Brussels, 22/06/2007 (Agence Europe) - Although there are still some problems in bilateral relations between the European Union and Hong Kong, especially in the area of intellectual property rights, relations remain as good as ever. Such is the conclusion reached in the annual report 2006 from the European Commission on the Hong Kong Special Administrative Region (SAR), adopted on 20 June. At a political level, the document notes that the “one country, two systems” approach has been complied with. From the economic point of view, it stresses the strong growth of the Hong Kong economy last year due to the growing convergence of SAR interests with those of mainland China. The Commission also welcomes the progress made in EU relations with Hong Kong, mainly in the fields of civil aviation, savings taxation and the environment. The report finally stresses the intensification of diplomatic contacts between the Union and the SAR.
On the subject of political and constitutional developments, the Commission reports on the public debate on universal suffrage, noting that “2006 has seen no substantive progress”. It recalls that the EU “supports early and substantial progress towards the ultimate goal of universal suffrage in Hong Kong as set out in the Basic Law and in line with the wishes of the people of Hong Kong”. It also notes that “there have been indications of the interests of the Chinese government in Beijing in this debate and, as a corollary, pressure on the SAR government”. It adds: “The Chinese leadership have called for constructive debate to reach a consensus on the SAR's democratic development in accordance with the Basic Law”. However, the Commission recognises that in general the “one country, two systems” principle has been respected and is working well for the people of Hong Kong. The EU supports this principle, and in particular the respect for human rights and individual freedoms enshrined in the Basic Law.
On the subject of economic developments, the report stresses that Hong Kong continued to enjoy strong growth for the first three quarters of 2006, and that, in particular, the economy of mainland China provided sustained growth momentum for the goods and services sectors. Overall, investment spending remained solid, the property market remained stable, and the labour market improved, with unemployment falling to the lowest level in five years. In tandem with strong domestic demand, there was evidence of consumer price inflation. Among the various economic sectors, financial services, import and export trade and transport services were the most dynamic elements of the economy in 2006. The strong performance of the financial sector, particularly the stock market, was driven by huge levels of liquidity in the region, the report states, and “capital market activities related to mainland Chinese enterprises flourished”. It goes on to point out that Hong Kong's capital market continues to play a key role in financing the reform of China's state-owned enterprises, expansion of private enterprises and its massive infrastructure development programme. The Commission goes on to conclude that “the trade interests of Hong Kong and China (…) continue to interweave and converge”.
The Commission also welcomes the fact that bilateral trade and economic relations between the EU and Hong Kong “are mature and characterised by a very limited incidence of trade irritants”. Also, bilateral trade between the parties notched up strong growth in 2006. The EU became Hong Kong's second largest trading partner in 2006, after mainland China. The key growth items were office machines and textiles.
At a sector-specific level, the Commission appreciates Hong Kong's sustained efforts in IPR (intellectual property rights) protection. The Commission considers, however, that “PR problems have not been completely resolved in some areas”. The Commission remains concerned that Hong Kong continues to allow companies to register under names identical to or closely resembling well-known EU brand names, which then infringe the rights of the EU companies through operation in mainland China. Also, it is concerned that owners of patent rights to pharmaceutical products are not adequately protected under the current system of registration. Another cause for dissatisfaction is the tax applied to wine. The Commission is “disappointed that the Hong Kong Government did not revise downward the very high excise duty on wine in the 2006-07 fiscal year, which was maintained at 80%”. On the other hand, it is pleased that the SAR is willing to negotiate a horizontal agreement with the EU in the field of civil aviation. The project for a new overall legislation on competition formed by the SAR is also welcomed by the Commission. The Commission expressed its interest in starting exploratory talks with the SAR government with a view to promoting the introduction of measures equivalent to the EC directive on taxation of savings.
The Commission also welcomes the strengthened economic partnership process between mainland China and Hong Kong, as well as environmental measures that the government presented during a political speech by the chief executive in October 2006, particularly the reference and proposed application of EURO standards and orientations. The Commission is said to be ready to cooperate with Hong Kong, “to assist and encourage the implementation of such measures, and to explore scope for trilateral co-operation with mainland China as appropriate”.
The report revealed an increase in diplomatic contacts between the EU and Hong Kong. It pointed out that the chief executive of the SAR, Donald Tsang, met Commission President José Manuel Barroso last September and that Commissioners Kyprianou, McCreevy and Reding went to Hong Kong last year. The report can be consulted at: (http: //eur-lex.europa.eu/LexUriServ/site/fr/com/2007/com2007_0341fr01.pdf). (ol)