WTO Trade Policy Review of Macau, China
Statement by Ambassador Rita D. Hayes
U.S. Representative to the WTO

March 19, 2001

Opening Remarks

Thank you Mr. Chairman. The United States welcomes Secretary Tam and his delegation to the Trade Policy Review of Macau, China (hereinafter Macau). We commend the Secretariat's report on Macau's trade policies and practices prepared for this review. We also appreciate the report by the Macau Special Administrative Region (SAR) Government. These reports offer excellent historical and current materials on Macau, China's laws and regulations related to trade. We have generated several questions in these areas based on those reports. We look forward to reviewing in greater depth its trade regime and receiving answers from Macau to our questions.

We support Macau's unique character and prosperity and continue to value its special features as a home to citizens of different ethnic and cultural backgrounds. The continued attention of the international community and Macau's links with the rest of the world can make a key contribution to its future. Although Macau's economy and market are small, they have their strengths: low rents, a convenient new airport, reasonable warehouse facilities and easy access to the booming Pearl River Delta. Recently there has been a sharp increase in tourist travel to Macau, China that has boosted the forecasted growth to 2.4 percent for 2000.

The United States remains fully engaged with the Macau S.A.R. Government and the people of Macau. The United States is Macau's largest trading partner, purchasing almost half of its exports, more than $1.3 billion U.S. in 2000. We seek to build on our excellent relations to expand our trade and investment ties with Macau.

Since the last Trade Policy Review in 1994, Macau has maintained its liberal trade policies. There have been few major changes other than those related to commitments made in the Uruguay Round. Despite the Asian crisis and changes related to Macau's relations to the
People's Republic of China, Macau's trade policy has stayed the course. We recognize the strong commitment of the Macau SAR Government and expand these liberal trade policies and look forward to continuing to work closely with it to help in the these efforts.

Macau and the WTO

Mr. Chairman, the United States and Macau share a commitment to the objectives of the WTO. Macau is not only a founding member of the WTO; it has been a GATT Contracting party since January 1991.

We encourage Macau's participation in the built in agenda negotiations. During the Uruguay Round, Macau bound all those encompassing agricultural products listed in Annex 1 to the Agreement on Agriculture at zero. Macau has also indicated it attaches great importance to the liberalization of certain services sectors, such as tourism, telecommunications, and e-commerce. In addition, Macau has said it is examining the possibility of binding more tariff lines for industrial products in future negotiations.

Macau's commitments under GATS are limited primarily to financial services. The Government has indicated it will unilaterally liberalize some other services, including telecommunications. We encourage Macau to expand its GATS commitments and increase its competitiveness in the global economy by lowering costs and strengthening the transparency and predictability of its trade and investment regime.

We were pleased Macau amended its copyright laws in 1999 with the intention of making them TRIPs compatible. We were also pleased that the Macau SAR Government has taken steps to implement a decree to require the use of only licensed software by government offices. However more needs to be done about enforcement of intellectual property rights in the copyright area.

Ongoing Matters of Concern

With no tariffs applied on imports, Macau has one of the most open trade regimes in the world. However, in several areas more needs to be done to improve the business climate and encourage further growth. Furthermore, Macau needs to diversify its exports. While the Macau SAR Government has begun to address some of these problems, we remain concerned that certain practices continue to limit the attractiveness of Macau to trade and investment.

The Secretariat's report notes that the authorities have succeeded in sharply reducing crime much to the benefit of tourism, one of Macau's major foreign exchange earners. We also recognize that the Government has also said it is committed to tackling corruption issues. However there is more it can do in these areas and on other important issues such as money laundering.

While Macau has strengthened its IPR legislation and increased enforcement, it has failed to achieve convictions and impose deterrent sentences for suspected pirate manufacturers. Strong intellectual property rights protection, including a serious and sustained enforcement effort, are essential to Macau's efforts to attract foreign investment and to develop high technology industry and services.

In raising another issue, we would like to first note that Macau has done much to control this problem. A serious problem that has clouded Macau's reputation and discouraged legitimate business is the illegal transhipment of textiles. Illegal transshipments damage Macau's legitimate manufacturing enterprises and take jobs away from Macau. We recognize that, here too, the Macau SAR Government has made a commitment to solve the transshipment problem. While we appreciate the increased cooperation that has been possible under our MOU, the true test will be in the SAR's commitment to fulfill the terms of the MOU and toughen penalties for convicted transshipers, including denying future export licenses. We know from working with Macau on this issue that Macau has made great efforts in this area and will continue to do so.

Increased competition and de-regulation is also desirable to attract investment. We are pleased to note the Macau SAR Government's decision last fall to liberalize the mobile telephone market. We hope this will be followed by similar liberalization of other telecom sectors We urge the Macau SAR Government to improve competition in telecom and other basic services.

Increased transparency would also be helpful. The share of public expenditure is estimated at 20 percent of GDP. We urge Macau to take steps to increase transparency in government procurement. We also urge Macau to introduce legislation to protect the right to collective bargaining. We would also welcome some streamlining of the "red tape" involved in doing business. Improvements in these areas will make Macau an even more attractive place to invest and do business.

CONCLUSION

Mr. Chairman, Macau's free trade policies are highly commendable and have served it extremely well. In order to ensure future growth, the Macau, SAR Government needs to further liberalize its investment regime, as well as ensure effective enforcement of its laws. We admire the commitment of the Macau SAR Government to do more in these areas and look forward to continuing to support in its efforts. We look forward to discussing Macau's trade policies and practices with other delegations during this review.