MESSAGE

         For the Hong Kong Special Administrative Region to continue to achieve economic success, it is imperative that it continues to pursue policies to promote free trade and free enterprise. We are committed to doing this, to encouraging competitiveness and to seeking the freest possible access for our exporters of both merchandise goods and services. To help our manufacturing sector develop and remain competitive in international markets, we will continue to upgrade Hong Kong's industrial and technological infrastructure. We will also step up our efforts to promote Hong Kong's role as a service centre for the region and the world.

         We are committed to upholding and enforcing a most robust regime for the protection of intellectual property rights. This enhances our efforts to promote creativity and maintain the competitiveness of our economy.







(Miss Denise Yue)
Secretary for Trade and Industry

INTRODUCTION

         The Hong Kong Special Administrative Region (HKSAR) Government is committed to ensuring that it is open and fully accountable to the people of Hong Kong. Policies, aims and programmes must be clear to all so that the Government can be accountable for their delivery. With greater clarity of purpose and accessibility, the public can better assess our performance, and help us improve our quality of service.

         The Policy Programmes, which underpin the Policy Address delivered by the Chief Executive in October 1997, explain the objectives and ongoing work of each Policy Bureau and its supporting departments, as well as Department of Justice, Office of the Judiciary Administrator, Independent Commission Against Corruption and the Administration Wing of the Chief Secretary for Administration's Office, and their proposed new commitments for the coming year. They are set out in three sections:


Objectives

         The HKSAR Government's objectives are to encourage the development of Hong Kong's trade and industry through a free-market economy and to protect the legitimate interests of domestic producers, traders and consumers. We seek to achieve these goals by:


Implementing the Basic Law

         The requirements of the relevant articles of the Basic Law, as listed at Annex, have been reflected in the Bureau's objectives. In particular, it is most important to note the requirements of Article 115 of the Basic Law that the HKSAR shall pursue the policy of free trade and of Article 116 that the HKSAR shall be a separate customs territory. In addition, Article 118 stipulates that the HKSAR Government shall provide an economic and legal environment for encouraging investments, technological progress and the development of new industries. To ensure that these Basic Law articles are fully observed, we will continue to advocate free trade actively in the multilateral forum of the World Trade Organisation (WTO) and the regional forum of the Asia-Pacific Economic Co-operation (APEC). We will also seek to protect the integrity of our trading system so as to uphold our separate customs territory status. On the industrial front, we will continue to create and maintain a sound infrastructure, enabling our manufacturing and service sectors to achieve their full potential.

         Articles 139 and 140 of the Basic Law stipulate that the HKSAR Government shall, on its own, protect by law achievements in scientific and technological research, patents, discoveries and inventions; and protect by law the achievements and the lawful rights and interests of authors in their literary and artistic creation. In full accordance with these provisions, we have put in place, as from 27 June 1997, a new set of local legislation to protect the legitimate interests of copyright owners and proprietors of patents and registered designs. We will also be modernising our Trade Marks Ordinance to bring it in line with the most advanced international standards.


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Major Programme Areas

         The Trade and Industry Bureau is responsible for five major programme areas:

  1. Advancement of External Trade;

  2. Support for Manufacturing and Service Industries;

  3. Protection of Intellectual Property Rights;

  4. Promotion of Competition; and

  5. Consumer Protection.


A. Advancement of External Trade


Aims

         The aims of the Bureau are to ensure that:


Overview

Trade liberalisation

         The HKSAR Government plays an active and constructive role in the WTO, advocating free trade and promoting a stable, rule-based multilateral trading system. We are seeking the best possible market access for our service suppliers in the ongoing WTO negotiations on trade in services. We continue to closely monitor the implementation of the Agreement on Textiles and Clothing to ensure that Hong Kong's textiles and clothing (T?蟖) exports are treated equitably in overseas markets.

         On the regional front, the HKSAR Government works closely with its APEC partners to achieve free and open trade and investment in the Asia-Pacific region by the year 2020. To this end, we contributed significantly to the formulation of the 1996 Manila Action Plan for APEC which sets out concrete measures to liberalise and facilitate trade and investment in the region.

Trade control system

         We are determined to combat illegal transhipment of T?蟖 products as well as illicit trade in strategic commodities. This is in our own economic interests ?to protect the legitimate trade of our business people and to discharge our international obligations. Our trade control system is based on regularly updated legislation, comprehensive licensing, vigorous enforcement and international co-operation. To enhance the effectiveness of our system, we introduced in 1996-97 factory-based real time checks on T?蟖 production and new legislation controlling brokerage activities related to strategic goods which may cause mass destruction.

Trade support and facilitation

         We are committed to providing quality service to facilitate trade and ensure compliance. As part of these efforts, the Community Electronic Trading Service (CETS) started commercial operation in January 1997, enabling traders to apply for textiles export licences or to lodge trade declarations on-line.


Key Indicators


New Commitments

Trade liberalisation

  1. In May 1998, we will advance Hong Kong's trading interests by pressing for further liberalisation and facilitation of trade and investment at the second Ministerial Conference of the WTO. We will also underscore the importance of keeping the WTO rules up-to-date and relevant to modern commercial realities. The Conference will chart the course of the multilateral trading system into the 21st Century.

  2. We will collaborate with other APEC members to identify specific sectors where there is a common interest for early liberalisation and formulate concrete liberalisation measures in those sectors for consideration by APEC Economic Leaders in November 1997.

Trade control system

  1. In 1998, we will continue to strengthen our integrated and targeted approach in T?蟖 factory inspection and investigation. We will strengthen the legal and operational capabilities of the licensing and enforcement agencies for combating illegal activities in both T?蟖 trade and trade in strategic commodities.

    2. Trade support and facilitation

    1. In 1998, we will streamline our trade documentation system to provide maximum convenience to businesses. In particular, we will reduce unnecessary formalities, review the cost effectiveness of various control measures and promote the CETS. We will extend the CETS to certificate of origin applications by 1999.


    B. Support for Manufacturing and Service Industries


    Aims

             The aims of the Bureau are to ensure that:


    Overview

             Over the last decade, there has been a dramatic restructuring of our economy. Our manufacturers are increasingly involved in higher technology and higher value-added manufacturing and related activities. Apart from being a production centre, Hong Kong has become a control centre for a vast network of offshore manufacturing as a result of the massive relocation of assembly-type production to areas where land and labour are cheaper, notably Southern China. At the same time, Hong Kong has grown to become one of the world's leading service centres.

             In order to keep pace with and facilitate the further development of the manufacturing and service sectors, we continue to upgrade Hong Kong's industrial and technological infrastructure and to implement new initiatives to support their growth. We are committed to the timely provision of new infrastructure facilities, namely the science park, the second technology centre and the fourth industrial estate. In parallel, we have set up a Services Support Fund to finance projects which are beneficial to the competitiveness of our service sector or the overall development of Hong Kong as a service centre.


    Key Indicators


    New Commitments

    1. We stand ready to make an additional grant of $500 million to the Applied Research Fund (ARF), specifically to support the commercialisation of research in information technology and other high technology fields, subject to a review of the operation of the ARF and the Industrial Support Fund, to ensure that they continue to be effective in meeting the objective of upgrading our industry in terms of value and technology.

    2. We will allocate an additional $50 million to the Services Support Fund to finance initiatives which help sustain and improve the competitiveness of the service sector.

    3. We will ensure the timely provision of new industrial infrastructure. Funding will be sought to set up a limited company to start the development works for Phase 1 of the Science Park at Pak Shek Kok. Land will be available for construction of Phase One in 1998. We will continue to support the Hong Kong Industrial Technology Centre Corporation in constructing a second Technology Centre. A site in Kowloon Tong has been identified for this Centre. Our target is to obtain the land grant by end 1998/early 1999. The construction will start immediately afterwards and should be completed in around three years' time. We will continue to support the Hong Kong Industrial Estate Corporation in planning for a fourth industrial estate in Tuen Mun which should be completed by about 2004 when all the land in existing industrial estates is expected to be leased out. Also, we will commission a consultancy study to explore the need to establish a business park in Hong Kong.

    4. We will consider allocating $500 million to set up a pilot Credit Guarantee Scheme to facilitate small and medium enterprises to obtain from authorised lending institutions the necessary financing for their pre-export expenses. We will also provide more support service to small and medium enterprises, for example, the launch of an Internet version of a directory on services and facilities available to small and medium enterprises.


    C. Protection of Intellectual Property Rights


    Aims

             The aims of the Bureau are:


    Overview

             The coming into force of three new pieces of local legislation on patents, registered designs and copyright on 27獱une?997 marks the beginning of a very important new era for the protection of IPR in Hong Kong. We now have, for the first time, registries for the grant of patents and registered designs. We are offering a new form of short-term patent protection. The new Copyright Ordinance also provides our enforcement authorities with added powers to combat copyright piracy.


    Key Indicators

             In 1996-97,


    New Commitments

    1. We will provide additional resources to the Customs and Excise Department to enable it to continue vigorous enforcement actions against IPR infringements at all levels.

    2. We will consider legislative amendments to further deter copyright piracy; these include proposals to license the import and export of compact disc manufacturing equipment, and introduce some form of registration requirements for such factories.

    3. We aim to complete our review of the Trade Marks Ordinance in 1998-99. We will then prepare a new Trade Marks Bill.

    4. We will actively promote public awareness in IPR through a series of school visits, seminars and publicity programmes.


      5. D. Promotion Of Competition


      Aim

               The aim of the Bureau is to promote competition with a view to enhancing economic efficiency.


      Overview

               We have responded positively to many of the recommendations made by the Consumer Council in its sectoral competition studies. We are carefully considering what additional administrative and legislative measures are required in the light of the Council's proposals to adopt a more comprehensive competition policy for Hong Kong.


      Key Indicators

      • The HKSAR Government is committed to the promotion of free trade and competition. Externally, we maintain no tariff, no quantitative restriction on foreign goods, and no capital flow restrictions on foreign investment. Internally, we adopt a minimum intervention approach in the running of the economy. Barriers to market entry are virtually non-existent.

      • Hong Kong has been named by various institutes, including the Heritage Foundation, the Fraser Institute of Canada, the International Institute of Management Development and the World Economic Forum, as one of the freest and most competitive economies in the world.


      New Commitments

      1. We will strive to further promote competition and enhance economic efficiency in Hong Kong. We will encourage the Consumer Council to continue its good work in the promotion of competition. The Council has previously issued a report on the overall competition environment of Hong Kong. We will respond shortly to the recommendations made.


        2. E. Consumer Protection


        Aims

                 The aims of the Bureau are:

        • to protect and promote the interests of consumers;

        • to discourage unfair business practices; and

        • to provide consumers with effective channels to redress their complaints.


        Overview

                 We continue to work closely with the Consumer Council to consider administrative or legislative changes to promote the interest of consumers.

                 In 1997-98, we introduced two safety regulations which require safety labels on all toys, children's products and consumer goods in both English and Chinese. We enacted the Toys and Children's Products Safety (Amendment) Ordinance 1997 to enable the adoption of multiple safety standards for specified children's products. We issued guidelines to facilitate suppliers to arrange for the voluntary recall of unsafe toys, children's products and consumer goods. We completed a review of the regulatory mechanism for licensed travel agents.


        Key Indicators

        • On product safety enforcement, Customs concluded 904 spot checks and 454 investigations, and seized goods valued at some $600,000 within the first half of 1997, as against 875 spot checks, 276 investigations and seizures worth $350,000 for the first half of 1996.

        • In 1997-98, we raised the ceiling for ex gratia payments under the Travel Industry Compensation Fund from 80% to 90% of the outbound tour fare for each claimant. Given the healthy state of the Fund, we reduced travel agents' contribution to the Fund from 0.35% to 0.15% of the outbound package tour fare. We also simplified procedures for applications of $10,000 or below under the Package Tour Accident Contingency Fund Scheme.


        New Commitments

        1. In 1998-99, we will be considering the proposals from the Law Reform Commission to expand the law governing compensation for injury and damage caused by defective or unsafe goods, beyond the existing spheres of contract and negligence laws. The main objective is to help consumers seek fair compensation for loss suffered because of defective or unsafe products.


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        Into the 21st Century

                 We are committed to maintaining Hong Kong as the freest and the most vibrant economy in the world, where free trade and free enterprise flourish, where creativity and entrepreneurship are encouraged and protected, where fair competition is upheld, and where consumer welfare is safeguarded.


        Global Trade Advancement

                 We will be at the forefront of efforts to advance the liberalisation of global trade and investment. Protectionism continues to exist in different guises. We will combat all protectionist acts and tendencies which seek to manage or restrict world trade through the WTO and other forums, including APEC.


        Manufacturing and Service Industries

                 We will provide an infrastructure conducive to the further development of high valued-added and high technology manufacturing and service industries. We will ensure that the environment in Hong Kong is business-friendly. We will implement the necessary initiatives to advance and enrich technological expertise in Hong Kong, and achieve greater synergy between the Mainland's technological and scientific strengths and our commercial and trading skills.


        IPR/Competition/Consumer Protection

                 We will maintain a robust IPR protection regime by refining our laws, stepping up enforcement efforts, promoting respect for IPR and forging a closer alliance with the copyright industry. We want copyright owners and proprietors of trademarks, patents and registered designs, both local and overseas, to feel comfortable and tempted to exploit their creative work in Hong Kong. This is vital to promoting creativity and technology transfer and sustaining Hong Kong's long term competitiveness.

                 We will also continue to promote competition as a means of maximising economic efficiency, and further the rights and interests of consumers.


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        Annex: Relevant Articles of the Basic Law


        Chapter V: Economy


        Section 1: Public Finance, Monetary Affairs, Trade, Industry and Commerce

        Article 114

                 The Hong Kong Special Administrative Region shall maintain the status of a free port and shall not impose any tariff unless otherwise prescribed by law.

        Article 115

                 The Hong Kong Special Administrative Region shall pursue the policy of free trade and safeguard the free movement of goods, intangible assets and capital.

        Article 116

                 The Hong Kong Special Administrative Region shall be a separate customs territory.

                 The Hong Kong Special Administrative Region may, using the name "Hong Kong, China", participate in relevant international organizations and international trade agreements (including preferential trade arrangements), such as the General Agreement on Tariffs and Trade and arrangements regarding international trade in textiles.

                 Export quotas, tariff preferences and other similar arrangements, which are obtained or made by the Hong Kong Special Administrative Region or which were obtained or made and remain valid, shall be enjoyed exclusively by the Region.

        Article 117

                 The Hong Kong Special Administrative Region may issue its own certificates of origins for products in accordance with prevailing rules of origin.

        Article 118

                 The Government of the Hong Kong Special Administrative Region shall provide an economic and legal environment for encouraging investments, technological progress and the development of new industries.

        Article 119

                 The Government of the Hong Kong Special Administrative Region shall formulate appropriate policies to promote and co-ordinate the development of various trades such as manufacturing, commerce, tourism, real estate, transport, public utilities, services, agriculture and fisheries, and pay regard to the protection of the environment.


        Chapter VI: Education, Science, Culture, Sports, Religion, Labour and Social Services

        Article 139

                 The Government of the Hong Kong Special Administrative Region shall, on its own, formulate policies on science and technology and protect by law achievements in scientific and technological research, patents, discoveries and inventions.

                 The Government of the Hong Kong Special Administrative Region shall, on its own, decide on the scientific and technological standards and specifications applicable in Hong Kong.

        Article 140

                 The Government of the Hong Kong Special Administrative Region shall, on its own, formulate policies on culture and protect by law the achievements and the lawful rights and interests of authors in their literary and artistic creation.

        Article 144

                 The Government of the Hong Kong Special Administrative Region shall maintain the policy previously practised in Hong Kong in respect of subventions for non-governmental organizations in fields such as education, medicine and health, culture, art, recreation, sports, social welfare and social work. Staff members previously serving in subvented organizations in Hong Kong may remain in their employment in accordance with the previous system.


        Chapter VII: External Affairs

        Article 156

                 The Hong Kong Special Administrative Region may, as necessary, establish official or semi-official economic and trade missions in foreign countries and shall report the establishment of such missions to the Central People's Government for the record.


        Note

                 In addition, all Bureaux/Departments, as well as Department of Justice, Office of the Judiciary Administrator, Independent Commission Against Corruption and the Administration Wing of the Chief Secretary for Administrations's Office, have joint responsibility for the implementation of the following articles:

        Articles 11 (first paragraph), 16, 56 (second paragraph), 62(1) and (2), 64, 142, 148, 149, 150, 151, 152 and 153.


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        Policy Programme