LegCo Panel on Trade and Industry
Meeting on 12 October 1999 at 4:30 p.m.

Speaking Note for STI

In view of the time constraint, I will focus on the important developments and new initiatives under the two policy objectives of the Trade and Industry Bureau.

(1) Promotion of Free Trade and Investment

On promotion of free trade and investment, we strongly believe that maintaining an open market, keeping protectionist forces at bay and encouraging competition are ways to achieve economic recovery and sustainable development. These can also help all economies to attain stable growth. The regular conduct of trade negotiations can promote the further opening of markets towards the ultimate goal of global free trade.

2. Therefore, Hong Kong has been working closely and actively with other like-minded WTO members with the aim to build consensus for the launch of a new round of comprehensive and balanced multilateral trade negotiations at the forthcoming Third WTO Ministerial Conference, so as to set a forward-looking WTO agenda for the 21st Century.

(2) Mainland/Hong Kong Special Administrative Region Joint Commission on Commerce and Trade

3. As Hong Kong's economy becomes more intertwined with that of the Mainland, we have agreed with the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) to set up the "Mainland/HKSAR Joint Commission on Commerce and Trade" (hereinafter referred to as the Joint Commission). The Joint Commission will serve as a forum for the Mainland and HKSAR authorities dealing with trade and commercial matters to exchange views regularly on matters of mutual interest. It will operate in accordance with the "One Country, Two Systems" principle, and having regard to the status of the HKSAR as a separate customs territory as enshrined in the Basic Law. As a matter of fact, similar liaison bodies between MOFTEC and a number of economies, notably the United States and the European Union, have already been in existence for a number of years. We expect that the establishment of the Joint Commission will help both sides better understand each other's trade and commercial policies and measures, and bring about mutually beneficial economic and trade developments.

4. The Joint Commission will hold meetings annually in either Beijing or Hong Kong. The first meeting will be held on 8-9 November 1999 in Beijing. The Joint Commission will be co-chaired by the Assistant Minister of MOFTEC, Mr. AN Min and me. Ad hoc working groups will be set up under the Joint Commission to research into specific issues if necessary.

5. Details of the terms of reference and modus operandi of the Joint Commission are set out in the LegCo brief issued to Members on 6 October. We are finalizing with MOFTEC the agenda for the first meeting and the list of working groups that may be set up.

(3) Protection of Intellectual Property Rights

6. Protection of intellectual property rights is the bedrock of Hong Kong's long term economic development. The international community also has high expectations of our intellectual property regime. We therefore always strive for excellence in this area.

7. We have earlier consulted the public on various options to enhance the existing legal provisions to protect intellectual property rights. The public, the organizations concerned as well as the Legislative Council are supportive of most of the options. We will therefore introduce draft legislation into the Legislative Council to effect the proposals, including the specification of certain copyright piracy and trade mark counterfeiting offences under the Organised and Serious Crimes Ordinance, banning the unauthorised possession of recording equipment in cinemas or concert venues, and the clarifications of the relevant provisions to facilitate prosecution of corporate piracy. We look forward to Members' support for the legislation.

8. On enforcement, we continue to combat infringing activities vigorously. In June 1999, the Customs & Excise Department established a special task force of more than 180 officers to compliment the existing 300 in the Intellectual Property Investigation Bureau in combating copyright piracy. Retail piracy has subsided considerably as a result of the enhanced enforcement action. In the first eight months this year, the Customs & Excise Department already seized some 10 million copies of suspected pirated optical discs, 9 production lines and arrested about 1,600 suspects. We will keep up our enforcement efforts so that offenders are brought to justice.

9. In addition, we will be devoting more resources to education and publicity in the coming years in order to strengthen public awareness of the importance of protecting intellectual property rights.

(4) Promoting Innovation and Improved Technology in Manufacturing and Service Industries

10. Over the past year, the Trade and Industry Bureau has been strengthening our existing technological support services on the one hand and actively implementing the recommendations of the First Report of the Chief Executive's Commission on Innovation and Technology on the other. For example, we have set up a $5 billion Innovation and Technology Fund. We have also been planning for the establishment of an Applied Science and Technology Research Institute.

11. Looking forward, we will continue our effort in the promotion of innovation and technology. In this regard, the Government has accepted all the recommendations of the Second and Final Report of the Commission on Innovation and Technology. These include -

• the establishment of a standing advisory body reporting to the Chief Executive to advise on policy matters related to innovation and technology;

• the establishment of a policy group headed by the Financial Secretary to formulate and co-ordinate policy in relation to innovation and technology;

• the merging of the Hong Kong Science Park, the Hong Kong Industrial Technology Centre Corporation and the Hong Kong Industrial Estates Corporation to streamline our service delivery structure; and

• the establishment of a new scheme under the Innovation and Technology Fund to provide funding support for small enterprises undertaking commercial research and development.

12. We believe that the above initiatives will further strengthen our policy setting and service delivery mechanisms, thereby creating new strengths for Hong Kong to meet the challenges of the next millennium.

(5) Small and Medium Enterprises

13. Another important area of work for us is to provide appropriate support to small and medium enterprises (SMEs). We established the Small and Medium Enterprises Office under the Industry Department in August 1999, providing one-stop information services to SMEs. In the past year, the Special Finance Scheme for SMEs, which was set up in response to the short-term liquidity crunch problem, also provided guarantee for bank credit to over 5,000 enterprises.

14. In order to assist more SMEs, we propose to increase the amount of available guarantees under the Scheme. In the long term, we shall endeavor to strengthen our support to SMEs in co-operation with the Financial Services Bureau and other relevant organizations, so that SMEs will be better equipped in applying for bank loans. We shall also encourage banks to be more active in considering non-collateral-based lending through structural reform of the banking sector.

(6) Maximise Hong Kong's access to high-tech products

15. To maintain Hong Kong's role as an international business and financial centre, we need to maintain our trading partners' faith in the integrity of our strategic trade control system so that we can have continued access to high-tech products. Hence, according to the "one country, two systems" principle and Hong Kong's status as a separate customs territory, Hong Kong maintains an independent and autonomous import and export control system over strategic commodities. Our system is law-based, backed by a comprehensive licensing system, vigorous enforcement and close international co-operation. Our system is also objective and transparent and is highly regarded by our trading partners.

16. In May this year, a US Congressional special committee published an investigation report commonly known as the Cox Report which caused some people to cast doubts on the integrity of Hong Kong's strategic trade control system. To refute the unfounded allegations contained in the Report, we have briefed US Congressmen, government agencies, and business community on our position regarding the Report and also explained to them Hong Kong's strict control over strategic commodities trade.

17. In the coming year, we shall continue to uphold and strengthen our vigorous enforcement over strategic commodities trade.

Conclusion

18. Finally, over the past year, in order to strengthen Hong Kong's status as an international trade centre and to enhance the competitiveness of the local manufacturing and service industries, we have been striving to implement the 44 initiatives committed in or before 1998. I am delighted to report to Members that the Trade and Industry Bureau and its Departments have made good progress in implementing these initiatives. We have completed actions for 16 items, and are on schedule in taking forward the remaining 28 items. Generally speaking, our main achievements in the past year include-

• progressive implementation of the recommendations made by the Chief Executive's Commission on Innovation and Technology in its First Report, including the setting up of the $5 billion Innovation and Technology Fund;

• strengthened our support to SMEs;

• established the "Mainland/HKSAR Joint Commission on Commerce and Trade" with MOFTEC;

• maintaining a vigorous control system for strategic commodities and textiles and clothing;

• encouraging the public and private sectors to comply with our competition policy;

• active participation in the preparation for the new round of multilateral trade negotiations to be launched in early next century; and

• vigorously combating intellectual property rights infringement and piracy activities.

19. Thank you.