PLC Paper No. CB(1)119
(These minutes have been seen by the
Administration and cleared with the Chairman)
Ref: CB1/PL/TI/1

LegCo Panel on Trade and Industry

Minutes of meeting
held on Tuesday, 27 May 1997,
at 10:30 am in Conference Room B
of the Legislative Council Building

Members present :

    Hon NGAI Shiu-kit, OBE, JP (Chairman)
    Hon SIN Chung-kai (Deputy Chairman)
    Hon CHAN Kam-lam
    Hon CHAN Yuen-han
    Hon Ambrose LAU Hon-chuen, JP

Members absent :

    Hon Mrs Selina CHOW, OBE, JP
    Hon Martin LEE, QC, JP
    Dr Hon HUANG Chen-ya, MBE
    Hon Henry TANG Ying-yen, JP
    Dr Hon Philip WONG Yu-hong
    Hon James TIEN Pei-chun, OBE, JP
    Hon Paul CHENG Ming-fun
    Dr Hon LAW Cheung-kwok

Public officers attending :

Items IV, V and VI

Miss Denise YUE, JP
Secretary for Trade and Industry
Miss Elizabeth TSE
Principal Assistant Secretary for Trade and Industry

Clerk in attendance:

Miss Odelia LEUNG,
Chief Assistant Secretary (1)1

Staff in attendance :

Mr Kenneth KWOK,
Senior Assistant Secretary (1)2

I Confirmation of minutes of meeting

(LegCo Paper No. CB(1)1682/96-97)

The minutes of the meeting held on 15 April 1997 were confirmed.

II Date of next meeting and items for discussion

2. Since there was no urgent outstanding item for discussion and in view of members’ heavy involvement in scrutinising bills, members agreed to cancel the meeting scheduled for 10 June 1997.

III Information papers issued since last meeting

(LegCo Paper Nos. CB(1)1324, 1652 and 1681/96-97)

3. Members noted the information papers, in particular the one regarding the definition of "carrying on business as a travel agent" under the Travel Agents Ordinance at LegCo Paper No. CB(1)1681/96-97.

IV Update on renewal of China’s Most Favoured Nation Status by the United States

(LegCo Paper No. CB(1)1646/96-97(01))

4. At the Chairman’s invitation, the Secretary for Trade and Industry (S for TI) briefed members on the latest development in the United States (US) on renewal of China’s Most Favoured Nation (MFN) trading status. She said that President Clinton announced on 19 May 1997 his decision to renew MFN status for China unconditionally. He was required to submit his decision formally to Congress by 3 June 1997. Congress would decide by 1 September 1997 whether or not to accept the President’s decision. Congress might pass a joint resolution by one-half of its members to disapprove the President’s decision. The President would have 10 days to veto the resolution. Congress would then have 15 legislative days to overrule the President’s veto but a successful override veto required support by two-thirds of its members. Congress was divided on the issue. Many senior Senators supported the President’s decision but some Republicans, Democrats, religious groups and human rights groups were opposed to it. As compared with previous year, opposition force got stronger. On top of the recurrent concerns about widening Sino-US trade deficits, arms proliferation and human rights, the following three factors had further complicated the issue this year -

  1. Hong Kong ’s transition;

  2. concerns about religious freedom and abortion practice in China; and

  3. reports on alleged Chinese involvement in financing election campaign in the US.

S for TI opined that she was optimistic about renewal. Over half of the members of the House of Representatives might oppose the President’s decision but the number would not exceed two-thirds. The opposition votes in the Senate would be even less.

5. The Chairman pointed out that the US President had agreed to delink political and human right issues from consideration of renewal of China’s MFN status. Renewal of China’s MFN status was beneficial both to the US and China. He urged the Administration to put this message across clearly. A member opined that the Sino-US relationship was improving as shown in the visits to China by the Secretary of State, the Vice-President and the Speaker of the House of Representatives. President Clinton had publicly said that he was confident in the successful transition of Hong Kong. The member doubted the effectiveness of the Administration’s lobbying efforts and questioned if incomplete information on Hong Kong’s situation had been conveyed to the US, such as the issue of establishment of Provisional Legislative Council.

6. S for TI responded that the Administration’s lobbying had been effective. In announcing his decision to renew China’s MFN status, President Clinton had said that the US and China should have positive engagement despite some unresolved problems. The President acknowledged that renewal of China’s MFN status was mutually beneficial and non-renewal would affect the livelihood of about 170,000 American workers. He was also aware of the importance of renewal of China’s MFN status to Hong Kong. The US obtained information on Hong Kong not only from the media; the American Consulate in Hong Kong had first hand information on the territory. The Hong Kong Economic and Trade Office in Washington provided information on Hong Kong readily. The Administration had stated categorically to the US of its support for unconditional renewal of China’s MFN status. The Administration hoped that the US could grant permanent MFN status unconditionally to China.

7. In response to members’ further questions, S for TI explained that the Administration’s lobbying targets included government officials, Congressmen and their assistants, think tanks such as the Asia Society and the Heritage Foundation, and the commercial sector. Prior to the President’s announcement of his decision to renew China’s MFN status, lobbying concentrated on government officials. After the President’s announcement, efforts were diverted to the other three categories of target persons. S for TI said that she had visited the US for three days in early May 1997 and would visit the country again should circumstances warrant it.

8. A member enquired if the Administration would widen its lobbying targets to include the US citizens. S for TI responded that due to resource constraints, it would be difficult for the Administration to reach out to residents of over 50 states in the US. She considered it more effective to focus limited resources on the commercial sector which would be in a better position to get in touch with the local people. S for TI added that China’s access to the World Trade Organisation (WTO) would resolve the issue at root.

9. On the effect of non-renewal of China’s MFN status on the US, S for TI advised that barring retaliatory actions from the Chinese Government, the American consumers would have to spend several billion more US dollars to buy products of the same quality from other countries. Hon SIN Chung-kai said that he was optimistic about renewal of China’s MFN status. Nonetheless, the Administration should not over-estimate the adverse effects of non-renewal on the US’s economy. Political and economic developments in a country were inter-related. It would send a positive message to the US if election for the first Legislative Council of the Hong Kong Special Administrative Region (HKSAR) could be held as early as possible. He urged the Administration to lobby China through the Chief Executive of the HKSAR to hold an early election.

(The Chairman left the meeting and the Deputy Chairman took the chair.)

V Inclusion of Hong Kong on the US Special 301 Watch List

(LegCo Paper No. CB(1)1646/96-97(02))

10. The Principal Assistant Secretary for Trade and Industry (PAS/TI) briefed members that under the Special 301 (the Omnibus Trade and Competitiveness Act of 1988), the US Trade Representative was required to publish annually lists of countries/territories which, in the view of the US Administration, offered insufficient intellectual property rights (IPR) protection or denied market access to US IPR investments. The US Trade Representative might impose statutory trade sanctions on countries on "Priority Foreign Countries" list should they fail to make sufficient improvements in a short time. There were three other non-statutory listings in the following descending order in terms of seriousness of IPR inadequacies: "Priority Watch List" (10 in 1997), "Watch List" (36 in 1997), and "Other Observations" (11 in 1997). Among the 70 countries reviewed in the Report, the US had threatened to initiate WTO dispute settlement actions against Denmark, Sweden, Ireland and Ecuador. Although China had not been included in the Watch List, she would be monitored under section 306 of the Trade Act on its commitment to enforcing the bilateral IPR agreement with the US. Hong Kong was put under the "Other Observations" category in the US Special 301 Report for the first time in 1996. Hong Kong was included in the "Watch List" this year. The Administration was very disappointed at the US’s decision as Hong Kong had strengthened its enforcement actions against IPR piracy and had introduced a new copyright law. The US agreed to conduct an out-of-cycle review on Hong Kong in the coming fall.

11. A member suggested stationing staff of the Customs and Excise Department (C&ED) in notorious shopping malls to deter the sale of pirated goods. PAS/TI responded that the Administration had reservations on this because the presence of uniformed staff might send a wrong message that the Hong Kong Government condoned the goods sold in the malls. In fact, C&ED mounted nearly daily raids against the black spots. Upon the enactment of the Copyright Bill, C&ED staff could take more effective enforcement and could confiscate suspected pirated goods. PAS/TI added that the number of successful prosecution against piracy had increased substantially. 144 persons received immediate custodial sentences for offences relating to copyright piracy in 1996 as compared with 18 in 1995.

12. In response to members, PAS/TI said that the US Government and traders were well aware of Hong Kong’s anti-piracy efforts. Nonetheless, some American companies were complaining about business loss because of pirated goods. The Deputy Chairman opined that despite the increase in prosecution, piracy was getting worse in Hong Kong. Local copyright holders were urging for stringent enforcement actions against pirated products. He asked the Administration to step up its enforcement actions.

VI Prepayment for goods and services

(LegCo Paper No. CB(1)1646/96-97(03))

13. In response to the Deputy Chairman, PAS/TI explained that seven complaints had been received in 1996 about closing down of businesses prior to delivery of pre-paid goods or services, involving a total amount of about $100,000. Deception had not been detected in any of these cases. S for TI added that the Administration would enhance public education such as through the Consumer Council’s publications to alert the public to the risk of using pre-paid goods and services.

14. On the possibility of setting up a compensation fund similar to the Travel Industry Compensation Fund, PAS/TI said that affected persons could resort to various channels to seek compensation under existing legislation. Even a business had been liquidated, aggrieved consumers could lodge a claim as creditors. If the amount involved was less than $15,000, the case could be filed to the Small Claims Tribunal. The Administration would closely monitor the situation, in particular video rental shops. The Administration was considering the Law Reform Commission’s proposal to introduce measures to facilitate the public to claim compensation through civil actions.

VII Any other business

15. There being no other business, the meeting ended at 11:50 am.

Provisional Legislative Council Secretariat
7 August 1997

Last Updated on 21 August 1998