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(CHAPTER 42)ARRANGEMENT OF SECTIONS

(CHAPTER 42)ARRANGEMENT OF SECTIONS Section 1. Short title 2. Interpretation 3. Application for registration of patent 4. Application to be accompanied by certain documents 5. Issue of certificate of registration 6. Nature of rights conferred by registration 7. Period of rights conferred by registration 7A. Crown 7B. Use of patented inventions for the services of the Crown 7C. Right of third parties in respect of Crown use 7D. Reference of disputes as to Crown use 8. Power to declare exclusive privileges not acquired 9. Amendment of specification or drawings 10. Registration of assignment, etc.

11. Power to make rules prescribing procedure and fees To consolidate and amend the law relating to the registration of Patents.

(Amended 25 of 1979 s. 2) [9 December 1932] WHOLE DOCUMENT 1. Short title This Ordinance may be cited as the Registration of Patents Ordinance.

(Amended 25 of 1979 s. 3) 2. Interpretation In this Ordinance, unless the context otherwise requires- "comptroller" means the Comptroller-General of Patents, Designs and Trade Marks in the United Kingdom; (Added 25 of 1979 s. 4) [cf. 1977 c. 37 s.

130 U. K.] "European patent (UK)" means a patent granted under the Convention on the Grant of European Patents and designating the United Kingdom; (Added 25 of 1979 s. 4) [cf. 1977 c. 37 s. 130 U. K.] "patent" means a patent granted under the Patents Act 1949 (1949 c. 87 U.

K.) or under the Patents Act 1977 (1977 c. 37 U. K.) and means also a European patent (UK) that has effect in the United Kingdom pursuant to section 77 of the Patents Act 1977 (1977 c. 37 U. K.); (Added 25 of 1979 s. 4); "priority date" has the meaning assigned to it- (a) in the case of a patent under the Patents Act 1949 (1949 c. 87 U. K.), by section 5 of that Act; (b) in the case of a patent under the Patents Act 1977 (1977 c. 37 U. K.), by section 5 of that Act; and (c) in the case of a European patent (UK), by section 5 of the Patents Act 1977 (1977 c. 37 U. K.), subject to the incidents and modifications mentioned in section 78 of that Act; (Added 25 of 1979 s. 4) "Registrar" means the Registrar of Patents appointed by the Governor.

(Amended 35 of 1990 s. 9) (Replaced 27 of 1958 s. 2) 3. Application for registration of patent (1) Any person being the grantee of a patent, or any person deriving his right from such grantee by assignment, transmission or other operation of law, may, within 5 years from the date of grant of the patent, apply to have such patent registered in Hong Kong. Where any partial assignment or transmission has been made all proper parties shall be joined in the application for registration. (Amended 27 of 1958 s. 3; 25 of 1979 s. 5) (2) In this section "the date of grant" means- (a) in relation to a patent under the Patents Act 1949 (1949 c. 87 U. K.), the date of sealing of the patent under section 19 of that Act; (b) in relation to a patent under the Patents Act 1977 (1977 c. 37 U. K.), the date upon which the patent takes effect pursuant to section 25 of that Act; and (c) in relation to a European patent (UK), the date upon which the patent takes effect in the United Kingdom pursuant to section 77 of the Patents Act 1977 (1977 c. 37 U. K.). (Added 25 of 1979 s. 5) 4. Application to be accompanied by certain documents An application under this Ordinance shall be accompanied by- (a) in the case of a patent the specification of which was published in a language other than English, a certified copy of the translation into English of the specification; or (b) in any other case, a certified copy of the specification, together with the drawings (if any) relating to the patent and a certificate of the comptroller giving full particulars of the grant of the patent or of its taking effect in the United Kingdom on such specification.

(Replaced 25 of 1979 s. 6) 5. Issue of certificate of registration Upon such application being received, together with the documents mentioned in section 4, and upon payment of the prescribed fees and of the cost of any prescribed advertisement, the Registrar shall issue a certificate of registration. (Amended 27 of 1958 s. 4) 6. Nature of rights conferred by registration Such certificate of registration shall confer on the applicant privileges and rights, subject to all conditions established by the law of Hong Kong, as though the patent had been granted in the United Kingdom with an extension to Hong Kong. (Amended 25 of 1979 s. 7) 7. Period of rights conferred by registration The privileges and rights so granted shall date from the commencement of the term of the patent in the United Kingdom and shall continue in force only so long as the patent remains in force in the United Kingdom: Provided that no action for infringement shall be entertained in respect of any act done prior to the date of issue of the certificate of registration in Hong Kong. (Amended 25 of 1979 s. 8) 7A. Crown Subject to the provisions of this Ordinance and of section 5 (3) of the Crown Proceedings Ordinance (Cap. 300), a certificate of registration, whether issued before or after the commencement of the Registration of United Kingdom Patents (Amendment) Ordinance 1968 (24 of 1968), shall, after the commencement of that Ordinance, have the same effect against the Crown as it has against a subject.

(Added 24 of 1968 s. 2) [cf. 1949 c. 87 s. 21 (2) U. K.] 7B. Use of patented inventions for the services of the Crown (1) (a) Notwithstanding anything in this Ordinance or any other law, the Government, and any person authorized in writing by the Governor, may use any patented invention for the services of the Crown in accordance with the following provisions of this section.

(b) An invention for which a patent has been granted or has taken effect in the United Kingdom shall, upon the issue of a certificate of registration of such patent under this Ordinance (but not any earlier) become a patented invention for the purposes of this section, and shall remain a patented invention only for so long as the patent remains in force in the United Kingdom, save that if a declaration is made under this Ordinance that the exclusive privileges and rights conferred by such certificate have not been acquired the invention shall not be or be regarded as having been a patented invention within the meaning of this section. (Amended 25 of 1979 s. 9) (2) If and so far as the patented invention has before its priority date been duly recorded by or tried by or on behalf of any department of Her Majesty's Government in the United Kingdom or the United Kingdom Atomic Energy Authority or the Government otherwise than in consequence of the communication thereof directly or indirectly by the person or persons entered as grantee or proprietor of the patent on the register of patents kept pursuant to the Patents Act 1977 (1977 c. 37 U. K.) or by any person from whom he derives title, any use of the invention by virtue of this section may be made free of any royalty or other payment to the person entitled under the relevant certificate of registration issued under this Ordinance to the privileges and rights conferred by such certificate.

(Amended 25 of 1979 s. 9) (3) If and so far as the patented invention has not been so recorded or tried as aforesaid, any use of the invention made by virtue of this section at any time after the issue under this Ordinance of the certificate of registration of the patent granted for that invention, or in consequence of any such communication as aforesaid, shall be made upon such terms as may be agreed upon, either before or after the use, between the Government and the person entitled under the certificate of registration to the privileges and rights conferred thereby, or as may in default of agreement be determined by the court on a reference under section 7D.

(4) The authority of the Governor in respect of a patented invention may be given under this section either before or after the certificate of registration of the patent for the invention is issued and either before or after the acts in respect of which the authority is given are done, and may be given to any person whether or not he is authorized directly or indirectly by the person entitled under the certificate of registration to the privileges and rights conferred thereby to use the invention.

(5) Where any use of a patented invention is made by the Government, or by any person with the authority of the Governor, under this section, then, unless it appears to the Governor that it would be contrary to the public interest so to do, the Chief Secretary shall notify the holder of the certificate of registration issued under this Ordinance as soon as is practicable after the use is begun, and furnish him with such information as to the extent of the use as he may from time to time require.

(Added 24 of 1968 s. 2) [cf. 1949 c. 87 s. 46 (1), (2), (3), (4), (5) & (7) U. K. See 1954 c. 32 3rd Sch. U. K.] 7C. Right of third parties in respect of Crown use (1) In relation to any use of a patented invention, within the meaning of section 7B (1) (b), made for the services of the Crown- (a) by the Government, or by a person authorized by the Governor under section 7B; or (b) by the person entitled under the certificate of registration to the privileges and rights conferred thereby, to the order of the Government, the provisions of any licence, assignment or agreement made, whether before or after the commencement of the Registration of United Kingdom Patents (Amendment) Ordinance 1968 (24 of 1968), between the person entitled under the certificate of registration to the privileges and rights conferred thereby, or any person who derives title from him or from whom he derives title, and any person other than the Government shall be of no effect so far as those provisions restrict or regulate the use of the invention, or any model, document or information relating thereto, or provide for the making of payments in respect of any such use, or calculated by reference thereto.

(2) Where an exclusive licence granted otherwise than for royalties or other benefits determined by reference to the use of the invention is in force in the Colony, then- (a) in relation to any use of the patented invention which, but for the provisions of this section and section 7B, would constitute an infringement of the rights of the licensee, section 7B (3) shall have effect as if for the reference to the person entitled under the certificate of registration to the privileges and rights conferred thereby there were substituted a reference to the licensee; and (b) in relation to the use of the patented invention by the licensee by virtue of an authority given under section 7B, that section shall have effect as if the said subsection (3) were omitted.

(3) Subject to the provisions of subsection (2), where the patent has been assigned to the person entitled under the certificate of registration thereof to the privileges and rights conferred by such certificate in consideration of royalties or other benefits determined by reference to the use of the patented invention, then- (a) in relation to any use of the invention by virtue of section 7B, subsection (3) of that section shall have effect as if the reference to the person entitled under the certificate of registration to the privileges and rights conferred thereby included a reference to the assignor, and any sum payable by virtue of that subsection shall be divided between the person entitled as aforesaid and the assignor in such proportion as may be agreed upon between them or as may in default of agreement be determined by the court on a reference under section 7D; and (b) in relation to any use of the invention made for the services of the Crown by the person entitled under the certificate of registration to the privileges and rights conferred thereby to the order of the Government, section 7B (3) shall have effect as if that use were made by virtue of an authority given under that section.

(4) Where, under section 7B (3), payments are required to be made by the Government to a person entitled under a certificate of registration to the privileges and rights conferred thereby in respect of any use of patented invention, any person, being the holder of an exclusive licence in force in the Colony (not being such a licence as is mentioned in subsection (2) of this section) authorizing him to make that use of the invention, shall be entitled to recover from the person entitled under the certificate of registration to the privileges and rights conferred thereby such part (if any) of those payments as may be agreed upon between that person and the person entitled as aforesaid to the said privileges and rights, or as may in default of agreement be determined by the court under section 7D to be just having regard to any expenditure incurred by that person- (a) in developing the said invention; or (b) in making payments to the person entitled as aforesaid to the said privileges and rights, other than royalties or other payments determined by reference to the use of the invention, in consideration of the licence, and if, at any time before the amount of any such payment has been agreed upon between the Government and the person entitled as aforesaid to the said privileges and rights that person gives notice in writing of his interest to the Chief Secretary, any agreement as to the amount of that payment shall be of no effect unless it is made with his consent.

(Added 24 of 1968 s. 2) [cf. 1949 c. 87 s. 47 U. K.] 7D. Reference of disputes as to Crown use (1) Any dispute as to the exercise by the Government or a person authorized by the Governor of the powers conferred by section 7B, or as to terms for the use of a patented invention for the services of the Crown thereunder, or as to the right of any person to receive any part of a payment made in pursuance of subsection (3) of that section, may be referred to the High Court by either party to the dispute in such manner as may be prescribed by rules of court.

(2) In any proceedings under this section in which the Attorney General represents the Crown or the Government, the Attorney General may- (a) if the person entitled under the relevant certificate of registration to the privileges and rights conferred thereby is a party to the proceedings, apply for a declaration, on any of grounds upon which such a declaration may be made under section 8, that the exclusive privileges and rights conferred by such certificate of registration have not been acquired; (b) in any case, put in issue the validity of the certificate without applying for such a declaration as aforesaid.

(3) If in such proceedings as aforesaid any question arises whether an invention has been recorded or tried as mentioned in section 7B, and the disclosure of any document recording the invention, or of any evidence of the trial thereof, would in the opinion of the Governor be prejudicial to the public interest, the disclosure may be made confidentially to counsel for the other party or to an independent expert mutually agreed upon.

(4) In determining under this section any dispute between the Government and any person as to terms for the use of an invention for the services of the Crown, the court shall have regard to any benefit or compensation which that person or any person from whom he derives title may have received, or may be entitled to receive, directly or indirectly from the Government in respect of the invention in question.

(5) In any proceedings under this section the court may at any time order the whole proceedings or any question or issue of fact arising therein to be referred to a special referee or an arbitrator on such terms as the court may direct; and references to the court in the foregoing provisions of this section shall be construed accordingly. (Added 24 of 1968 s. 2) [cf. 1949 c. 87 s. 48 U. K.] 8. Power to declare exclusive privileges not acquired (1) The High Court shall have power, upon the application of any person who alleges that his interests have been prejudicially affected by the issue of a certificate of registration, to declare, on any of the grounds upon which the patent might be revoked or treated as revoked under the law for the time being in force in the United Kingdom, that the exclusive privileges and rights conferred by such certificate of registration have not been acquired. (Amended 25 of 1979 s. 10) (2) Such grounds shall be deemed to include the manufacture, use or sale of the invention in the Colony before the priority date applicable to the patent in the United Kingdom, but not to include the manufacture, use or sale of the invention in the Colony by some person or persons after the priority date applicable to the patent in the United Kingdom and before the date of the issue of the certificate of registration under section 5.

(Replaced 27 of 1958 s. 5. Amended 25 of 1979 s. 10) 9. Amendment of specification or drawings Whenever the specification or drawings of a patent registered in Hong Kong has or have been amended or treated as amended, according to the law of the United Kingdom, a request, accompanied by a copy of the specification and drawings (if any) as amended, or a copy of the translation into English of the amendment, as the case may be, duly certified by the comptroller, may be made to the Registrar to substitute the specification and drawings as amended for the specification and drawings originally filed.

(Replaced 25 of 1979 s. 11) 10. Registration of assignment, etc.

Where a person becomes entitled by assignment, transmission or other operation of law to the privileges and rights conferred by a certificate of registration or to any interest therein, he may make application in the prescribed manner to the Registrar for the entry on the register of such assignment, transmission or other instrument affecting the title, or giving an interest therein.

(Amended 27 of 1958 s. 4) 11. Power to make rules prescribing procedure and fees The Registrar may make such rules and do such things as he may think expedient, subject to the provisions of this Ordinance, for prescribing the procedure under this Ordinance and the fees to be paid in respect of proceedings under this Ordinance: Provided that no such rules shall come into operation until the same have been approved by the Legislative Council and published in the Gazette.

ent, or by a person authorized by the Governor under section 7B; or (b) by the person entitled under the certificate of registration to the privileges and rights conferred thereby, to the order of the Government, the provisions of any licence, assignment or agreement made, whether before or after the commencement of the Registration of United Kingdom Patents (Amendment) Ordinance 1968 (24 of 1968), between the person entitled under the certificate of registration to the privileges and rights conferred thereby, or any person who derives title from him or from whom he derives title, and any person other than the Government shall be of no effect so far as those provisions restrict or regulate the use of the invention, or any model, document or information relating thereto, or provide for the making of payments in respect of any such use, or calculated by reference thereto.

(2) Where an exclusive licence granted otherwise than for royalties or other benefits determined by reference to the use of the invention is in force in the Colony, then- (a) in relation to any use of the patented invention which, but for the provisions of this section and section 7B, would constitute an infringement of the rights of the licensee, section 7B (3) shall have effect as if for the reference to the person entitled under the certificate of registration to the privileges and rights conferred thereby there were substituted a reference to the licensee; and (b) in relation to the use of the patented invention by the licensee by virtue of an authority given under section 7B, that section shall have effect as if the said subsection (3) were omitted.

(3) Subject to the provisions of subsection (2), where the patent has been assigned to the person entitled under the certificate of registration thereof to the privileges and rights conferred by such certificate in consideration of royalties or other benefits determined by reference to the use of the patented invention, then- (a) in relation to any use of the invention by virtue of section 7B, subsection (3) of that section shall have effect as if the reference to the person entitled under the certificate of registration to the privileges and rights conferred thereby included a reference to the assignor, and any sum payable by virtue of that subsection shall be divided between the person entitled as aforesaid and the assignor in such proportion as may be agreed upon between them or as may in default of agreement be determined by the court on a reference under section 7D; and (b) in relation to any use of the invention made for the services of the Crown by the person entitled under the certificate of registration to the privileges and rights conferred thereby to the order of the Government, section 7B (3) shall have effect as if that use were made by virtue of an authority given under that section.

(4) Where, under section 7B (3), payments are required to be made by the Government to a person entitled under a certificate of registration to the privileges and rights conferred thereby in respect of any use of patented invention, any person, being the holder of an exclusive licence in force in the Colony (not being such a licence as is mentioned in subsection (2) of this section) authorizing him to make that use of the invention, shall be entitled to recover from the person entitled under the certificate of registration to the privileges and rights conferred thereby such part (if any) of those payments as may be agreed upon between that person and the person entitled as aforesaid to the said privileges and rights, or as may in default of agreement be determined by the court under section 7D to be just having regard to any expenditure incurred by that person- (a) in developing the said invention; or (b) in making payments to the person entitled as aforesaid to the said privileges and rights, other than royalties or other payments determined by reference to the use of the invention, in consideration of the licence, and if, at any time before the amount of any such payment has been agreed upon between the Government and the person entitled as aforesaid to the said privileges and rights that person gives notice in writing of his interest to the Chief Secretary, any agreement as to the amount of that payment shall be of no effect unless it is made with his consent.

(Added 24 of 1968 s. 2) [cf. 1949 c. 87 s. 47 U. K.] 7D. Reference of disputes as to Crown use (1) Any dispute as to the exercise by the Government or a person authorized by the Governor of the powers conferred by section 7B, or as to terms for the use of a patented invention for the services of the Crown thereunder, or as to the right of any person to receive any part of a payment made in pursuance of subsection (3) of that section, may be referred to the High Court by either party to the dispute in such manner as may be prescribed by rules of court.

(2) In any proceedings under this section in which the Attorney General represents the Crown or the Government, the Attorney General may- (a) if the person entitled under the relevant certificate of registration to the privileges and rights conferred thereby is a party to the proceedings, apply for a declaration, on any of grounds upon which such a declaration may be made under section 8, that the exclusive privileges and rights conferred by such certificate of registration have not been acquired; (b) in any case, put in issue the validity of the certificate without applying for such a declaration as aforesaid.

(3) If in such proceedings as aforesaid any question arises whether an invention has been recorded or tried as mentioned in section 7B, and the disclosure of any document recording the invention, or of any evidence of the trial thereof, would in the opinion of the Governor be prejudicial to the public interest, the disclosure may be made confidentially to counsel for the other party or to an independent expert mutually agreed upon.

(4) In determining under this section any dispute between the Government and any person as to terms for the use of an invention for the services of the Crown, the court shall have regard to any benefit or compensation which that person or any person from whom he derives title may have received, or may be entitled to receive, directly or indirectly from the Government in respect of the invention in question.

(5) In any proceedings under this section the court may at any time order the whole proceedings or any question or issue of fact arising therein to be referred to a special referee or an arbitrator on such terms as the court may direct; and references to the court in the foregoing provisions of this section shall be construed accordingly. (Added 24 of 1968 s. 2) [cf. 1949 c. 87 s. 48 U. K.] 8. Power to declare exclusive privileges not acquired (1) The High Court shall have power, upon the application of any person who alleges that his interests have been prejudicially affected by the issue of a certificate of registration, to declare, on any of the grounds upon which the patent might be revoked or treated as revoked under the law for the time being in force in the United Kingdom, that the exclusive privileges and rights conferred by such certificate of registration have not been acquired. (Amended 25 of 1979 s. 10) (2) Such grounds shall be deemed to include the manufacture, use or sale of the invention in the Colony before the priority date applicable to the patent in the United Kingdom, but not to include the manufacture, use or sale of the invention in the Colony by some person or persons after the priority date applicable to the patent in the United Kingdom and before the date of the issue of the certificate of registration under section 5.

(Replaced 27 of 1958 s. 5. Amended 25 of 1979 s. 10) 9. Amendment of specification or drawings Whenever the specification or drawings of a patent registered in Hong Kong has or have been amended or treated as amended, according to the law of the United Kingdom, a request, accompanied by a copy of the specification and drawings (if any) as amended, or a copy of the translation into English of the amendment, as the case may be, duly certified by the comptroller, may be made to the Registrar to substitute the specification and drawings as amended for the specification and drawings originally filed.

(Replaced 25 of 1979 s. 11) 10. Registration of assignment, etc.

Where a person becomes entitled by assignment, transmission or other operation of law to the privileges and rights conferred by a certificate of registration or to any interest therein, he may make application in the prescribed manner to the Registrar for the entry on the register of such assignment, transmission or other instrument affecting the title, or giving an interest therein.

(Amended 27 of 1958 s. 4) 11. Power to make rules prescribing procedure and fees The Registrar may make such rules and do such things as he may think expedient, subject to the provisions of this Ordinance, for prescribing the procedure under this Ordinance and the fees to be paid in respect of proceedings under this Ordinance: Provided that no such rules shall come into operation until the same have been approved by the Legislative Council and published in the Gazette.

TABLE OF CONTENTS I. INTRODUCTION 1 1. Documentation Provided 1 2. Introductory Statements 1 II. ECONOMIC POLICIES 3 1. Non-Discrimination (including national treatment) 3 2. Monetary and Fiscal Policy 5 3. Foreign Exchange and Payments 5 4. Balance-of-Payments Measures 7 5. Investment Regime 8 6. State-Owned and State-Invested Enterprises 8 7. Pricing Policies 10 8. Competition Policy 12 III. FRAMEWORK FOR MAKING AND ENFORCING POLICIES 12 1. Structure and Powers of the Government 12 2. Authority of Sub-National Governments 13 3. Uniform Administration of the Trade Regime 14 4. Judicial Review 14 IV. POLICIES AFFECTING TRADE IN GOODS 15 A. TRADING RIGHTS 15 1. General 15 2. Designated Trading 17 B. IMPORT REGULATION 17 1. Ordinary Customs Duties 17 2. Other Duties and Charges 19 3. Rules of Origin 19 4. Fees and Charges for Services Rendered 19 5. Application of Internal Taxes to Imports 19 6. Tariff Exemptions 20 7. Tariff Rate Quotas 21 8. Quantitative Import Restrictions, including Prohibitions and Quotas 23 9. Import Licensing 26 10. Customs Valuation 27 11. Other Customs Formalities 28 12. Preshipment Inspection 28 13. Anti-Dumping, Countervailing Duties 29 14. Safeguards 31 C. EXPORT REGULATIONS 31 1. Customs Tariffs, Fees and Charges for Services Rendered, Application of Internal Taxes to Exports 31 2. Export Licensing and Export Restrictions 31 3. Export Subsidies 33 D. INTERNAL POLICIES AFFECTING FOREIGN TRADE IN GOODS 33 1. Taxes and Charges Levied on Imports and Exports 33 2. Industrial Policy, including Subsidies 33 3. Technical Barriers to Trade 35 4. Sanitary and Phytosanitary Measures 39 5. Trade-Related Investment Measures 40 6. State Trading Entities 40 7. Special Economic Areas 42 8. Transit 43 9. Agricultural Policies 43 10. Trade in Civil Aircraft 45 11. Textiles 45 12. Measures Maintained Against China 46 13. Transitional Safeguards 46 V. TRADE-RELATED INTELLECTUAL PROPERTY REGIME 48 A. GENERAL 48 1. Overview 48 2. Responsible agencies for policy formulation and implementation 52 3. Participation in international intellectual property agreements 53 4. Application of national and MFN treatment to foreign nationals 53 B. SUBSTANTIVE STANDARDS OF PROTECTION, INCLUDING PROCEDURES FOR THE ACQUISITION AND MAINTENANCE OF INTELLECTUAL PROPERTY RIGHTS 54 1. Copyright protection 54 2. Trademarks, including service marks 54 3. Geographical indications, including appellations of origin 55 4. Industrial designs 55 5. Patents 56 6. Plant variety protection 58 7. Layout designs of integrated circuits 59 8. Requirements on undisclosed information, including trade secrets and test data 59 C. MEASURES TO CONTROL ABUSE OF INTELLECTUAL PROPERTY RIGHTS 60 D. ENFORCEMENT 60 1. General 60 2. Civil judicial procedures and remedies 61 3. Provisional measures 61 4. Administrative procedures and remedies 62 5. Special border measures 63 6. Criminal procedures 63 VI. POLICIES AFFECTING TRADE IN SERVICES 63 1. Licensing 63 2. Choice of Partner 66 3. Modification of the Equity Interest 67 4. Prior Experience Requirement for Establishment in Insurance Sector 67 5. Inspection Services 67 6. Market Research 67 7. Legal Services 67 8. Minority Shareholder Rights 67 9. Schedule of Specific Commitments 68 VII. OTHER ISSUES 68 1. Notifications 68 2. Special Trade Arrangements 68 3. Transparency 68 4. Government Procurement 70 VIII. CONCLUSIONS 71 I. INTRODUCTION 1. At its meeting on 4 March 1987, the Council established a Working Party to examine the request of the Government of the People's Republic of China ("China") (L/6017, submitted on 10 July 1986) for resumption of its status as a GATT contracting party, and to submit to the Council recommendations which may include a Protocol on the Status of China. In a communication dated 7 December 1995, the Government of China applied for accession to the Marrakesh Agreement Establishing the World Trade Organization ("WTO Agreement") pursuant to Article XII of the WTO Agreement. Following China's application and pursuant to the decision of the General Council on 31 January 1995, the existing Working Party on China's Status as a GATT 1947 Contracting Party was transformed into a WTO Accession Working Party, effective from 7 December 1995. The terms of reference and the membership of the Working Party are reproduced in document WT/ACC/CHN/2/Rev.11 and Corr.1.

2. The Working Party on China's Status as a Contracting Party met on 20 occasions between 1987 and 1995 under the Chairmanship of H.E. Mr. Pierre-Louis Girard (Switzerland). The Working Party on the Accession of China met on 22 March 1996, 1 November 1996, 6 March 1997, 23 May 1997, 1 August 1997, 5 December 1997, 8 April 1998, 24 July 1998, 21 March 2000, 23 June 2000, 27 July 2000, 28 September 2000, 9 November 2000, 8 December 2000, 17 January 2001, 4 July 2001, 20 July 2001 and 17 September 2001 under the same Chairman. At meetings held on 9 November 2000, 8 December 2000 and 17 January 2001, Mr. Paul-Henri Ravier, Deputy Director-General of the WTO, served as Acting Chairman.

1. Documentation Provided 3. The Working Party had before it, to serve as a basis for its discussion, a Memorandum on China's Foreign Trade Regime (L/6125) and questions posed by members of the Working Party on the foreign trade regime of China, together with replies of the Chinese authorities thereto. In addition, the Government of China made available to the Working Party a substantial amount of documentation, which is listed in document WT/ACC/CHN/23/Rev.1.

2. Introductory Statements 4. In statements to the GATT 1947 Working Party and subsequently to the Working Party on the Accession of China, the representative of China stated that China's consistent efforts to resume its status as a contracting party to GATT and accession to the WTO Agreement were in line with its objective of economic reform to establish a socialist market economy as well as its basic national policy of opening to the outside world. China's WTO accession would increase its economic growth and enhance its economic and trade relations with WTO Members.

5. Members of the Working Party welcomed China's accession to the WTO Agreement and considered that its accession would contribute to a strengthening of the multilateral trading system, enhancing the universality of the WTO, bringing mutual benefits to China and to the other Members of the WTO, and ensuring the steady development of the world economy.

6. The representative of China said that China had a territory of 9.6 million square kilometres and, at the end of 1998 a population of 1.25 billion. Since 1979, China had been progressively reforming its economic system, with the objective of establishing and improving the socialist market economy. The reform package introduced in 1994, covering the banking, finance, taxation, investment, foreign exchange ("forex") and foreign trade sectors, had brought about major breakthroughs in China's socialist market economy. State-owned enterprises had been reformed by a clear definition of property rights and responsibilities, a separation of government from enterprise, and scientific management. A modern enterprise system had been created for the state-owned sector, and the latter was gradually getting on the track of growth through independent operation, responsible for its own profits and losses. A nation-wide unified and open market system had been developed. An improved macroeconomic regulatory system used indirect means and market forces to play a central role in economic management and the allocation of resources. A new tax and financial system was functioning effectively. Financial policy had been separated from commercial operations of the central bank, which now focussed on financial regulation and supervision. The exchange rate of the Chinese currency Renminbi (also "CNY") had been unified and remained stable. The Renminbi had been made convertible on current account. Further liberalization of pricing policy had resulted in the majority of consumer and producer products being subject to market prices. The market now played a much more significant role in boosting supply and meeting demand.

7. The representative of China further noted that as a result, in 1999, the Gross Domestic Product ("GDP") of China totaled CNY 8.2054 trillion yuan (approximately US$ 990 billion). In 1998, the net per capita income for rural residents was CNY 2,160 yuan (approximately US$ 260), and the per capita dispensable income for urban dwellers was CNY 5,425 yuan (approximately US$ 655). In recent years, foreign trade had grown substantially. In 1999, total imports and exports of goods reached US$ 360.65 billion, of which exports stood at US$ 194.93 billion, and imports, US$ 165.72 billion. Exports from China in 1998 accounted for 3.4 per cent of the world's total.

8. The representative of China stated that although important achievements have been made in its economic development, China was still a developing country and therefore should have the right to enjoy all the differential and more favourable treatment accorded to developing country Members pursuant to the WTO Agreement.

9. Some members of the Working Party indicated that because of the significant size, rapid growth and transitional nature of the Chinese economy, a pragmatic approach should be taken in determining China's need for recourse to transitional periods and other special provisions in the WTO Agreement available to developing country WTO Members. Each agreement and China's situation should be carefully considered and specifically addressed. In this regard it was stressed that this pragmatic approach would be tailored to fit the specific cases of China's accession in a few areas, which were reflected in the relevant provisions set forth in China's Protocol and Working Party Report. Noting the preceding statements, Members reiterated that all commitments taken by China in her accession process were solely those of China and would prejudice neither existing rights and obligations of Members under the WTO Agreement nor on-going and future WTO negotiations and any other process of accession. While noting the pragmatic approach taken in China's case in a few areas, Members also recognized the importance of differential and more favourable treatment for developing countries embodied in the WTO Agreement.

10. At the request of interested members of the Working Party, the representative of China agreed that China would undertake bilateral market access negotiations with respect to industrial and agricultural products, and initial commitments in services.

11. Some members of the Working Party stated that in addition to undertaking market access negotiations in goods and services, close attention should also be paid to China's multilateral commitments, in particular China's future obligations under the Multilateral Agreements on Trade in Goods and the General Agreement on Trade in Services ("GATS"). This was of vital importance to ensure that China would be able to take full benefit of WTO membership as quickly as possible, as well as to ensure that the value of any market access conditions undertaken were not adversely affected by inconsistent measures such as some types of non-tariff measures.

12. The representative of China stated that the achievement of balance between rights and obligations was the basic principle in its negotiation of WTO accession.

13. Some members of the Working Party expressed concern over discrepancies in statistical information supplied by the Government of China on trade volume/value. Members and China pursued this issue separately in an Informal Group of Experts on Export Statistics.

14. The Working Party reviewed the foreign trade regime of China. The discussions and commitments resulting therefrom are contained in paragraphs 15-342 below and in the Protocol of Accession ("Protocol"), including the annexes.
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