Information Paper for
LegCo Panel on Trade & Industry

Reports on the work of Hong Kong Economic and Trade Offices overseas and the latest development on various economic and trade matters in the countries concerned

Attached at Appendices 1 to 9 for Members' reference are reports on the work of the Hong Kong Economic and Trade Offices (ETOs) overseas and the latest developments on various economic and trade matters in the countries concerned since the last meeting between the Panel and the Heads of Overseas Offices (HOOs) on 3 November 1998. This paper does not include reports from the Geneva ETO and the San Francisco ETO as both the Permanent Representative of the Hong Kong Special Administrative Region of China to the World Trade Organisation and the Director, Hong Kong Economic and Trade Affairs, San Francisco are unable to join the HOOs Meeting because of their work commitments.

Trade and Industry Bureau
June 1999

Appendix 1

Brief Report on the Work of the London ETO

The London Office is responsible for Hong Kong's economic and trade relations with the UK, as well as our relations with the non-European Union (EU) member states in the continent including Norway, Switzerland and the Central and Eastern European countries.

Business confidence in the UK has improved since the beginning of 1999 with a forecast of economic growth at 1% to 1.5%. The UK's role in the EU and whether she should be a member of the European Monetary Union dominate the centre stage in domestic politics.

Following the Chief Executive's Policy Address last October, the London Office focused on promoting Hong Kong's development plans in the years ahead. We conducted one conference, four seminars and ten major briefings to inform our targeted audience of the developments in the financial services, infrastructure, information technology and maritime services sectors. We also conducted 70 company visits and had been successful in helping 8 British companies set up their business in Hong Kong.

The Financial Secretary visited Oslo in May to promote the bilateral relations between Norway and Hong Kong. The Secretary for Transport led a delegation comprising representatives from the Kowloon Canton Railway Corporation, the Mass Transit Railway Corporation and the Highways Department to London in April. Apart from organising speaking engagements for the senior officials, the London Office also arranged high-level meetings with government officials and the business community.

On commercial relations, the London Office liaised closely with the UK Department of Trade and Industry on the issue of Asian Longhorn Beetle. In December 1998, the UK Forestry Commission decided to implement emergency measures on all wooden packing material originating in mainland China, and Hong Kong was excluded from the directive. In March, our office helped organise a UK Government interagency visit to Hong Kong. The visit had successfully reinforced the UK's understanding of Hong Kong's impeccable export control system.

The London Office continued to liaise closely with the opinion formers in the UK, including politicians, businessmen, journalists, rating agencies, think tankers, academics and professional groups, to keep them abreast of developments in Hong Kong. In February, we hosted a Chinese New Year reception for some 500 important contacts in the UK. Our office also conducted briefings on Hong Kong in Oslo, Zurich and Budapest.

Appendix 2

Brief Report on the Work of the Brussels ETO

Commercial Relations

We follow closely developments within the European institutions eg resignation of the European Commission (EC), formation of a new EC and the European Parliament elections. We also monitor the European Union (EU)'s anti-dumping policy and report specific anti-dumping or anti-circumvention cases which may be of interest to Hong Kong. We report new or proposed technical regulations and standards promulgated by the EC and individual Member States (MSS). Where Hong Kong's interests are being affected, we make representations to the EC and MSS. The European Economic and Monetary Union was launched in January this year and we continue to follow closely discussions and developments in this respect. Other issues also monitored by us include the EU's enlargement, the EU's position on multilateral trade issues and the EU's bilateral relations with other countries. Where necessary, we also assist in the negotiation of bilateral agreements between Hong Kong and the EC. For instance, the Hong Kong - European Community Customs Cooperation Agreement has just been concluded.

Public Relations

We continue our efforts in updating European government officials, businessmen, journalists and think tanks on the situation in Hong Kong, particularly on the economic front. We also briefed our contacts on the right of abode issue and the rationale behind the HKSARG's decision to seek an interpretation by the Standing Committee of the National People's Congress on the relevant articles of the Basic Law. At the same time, we continue to lobby for visa free access for HKSAR passport holders. We also organised the Chief Executive's visit to Israel, the Financial Secretary's visit to Denmark, Sweden and Finland, 11 Chinese New Year receptions and lunches around Europe as well as a roadshow in Rotterdam and Cologne to promote investment and trade in Hong Kong.

On the media side, we continue to monitor about 160 newspapers and periodicals published in Europe. Over the past seven months, we issued three newsletters and held 39 press briefings to update European journalists on the situation in Hong Kong.

Investment Promotion

We continue to run an active investment promotion programme. Since October 1998, we have conducted three direct mailing exercises, one related to captive insurance, one related to Cebit Hannover and one to Sweden covering 2 000 companies. We have organised three business seminars in Brussels, Limerick (Ireland) and Treviso (Italy) and ran an information stand at Cebit Hannover, the world's leading exhibition on information technology (IT) and telecommunications. Based on returns from our mailing exercises and contacts generated at business seminars and Cebit, we have visited 120 manufacturing and service companies. We are also following up with IT firms which met the Financial Secretary during the latter's visit to Sweden and Finland to promote the Cyberport project.

Appendix 3

Brief Report by Jacqueline Willis, Commissioner for Economic & Trade Affairs, USA

The Commissioner oversees three Hong Kong Economic and Trade Offices in USA (Washington, D.C., New York and San Francisco) which are responsible for:
  1. safeguarding Hong Kong's commercial interests and strengthening economic and trade ties with the U.S.;

  2. looking after Hong Kong's public relations interests in the U.S.; and

  3. promoting U.S. investments into Hong Kong.
We adopt a proactive approach in representing Hong Kong's interests. Our targets include the U.S. Administration, Congress, political leaders, business community, media, think-tanks and academic institutions. We maintain regular dialogue with our interlocutors through personal calls, meetings, briefings, public speeches, seminars, conferences, interviews and media-related activities. We raise our public visibility through newsletters, press releases, websites and electronic mail distribution services. We also work closely with our network of advocates who are opinion-formers and influential leaders prepared to speak up for Hong Kong.

It has been a particularly challenging period for us in the USA. The deterioration in U.S.-China relationship has made it all the more important for us to ensure that Members of Congress and our interlocutors understand Hong Kong's high degree of autonomy and the "one country, two systems" concept. In anticipation of the Cox Report which was finally published on 25 May, we have been very proactive in targetting key Members of Congress, the Administration and opinion makers to brief them on the vigorous system of strategic trade controls Hong Kong has in place. We are also working closely with the industry to ensure that Hong Kong continues to enjoy the same access to high technology. We have also been reinforcing in our messages: Hong Kong's commitment to the level playing field, the rule of law, free flow of information and corruption-free government. Other key issues dealt with by the ETOs are set out in their individual reports.

The U.S. 106th Congress will go into its summer recess on 9 August 1999. On the domestic front it is preoccupied with national security, gun control and social security issues and will be under pressure to pass all 13 of the Appropriations Bills. President Clinton has already given notice to Congress that he intends to renew Normal Trading Relations (NTR) with China for another year. Lobbying on the renewal of NTR has begun in earnest and we are doing our part in explaining the importance of the renewal to Hong Kong.

Appendix 4

Brief Report on the Work of the Washington ETO

The Washington office maintains relations with a number of agencies and departments of the US Government including the White House, State Department, US Treasury, US Trade Representative Office, Department of Commerce and US Customs Service. It maintains a network of contacts among Senators, Congressmen and their staff in the US Capitol. It has developed relations with the members of the media, Washington "think tanks" and academia with a particular interest in Hong Kong and US business.

Key issues over the past 6 months have included regular presentations on the state and prospects of the Hong Kong economy, the plans for Hong Kong's future (including the details of the Budget 1999/2000 and the Cyberport), strategic trade issues both in anticipation of and subsequent to the bipartisan report issued by Congressman Christopher Cox, textiles issues, matters pertaining to the Asia-Pacific Economic Co-operation and the World Trade Organisation (including preparations for a new round of multilateral trade talks), the rule of law in Hong Kong (including issues raised by the Court of Final Appeal's judgement on Right of Abode), and the protection of intellectual property rights in Hong Kong.

In addition to speeches, presentations, briefings and meetings the office coordinates the US HKETO's website, issues its own monthly newsletter, and maintains a regular output of press releases. It organises special functions like an annual Chinese New Year reception and an annual Film Festival to reach out to a wider audience.

Also important to the work of the office are regular visits made to Washington by Hong Kong officials, businessmen, politicians, academics and members of the media.

Appendix 5

Brief Report on the Work of the New York ETO

The New York office continues its vigorous and proactive programme of activities to reach out to companies, business groups, think-tanks and economic and trade officials in 31 states under its purview. We also liaise with the electronic and print media to provide them with information on Hong Kong. For example, the office organized two functions in New York and Atlanta respectively, to introduce the new Commissioner to the USA in February 1999. In addition to sending out useful information during Budget 1999, we arranged programmes for rating agencies in New York to videoconference with the Financial Secretary. We also organized programmes for officers from the Legal Department to visit New York to explain the Government's action regarding the Court of Final Appeal's decision on the Right of Abode cases. The New York office was in charge of Chief Secretary of Administration's visit programme in Chicago and New York in June.

Apart from specific topics, the overall theme of our message is that Hong Kong, with its strong economic fundamentals, continues to offer business opportunities in a free and fair environment. Recently, the attention of our contacts has gradually shifted from the Asian financial crisis to the recovery of the region. Many have shown interest in doing business with Hong Kong and mainland China.

We are continuing with our visits to states outside the New York tri-state areas to give talks and have meetings with a view to furthering their understanding of the economic and trade opportunities in Hong Kong, mainland China and Asia as a whole. Director (New York) visited 13 states and 17 cities since the last report.

Appendix 6

Brief Report on the Work of the Tokyo ETO

Japanese Economy

The economy remains sluggish. There are conflicting signs as to whether the Japanese economy has bottomed out. Bankruptcies are heard of less frequently these days. And new housing sales figures look more encouraging. But capital spending and private consumption, a major component of GDP, continues to be weak. The unemployment rate reached an all-time high of 4.8% in April. The stimulus measures introduced by the Japanese government, while successful in arresting a further dip of the economy, seem powerless in inspiring a self-sustained recovery. Notwithstanding the 1.9% growth in GDP registered in the first quarter of 1999, views remain divided on whether the 0.5% growth in GDP in fiscal 1999 forecast by the government is attainable. The International Monetary Fund's estimate, for example, is that Japan's GDP would shrink by 1.4% in 1999.


On the political front, the ruling Liberal Democratic Party (LDP) continues to enjoy a majority in the Lower House. Its coalition with the Liberal Party has given it a bigger slice of the Upper House representation, albeit still falling short of a majority. The LDP is due to elect its president, who will be de facto prime minister of the nation because of LDP's majority in the Lower House, in September this year. While public support for Prime Minister Keizo Obuchi and his cabinet is increasing, Obuchi is expected to face strong rivalry from candidates from other factions within the party.

ETO (Tokyo) Activities

The ETO moved to its new premises in Chiyoda-ku in January this year. Financial Secretary Hon. Donald Tsang opened the new office on February 9 in the presence of many guests. The Financial Secretary took the opportunity to call on top government officials, politicians and business leaders.

A number of high-level exchanges between Hong Kong and Japan then followed. A 9-member Legco delegation led by Hon. Edward Ho visited Japan from 23-27 February. The delegation was warmly received by the Japan/Hong Kong Parliamentary League chaired by Former Prime Minister Hon. Tsutomu Hata. Other activities of the delegation included, among other things, meetings with many top officials, politicians and business leaders, as well as a useful exchange with senior tourism representatives.

The Japan/Hong Kong Parliamentarian League paid a reciprocal visit to Hong Kong from 29 April to 4 May 1999. The League paid a courtesy call on the Chief Executive Hon. Tung Chee Hwa, was invited to dinner by the Chief Secretary for Administration Hon. Mrs. Anson Chan, and was warmly received by Members of the Legislative Council.

In Tokyo, the ETO continues to do as best as it could to help project a positive image on Hong Kong. We make regular calls on our interlocutors, including those at the highest level in government and political circle, the private sector and the media. Regular briefings and press conferences are held to disseminate information on Hong Kong in general and on topical issues such as the right of abode, Chief Executive's annual policy address and the Financial Secretary's annual budget.

We have in the past six months organized two business seminars, respectively in Kobe and Kanazawa. Invariably, the opportunity was taken by our speakers to cover a wide range of issues. Tourism, for example, was high on our agenda. Indeed, we are encouraged that the number of in-bound tourists from Japan saw an increase of some 15% in the first four months in 1999 compared with that in the same period last year.

Perception of Hong Kong

Overall, Hong Kong continues to enjoy broad-based support from Japan. Save for a few hard-core skeptics, our interlocutors in Japan in general adopt a pragmatic approach to Hong Kong. The economic downturn in Hong Kong is clearly a matter of concern to some, but most agreed that this has nothing to do with Hong Kong's reversion to its motherland. On issues such as the right of abode, we have received a great deal of understanding in Japan. Japan, the second largest economy in the world, will no doubt continue to watch Hong Kong with interest, even though the successful implementation of "one country, two systems" is now almost taken for granted.

Appendix 7

Brief Report on the Work of the Toronto ETO

Economic Developments

Riding on the strong growth of the US economy, the Canadian economy has been picking up since mid-1998. GDP grew by 3.4% in the first quarter of 1999, compared with 3% real growth in 1998. Bank of Canada (the central bank) has revised the growth rate for 1999 upwards to between 2.75% and 3.75%, with strongest growth in Ontario and Alberta provinces. Canadian dollar has risen by almost 6% against US dollar since the beginning of the year, underpinned by strong export performance. Unemployment in May 1999 remained on the very low side of 8.1%. Inflation is expected to rise but would hover around 1% and 1.5%. Canada has an export-driven economy and its economic growth would continue to hinge on the economic performance of other major industrial countries, in particular the US.

Political Developments

On the political front, the Liberal Government led by Prime Minister Chretien remains firmly in power although it has a narrower majority in the House of Commons. The Reform Party - Official Opposition - is eager to form a new political party with the Progressive Conservatives to challenge the Liberal Party. However, the outcome is not optimistic as the Conservative's new leader Joe Clark expressed no interest. A federal cabinet shuffle is expected before summer. The Quebec sovereignty issue has cooled down somewhat but Quebec Premier Lucien Bouchard promised to create "winning conditions" required for a referendum on the sovereignty issue. There is rumour that another referendum will be held after spring of 2000.

Work of the Toronto Office

The Toronto Office continues to reach out the three levels of government, the business community, the media, and think-tanks/academia across Canada through a range of proactive programmes (including speaking engagements, seminars, media interviews/briefings, and exhibitions, receptions, etc.) to inform them of our strong economic fundamentals, the latest state of play, and the excellent business opportunities awaiting them in Hong Kong. We also keep our 5 000 plus interlocutors updated of developments in Hong Kong through our newsletters and website.

To step up our ties with western Canada, particularly Vancouver and Richmond, we set up an information office in Vancouver in January 1999. The Vancouver Office has improved significantly our services to our interlocutors in western Canada and has contributed a lot to the success of the Hong Kong promotion in Vancouver spearheaded by Chief Secretary for Administration, Mrs. Anson Chan, in June 1999. The week-long promotion is the largest promotional activities organized in Canada after the changeover in 1997 and comprised a Hong Kong Film Week, a high-powered business conference cum keynote address by Mrs. Chan, and a gala dinner featuring a lion and dragon dance by award-winning teams from Hong Kong.

Appendix 8

Brief Report on the Work of the Singapore ETO

The Singapore Office is responsible for promoting the overseas image and interests of Hong Kong among the Association of South East Asian Nations (ASEAN) countries, as well as to provide a reliable feed of information on economic, social and political developments in the region.

Through meetings, business seminars, speaking engagements and other social activities, the Singapore Office aims to enhance the level of understanding on Hong Kong among government authorities and organisations, chambers of commerce, think-tanks, academic institutions and private corporations. On the public relations front, regular press conferences are held in different ASEAN countries to update journalists on the latest developments and government policies in Hong Kong. This is complemented by more in-depth briefings for the editorial board to clarify their perspectives and to enrich their background knowledge on the territory.

Given the similarities between Hong Kong and Singapore, there are many ways in which the two economies could share ideas and experience, explore scope for partnership and develop synergy in major growth areas such as banking and finance, shipping and logistics, information technology and e-commerce etc. To this end, the Singapore Office assists in conducting research and establishing contacts for the benefit of mutual exchange.

Furthermore, the Singapore Office serves as the point of liaison with governmental agencies in ASEAN countries and provides logistical support for official delegations from Hong Kong attending conferences or functions held in the region by major international bodies such as the Asia Pacific Economic Cooperation and the World Economic Forum.

ASEAN countries have gone through a traumatic period of adjustments in the past year following the financial turmoil. But positive signs of mild recovery are emerging in some economies. Apart from keeping a close tab on developments in the region, the Singapore Office will seek to identify windows of opportunity for Hong Kong investors arising from structural reforms and market liberalisation.

Appendix 9

Brief Report on the Work of the Sydney ETO

The Sydney Office continues vigorously to promote Hong Kong as Asia's premier international city and to explain government policies to political leaders, government officials, the business community and the general public in both Australia and New Zealand. This is done through regular liaison, speaking engagements, exhibitions, press interviews, press conferences/media briefings, and press releases and op-ed/letters to editors. In the past eight months, we have invited speakers from Hong Kong to address the Australian business community, such as the Chief Executive of the Hong Kong Monetary Authority and the former Solicitor General. The Investment Promotion Unit conducted investment promotion visits to Australian companies and assisted them in establishing/expanding their presence in Hong Kong.

In April 1999, a Police Liaison Officer was posted to the Sydney Office to strengthen co-operation between the Hong Kong and the Australian police forces, with special focus on commercial crimes, money laundering and drug trafficking. This officer will also study the tactics, technologies and strategies used in the prevention and detection of crimes in Australia as well as liaising with Australian authorities on strategic trade issues.

Following the Australian federal elections in October 1998, the Coalition Government pursued aggressively tax reforms and the introduction of a goods and services tax. If the required legislation was passed through the Senate before 30 June 1999, the new tax would be implemented in July 2000. The Government was also keen to promote Australia as one of the major financial centres in the region, together with Singapore and Hong Kong.

The Australian economy showed remarkable resilience in the face of the Asian crisis. The economy grew by 4.5% during the 1998/99 financial year and a further growth of 3% was expected in 1999/2000. The economic growth was achieved by substantial increases in exports to the United States and Europe as well as strong domestic consumption. In May 1999, Standard & Poor upgraded its long-term rating on Australia from AA to AA+, which reversed a 13-year downward trend. A half-yearly Organisation of Economic Co-operation and Development report on Australia also forecast a solid economic growth during 2000.