should be applied immediately after a retail outlet was found to have been used for selling pirated goods.
Noting that internet piracy, mainly in the form of unauthorized replication and distribution of sound recordings, was spreading in HKSAR, IFPI urged the Government to take action against copyright infringing activities in the online environment.
The Administration should further consult the trade on the proposal on licensing of retail outlets selling optical discs as this proposal would create inconvenience to outlets selling both musical and optical discs.

Motion Picture Association (MPA)
(Submission issued under LC Paper No. CB(1)1447/98-99(02))

12. Mr J HARDEE said that the extensive IPR infringements in HKSAR was tarnishing the city's international reputation. MPA appreciated efforts of the Customs and Excise Department in combating IPR infringements and the Government's willingness to look for new legislation to enhance the effectiveness of the enforcement action. He further said that MPA supported the proposal to include piracy and counterfeiting offences under Schedule 1 of the Organized and Serious Crime Ordinance (OSCO). Despite the proposal to establish a special task force in the Customs and Excise Department to undertake enforcement action on combating IPR infringement activities, MPA considered that the Police had to be assigned direct responsibilities in dealing with retail outlets selling pirated Video Compact Discs (VCD) which were spread out over the whole territory of HKSAR. Mr Sam HO quoted an example that due to the rigorous police involvement in combating sale of pirated VCD in the Yuen Long District, there was then very few hawkers or retail shops selling pirated VCD in the District. He emphasized that this case exemplified the success of police involvement in combating IPR infringements.

Blockbuster Hong Kong Limited
(Submission issued under LC Paper No. CB(1)1447/98-99(03))

13. Mr John SKINNER said that video piracy was a major cause of the failure of the previous KPS video store. As a newcomer to the video rental business in Hong Kong, Blockbuster found enforcement of anti-piracy action in HKSAR inadequate as evidenced in the fast increasing number of pirated VCD outlets in the territory.

Business Software Alliance
Software Publishers Association
(Joint submission issued under LC Paper No. CB(1)1627/98-99(02))

14. Mr Tom ROBERTSON informed members that software piracy was a major barrier for the development of a software industry in Hong Kong. Although some improvements were made over 1997 as a result of increased enforcement action by Customs and Excise Department, software piracy rate was estimated to be 59% in 1998 costing the industry about HK$680 million. He said that the Business Software Alliance (BSA) and the Software Publishers Association (SPA) supported the short term measures proposed by the Administration in combating piracy and counterfeiting offences as set out in paragraphs 5 to 8 of the information paper. He emphasized that software piracy by corporations was the most damaging type of software piracy, accounting for over half of the loss to the industry each year. He urged the Administration to take strong action in this regard.

15. As regards the longer term measures being considered by the Administration, Ms Grace H W CHU said that BSA and SPA supported the option of an immediate closure order after a first conviction for premises used for piracy or counterfeiting. She further advised that BSA and SPA also supported the proposal to license retail outlets selling optical discs as this would relieve the landlord from the burden of finding out whether the tenant was selling fake products. These two longer term measures implemented jointly would close the time gap between raid action and conviction as prosecution against unlicensed retail outlets would be more straight forward. She opined that Hong Kong's legislation for protection of IPR had to be enhanced in order to provide an environment conducive to development of various high-tech projects, such as the Cyberport project.

Members' responses

16. Mrs Selina CHOW pointed out that one major argument against imposing legal liability on consumers of infringing works was that consumers might have bought infringing goods believing them to be genuine. She asked whether the industry could do something which would give consumers a very clear guideline in differentiating infringing goods from the genuine products. In response Mr Raymond WONG advised that the movie industry had previously agreed that genuine VCDs of new movies would not be released for retail sale until 30 days after they were shown on local cinemas and this arrangement had been publicized at a press conference. As such, consumers should be well aware that VCDs of new movies purchased before the 30-day limit were pirated products. Mr Albert LEE supplemented that a message was released in the cinema before showing of every new movie that VCDs of the movie would not be released for retail sale during the specified period.

17. Mrs Selina CHOW opined that a press conference to announce the arrangement on release of genuine VCDs of movies might not be adequate for enforcement actions if a legal liability was imposed on consumers of pirated products. She urged the movie industry to further examine the subject and forward their views to the Administration. Mr Joseph LAI advised that if there was a copyright registration system in Hong Kong, it would be easier for consumers to differentiate a genuine product from a pirated one. Mr Peter LAM said that he had some reservation about regulating the current arrangement on release of movie VCDs for retail sale by legislation because regulation of commercial activities by legislation would reduce the flexibility required by movie producers for dealing with different channels and arrangements in releasing VCDs of their movies.

18. Noting that the industry favoured additional police involvement in combating IPR infringements, Mr James TIEN requested the industry representatives to clarify whether they were requesting the police to take the initiative to search citizens coming out from VCD retail outlets. Mr Peter LAM, Mr CHEUNG Tung-joe and Mr Raymond WONG responded that additional police involvement should be in many forms including raiding of VCD outlets, arresting persons selling fake products on the street and in retail outlets, etc. These actions should effectively deter retailing of pirated products. Mr LAM said that he believed that these types of police action would be more appropriate than searching citizens who had bought goods from VCD outlets.

19. Commenting on the two options to deal with bootlegging, Mr CHEUNG Man-kwong doubted whether the option of creating an offence of unauthorized possession of video recording equipment in a cinema was better than making it illegal to record or possessing an unauthorized recording of a film being shown in a cinema. He pointed out that requiring customers to deposit their recording equipment before going into a cinema could create inconvenience to citizens who just brought along the recording equipment for other purposes. Moreover, enforcement should be easier if it was an offence to make unauthorized recording of a film being shown in a cinema. In response, Mr Tony SHU commented that if cinema and concert venue operators would provide secure storage facilities for customers who wish to deposit their recording equipment, the inconvenience caused could be minimized. Mr CHEUNG Tung-joe further advised that unauthorized recording of films at cinemas had been carried out in a very organized manner and it would therefore be more effective to disallow unauthorized possession of video recording equipment in order to prevent bootlegging.

20. As regards software piracy in corporations, Mr James TIEN enquired whether software companies offered bulk discounts to corporations which required multiple copies of one software. He was also concerned whether the measures proposed by the Administration had dealt with the issue of software piracy in corporations. Mr Robertson advised that software companies did offer bulk discount for clients who used more than one copy of a software. He also confirmed that the proposal of revising the legislation to put beyond doubt that an offence was committed by any person possessing an infringing article other than for personal use would allow the Administration to take action against corporate software piracy.

21. Mrs Selina CHOW enquired whether the unavailability of some specialized computer software in the local market could be a cause of software piracy. Mr Robertson replied that he was not aware of any business type software being unavailable in the local market. Ms Grace CHU advised that on the contrary, some software publishers had indicated that they did not wish to release their software products in Hong Kong because of the rampant software piracy in the city.

22. Referring to piracy in the internet, Mr MA Fung-kwok enquired about the industry's view on future development of this type of illegal activity and whether the Administration's proposed measures had addressed the industry's concerns. Mr SIN Chung-kai asked whether providers of music recordings in the internet would consider levying a fee for access to the music recording on line. Mr Ricky FUNG replied that piracy activities in the internet was increasing very fast and it was estimated that by year 2002, piracy in the internet would account for 30% of total piracy activities. The industry world-wide was discussing with internet service providers with regard to the respective responsibilities and liabilities of relevant parties in combating piracy in the internet. IFPI hoped that the Government would jointly examine with other countries in finding a solution to this problem.

Meeting with the Administration

23. The Deputy Secretary for Trade and Industry (DS/TI) said that since the issue of the consultation paper on additional legal tools to combat IPR infringements, the Administration had received and considered many valuable comments. The proposed measures set out in the information paper provided by the Administration had taken these comments into account. Responding to the industry's call for additional police involvement in combating IPR infringements, she said that the Police and the Customs and Excise Department had had close co-operation in this respect. During the first quarter of 1999, the Police had dealt with more than 100 cases of IPR infringements, arresting some 140 suspects and confiscating about 640,000 VCDs. She emphasized that Police would continue to co-operate with the Customs and Excise Department on anti-piracy actions. She further advised that the number of Customs officers deployed for anti-piracy work had doubled in the last five years and a special task force of some 100 officers initially would be established to enhance the existing enforcement capabilities in the Customs and Excise Department against infringement activities at the retail level. The Administration would continue to keep in view the need to flexibly deploy enforcement resources in this area. As regards internet piracy, DS/TI advised that HKSAR was probably the first jurisdiction in which there was legislation (i.e. the Copyright Ordinance (Cap 528)) to deal with internet piracy. She cautioned however that internet piracy might involve events occurring in overseas countries and in which case, legislation in relevant overseas countries might need to be taken into account. She emphasized that anti-piracy was a long-term mission and to be successful there had to be support from the public. The Administration would deploy resources to educate the public about the importance of protection of IPR.

24. Explaining the need for a special task force, the Assistant Commissioner for Customs and Excise (AC/C&E) said that it was quite common that retail outlet selling pirated VCDs would reopen for business a few days after raiding by Customs officers. There was therefore a need for a special task force to monitor the activities of retail outlets which had been raided by Customs officers. The special task force would also be deployed to assist in major raiding operations if necessary.

25. Mr CHEUNG Man-kwong opined that the proposal of licensing retail outlets selling optical discs should be an effective means to control the piracy activities at the retail level as evidenced from the success came with the licensing of electronic games centres. He doubted the rationale of the Administration's suggestion to put this proposal aside for the time being. In response, DS/TI advised that the resources required for putting in place an effective licensing and enforcement system would be considerable in view of the large number of retail outlets selling optical discs. She reiterated that this option was shelved for the time being and the Administration would embark on other shorter term measures which were relatively straight forward in implementation and involved less legislative amendments. As requested by Mr CHEUNG, DS/TI agreed to provide more details to justify the suggestion to shelve the option of licensing retail outlets selling optical discs for the time being.

26. Mr HUI Cheung-ching noted that there had been much criticism on the option to make consumers of infringing works liable, and enquired whether the Administration would further consult the public before implementation of this option. Mrs Selina CHOW pointed out that according to results of a survey conducted by MPIA, over 60% of the respondents supported the option of introducing consumer liability. She urged the Administration to seriously consider this option. DS/TI advised that the Administration had received mixed comments on this option. While many opposed this idea in principle, some believed that it could be the only effective solution to stopping the demand for pirated and counterfeit goods if all other options failed.

27. In response to Mr SIN Chung-kai's question on whether manufacturers of VCDs were required to keep production records to facilitate enforcement actions against privated VCD production, DS/TI advised that all manufacturers of VCDs were licensed and Customs officers conducted factory inspections on the licensees to verify whether the factories were engaging in authorized productions. AC/C&E confirmed that Customs officers would examine various documents including production records of the factories during inspections.

28. Noting that police officers patrolling streets would have first-hand information on retail outlets selling pirated VCDs, Mr James TIEN enquired whether there existed any mechanism under which the Police would despatch such information for Customs officers to raid the retail outlets. AC/C&E confirmed that such a mechanism did exist. Currently, the relevant data were provided on a weekly basis.

29. Responding to the Chairman's question on the timing of introduction of relevant legislative proposals for consideration by the Legislative Council, DS/TI advised that the Administration intended to introduce the legislative proposals in the 1999-2000 session. Summing up the discussion, the Chairman said that the Administration should proceed with the shorter term measures as set out in the information papers as soon as possible. Legislative Council Members could examine the legislative proposals in further detail when they were introduced into the Council. Members agreed that the subject should be further discussed at the next regular meeting of the Panel scheduled for 5 July 1999.

IV Control over trade in strategic commodities
(LC Paper No. CB(1)1435/98-99(06) - Information paper provided by the Administration)

30. Introducing the information paper provided by the Administration, the Secretary for Trade and Industry (Acting) (STI(Atg)) emphasized that Hong Kong was fully committed to adopting the highest international standard of strategic trade control. Hong Kong's system of control over trade in strategic commodities was law-based, transparent, backed by stringent licensing controls and rigorous enforcement. She highlighted the unique features of Hong Kong's system as set out in paragraph 4 of the information paper. She further advised that the report by the US Congressional Hong Kong Transition Task Force released in May 1999 noted that Hong Kong's trade control regime was uniquely strict and rigorously enforced. As regards the report of a US congressional special committee chaired by Congressman Christopher Cox (the Cox Report), she said that the report had listed a few cases involving breaches of Hong Kong's control system on strategic commodities and casted doubt on the integrity of the system. The HKSAR Government disagreed with views of the Cox Report in this respect. On the contrary, the few cases quoted in the Cox Report reflected the effectiveness of Hong Kong's system. Hong Kong would continue to explain to the US Government and Congress its stringent control regime over trade in strategic commodities.

31. Mr James TIEN enquired whether Hong Kong's legislation had specified the type of products which were considered as strategic commodities and were therefore subject to the control system. He was also concerned whether some high-tech products, such as super computers which might be considered as strategic commodities but were mainly used in Hong Kong for commercial purposes, would be subject to export ban by the US Government. STI(Atg) advised that the scope of items subject to licensing was laid down in the schedule to the Import and Export (Strategic Commodities) Regulation which followed the highest prevailing international standards. The Deputy Director-General of Trade (DD/T) further advised that many items listed in the Schedule to the Import and Export (Strategic Commodities) Regulation could be used for military or non-military purpose. Since some countries considered that these items could be easily converted for military use, they were put on the list as agreed at multilateral forums. He added that the HKSAR Government would continue to brief its trading partners on the merits of our control system and hoped to preserve the existing arrangement on exports control to Hong Kong. STI(Atg) supplemented that it remained to be seen whether as a result of the Cox Report the US Government would exercise tighter control on its export of strategic commodities to Hong Kong and if it did, whether trade relations between HKSAR and US would be affected.

32. Addressing Mr HUI Cheung-ching's concern about the possibility of US Government treating HKSAR the same as the Mainland in relation to export control on high-tech products as a result of the Cox Report, STI(Atg) advised that the US Government had recognized that Hong Kong remained a separate customs territory after the reunification with full autonomy in regulating the import and export of goods and that we maintained a comprehensive and stringent system. Hence HKSAR and the Mainland were subject to different arrangements under US exports control. She emphasized that restricting export of high-tech products to Hong Kong would also have adverse effects on the US as Hong Kong was a major importer of US high-tech products.

33. Referring to the two cases of illegal transhipment of sensitive technology to the Mainland involving two "Mainland-controlled" companies, the Dragonair and the COSCO International, as mentioned in the Cox Report, Mr CHEUNG Man-kwong questioned whether the Administration had investigated into these two cases and examined loopholes, if any, in Hong Kong's control system. He further pointed out that the Cox Report had described the movements of Garrison vehicles across the Mainland/Hong Kong boundary as "unmonitored" and wondered how the Administration would explain the situation in this respect. STI(Atg) advised that the cases mentioned in the Cox Report had demonstrated the effectiveness and impartiality of our control system because Hong Kong Customs and Excise Department had actively investigated each case according to the strength of the evidence presented and prosecuted the offenders without regard to the background or affiliation of the companies involved. DDT further advised that the cases also reflected the stringency of Hong Kong's control system under which the import and export of strategic commodities were subject to licensing control and that the carriers were also responsible for licence compliance. In the case involving the Hong Kong Dragon Airlines Limited, for instance, the airline being the carrier of the unlicensed consignment was prosecuted and fined for failing to comply with the licensing requirements. As regards movements of Garrison vehicles across the boundary, STI(Atg) said that the Garrison were indeed subject to more stringent control than members of the public when entering or leaving Hong Kong as the Garrison had to provide prior notification with detailed information on the personnel and vehicles involved in the movement. If any breaches of HKSAR laws were suspected, HKSAR customs officials would liaise with the Garrison Headquarters to take appropriate actions.

34. Mr James TO opined that in relation to Garrison's movements across the HKSAR/Mainland boundary, the fact that Hong Kong customs officials had not conducted any inspections of the Garrison's vehicles when crossing the boundary could be used to argue against Hong Kong's control system.

35. Referring to paragraph 6 of the information paper provided by the Administration which stated that it was an offence under the Weapons of Mass Destruction (WMD) (Control of Provision of Services) Ordinances (Cap 526)) to finance WMD programmes, Mr NG Leung-sing was concerned whether the Administration had issued any guidelines to assist financial institutions to comply with the law. He also enquired whether any prosecution action had been taken under the legislation. In response, the Principal Assistant Secretary for Trade and Industry said that after the Ordinance was enacted in mid-1997 the Hong Kong Monetary Authority had issued guidelines alerting the financial institutions in Hong Kong of relevant provisions under the Ordinance. So far, no prosecution had been made under the Ordinance.

36. Ms CHOY So-yuk and Prof. NG Ching-fai pointed out that the Cox Report would also have adverse impact on non-commercial activities such as co-operation between academic institutions in HKSAR and the US and requested the Administration to conduct a comprehensive assessment on the impact of the Cox Report on Hong Kong. STI(Atg) responded that the Administration was aware that two visits to Hong Kong by US tertiary education institutions were cancelled after issue of the Cox Report. She advised that these two incidents were individual events and it was too early to conclude that the Cox Report had an impact on academic exchanges between Hong Kong and the US.

37. Mr SIN Chung-kai was concerned that lobbying efforts of the Hong Kong Government had not succeeded in stopping the publication of the Cox Report which casted such a negative image on Hong Kong. He asked whether the Administration would review its lobbying strategies to achieve better results. STI(Atg) reiterated that the Administration would continue to explain the strengh of Hong Kong's trade control system to the US Government, Congress as well as the business communities. At multilateral forums, the Administration would also explain our trade control system to other trading partners. She also advised that the former Secretary for Trade and Industry and the US Secretary for Commerce had signed a memorandum of understanding which provided a framework of mutual co-operation on strategic trade control issues. It also provided half-yearly visits between the two sides to exchange views and update each other on developments. HKSAR Government would make use of the forthcoming meeting between the two governments in early July in Washington to discuss issues relating to the Cox Report.

38. Members agreed that the subject should be further discussed at the special meeting of the Panel scheduled for 14 June 1999. As requested by members, STI(Atg) agreed to provide an information paper before the special meeting setting out the Administration's stance regarding the Cox Report, assessing its impact on Hong Kong and the follow-up actions to be taken by the Administration.

VI Any other business

39. There being no other business, the meeting ended at 4:40 pm.

Legislative Council Secretariat
5 October 1999