Legislative Council Panel on Trade and Industry

The Community Electronic Trading Service and Tradelink


This paper sets out the background and present position regarding the implementation of the Community Electronic Trading Service (CETS) and the role played by Tradelink. It also outlines the security arrangements put in place by Tradelink to protect the information it has received.


2. In the 1980s, the use of electronic data interchange (EDI) to replace the paperwork involved in trading procedures began to gain momentum. Leading international trading centres started using EDI to improve efficiency and reduce cost. It was clear that, to remain competitive, Hong Kong could not afford to continue to rely on paper-based methods of doing business.

3. At the time, there were only a few EDI users in Hong Kong. EDI usage was low and its users were limited to a small number of leading players in the banking and transportation sectors. The problem facing us then was how to quickly acquire such expertise within the Government and to achieve the widespread use of EDI in Hong Kong. After reviewing how other major trading centres had introduced EDI services, the Government decided to adopt a two-pronged approach:

  1. involving the major players in the flow of trade information as partners, and

  2. accelerating the widespread use of EDI in Hong Kong by taking the lead in implementing it for key Government trade-related documents and hence building the critical mass required.

4. A good number of the major players involved in the flow of trade information in Hong Kong were then already shareholders of Tradelink and some of them had had actual experience of implementing EDI. It therefore made sense for the Government to build on an already existing partnership. Thus, the Government decided to become a shareholder of Tradelink. A list of the current shareholders of the company is at the Annex.

5. Apart from the need to equip the relevant Government Departments with the necessary computer facilities, the Government also required electronic gateway facilities to interface with the business community. Tradelink was tasked to provide the Government with such facilities. Because a substantial investment would be required, Tradelink would quite naturally like to have some certainty that it would be able to recoup the costs involved and to make a reasonable return on its investment. In the circumstances, a period of seven years of exclusive rights to provide the electronic gateway facilities to Government for five trade documents , which make up the initial scope of CETS, was granted to Tradelink. This period was to commence with the launching of the commercial phase, which subsequently started in January 1997. Tradelink's charges for its exclusive services are subject to the approval of the Chief Executive in Council.

6. As part of its agreement with the Government, Tradelink will, upon the expiry of the seven-year period of exclusive rights on 31 December 2003, return to the Government all the assets required for providing the services for the relevant Government documents at zero cost. Tradelink may also implement other electronic services, but does not have exclusive rights over them.

Present Position

7. At present, Tradelink has about 12,000 customers. They can apply for Restrained Textiles Export Licences (RTEL) and lodge Import and Export Declarations (commonly known as Trade Declarations or TDEC) through the CETS. Later this year, the CETS will also be able to handle bilingual TDEC.

8. Nearly 60% of RTEL are currently applied through the CETS and we intend to make the CETS the only means of applying for such licences in January 1999. Companies eligible to apply for RTEL have been asked by the Trade Department to switch over to electronic submission in phases since January 1998. To cater for those companies that may not be ready to start using electronic submission and for those that only need to apply for an RTEL occasionally, Tradelink provides service centres for converting paper submissions into electronic ones. These service centres are providing a free conversion service for RTEL until the end of December 1998. At present, Tradelink operates five such centres: one of its own and one each in conjunction with the Chinese General Chamber of Commerce, the Chinese Manufacturers' Association, the Hong Kong General Chamber of Commerce and the Federation of Hong Kong Industries.

9. Currently about 28% of TDEC are lodged through the CETS, 11% by post and 61% in person. We intend to make the CETS the only means of lodging such declarations in April 2000. Towards the end of September 1998, Tradelink's service centres will also be able to convert paper TDEC into electronic ones and a free conversion service for TDEC will be provided until the end of March 2000. To tie in with this and subject to the necessary approvals, the existing Government facilities for lodging TDEC in paper will be withdrawn in two phases:

    - first, withdrawal of postal lodgement; and

    - second, gradual run down of the counter service operated by the Customs and Excise Department (C&ED) to receive paper TDEC.

10. We intend to make the necessary legislative arrangements to withdraw the postal lodgement service for TDEC towards the end of this year and to implement the withdrawal of the service in early 1999. To give ample notice to importers and exporters, the C&ED has started to bring the matter to the attention of users of the postal service since August 1998. We have also asked for the assistance of the major trade associations in bringing the matter to the attention of their members.

11. We intend to make the necessary legislative arrangements to withdraw the counter service operated by C&ED to receive paper TDEC towards the end of 1999 and to implement the withdrawal of the service in April 2000.

12. As regards the remaining Government trade-related documents, our current plan is to start using the CETS for Certificates of Origin in mid-1999. We have started the feasibility study for Cargo Manifests. We also plan to start the feasibility study for Dutiable Commodities Permits later this year.


13. Tradelink's system receives, processes, delivers and archives a wide range of commercial information on behalf of its customers. To gain their confidence in using the CETS, the company's system needs to operate at an appropriate security level. As stipulated in its Operating Agreement with the Government, Tradelink is obliged not to disclose the content of any electronic message to any party other than the sender or, after successful delivery, the recipient of the message. Tradelink's shareholders are not privy to the messages except those for which they are senders or receivers.

14. To safeguard the confidentiality of information stored in its system, Tradelink is operating at the C2 level of security, a controlled access protection security standard as defined by the United States Department of Defense Trusted Computer Evaluation Criteria. Under such a level of security, Tradelink's Production Operation and Technical Support Department only authorised strictly limited access to Tradelink's system and computer applications. Moreover, all such access entries are logged and the logs are scrutinised by a separate Control and Quality Management Department to detect any attempts of unauthorised access and possible breaches of security. Authorisations are reviewed at least once every six months and any changes can only be executed with the approval of the Chief Executive Officer of Tradelink.

15. Tradelink's computer centres are managed and operated by a third party service provider under a facility management contract. Entry to these segregated centres to operate the system is limited to a small number of authorised staff. Tradelink's vendors are not allowed to conduct maintenance service in the computer centres without its prior approval. Again, all entries to the computer centres are logged and the logs are subject to the same scrutinies and reviews as described in paragraph 14 above.

16. In addition, Tradelink makes use of external experts from time to time to ensure that its control mechanism is effective and has not been compromised. One such exercise was conducted in February 1997 and the report of the external expert pronounced Tradelink's control measures to be adequate. Tradelink intends to conduct another independent review in early 1999.


17. Panel Members are invited to note this paper.

Trade and Industry Bureau
6 August 1998

    (a) Restrained Textiles Export Licences;

    (b) Trade Declarations;

    (c) Certificates of Origin;

    (d) Cargo Manifests; and

    (e) Dutiable Commodities Permits.


The Shareholders of Tradelink (position as at 31 July 1998)


The Government of the Hong Kong Special Administrative Region



The Hongkong and Shanghai Banking Corporation Ltd



Hong Kong Telecommunications Ltd



China Resources (Holdings) Co Ltd



HACTL Investment Ltd



Modern Terminals Ltd



Swire Pacific Ltd



Hong Kong International Terminals Ltd



Hong Kong General Chamber of Commerce



Federation of Hong Kong Industries



Standard Chartered Bank



Hong Kong Association of Freight Forwarding Agents