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U.S. and Hong Kong
 

United States Hong Kong Policy Act Report, as of April 1, 2000

As required by Section 301 of the United States-Hong Kong Policy Act of 1992, 22 U.S.C. 5731 as amended
Released by the Bureau of East Asian and Pacific Affairs
U.S. Department of State, April 25, 2000

TABLE OF CONTENTS

PREFACE

I. SIGNIFICANT DEVELOPMENTS IN US-HONG KONG RELATIONS

A. Economic-Commercial
B. Law Enforcement Cooperation
C. Bilateral Agreements

II. OTHER MATTERS, INCLUDING DEVELOPMENTS RELATED TO THE CHANGE IN THE EXERCISE OF SOVEREIGNTY AFFECTING U.S. INTERESTS IN HONG KONG

A. United States Interests in Hong Kong
B. Developments affecting U.S. Interests:

-- The Electoral System
-- Update on Civil Liberties Ordinances, Adaptation of Laws
-- Article 23 of the Basic Law: Treason and Related Crimes
-- ILO Comments on Repeal of Labor Laws
-- The Civil Service
-- HKSAR Passport and Visa Regime
-- People's Liberation Army Hong Kong Garrison

 

III. THE NATURE AND EXTENT OF UNITED STATES-HONG KONG CULTURAL, EDUCATIONAL, SCIENTIFIC, AND ACADEMIC EXCHANGES

A. Exchanges
B. Public Diplomacy

 

IV. SECTION 201(A) SUSPENSIONS -- (NO SUCH SUSPENSIONS)

V. SECTION 201(B) DETERMINATIONS -- (NO SUCH DETERMINATIONS)

VI. COOPERATION IN THE AREA OF EXPORT CONTROLS

VII. DEVELOPMENT OF DEMOCRATIC INSTITUTIONS AND IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION

A. The Basic Law and its Consistency with the Joint Declaration
B. The Openness and Fairness of Elections
C. The Debate on Democratization
D. Treatment of Political Parties
E. Judicial and Legal Developments
F. International Human Rights Conventions
G. Freedom of Expression

VIII. THE NATURE AND EXTENT OF HONG KONG'S PARTICIPATION IN INTERNATIONAL ORGANIZATIONS (LISTS)

UNITED STATES HONG KONG POLICY ACT REPORT
as of April 1, 2000

As required by Section 301 of the United-States-Hong Kong Policy Act
of 1992, 22 U.S.C. 5731 as amended

PREFACE

After 156 years of British colonial rule, Hong Kong became a Special Administrative Region of the People's Republic of China (PRC) on July 1, 1997. Hong Kong's status since reverting to China is defined in two documents: the Joint Declaration signed by Britain and China in 1984, and the Basic Law promulgated by China in 1990. These documents established the concept of "one country, two systems" under which Hong Kong is guaranteed a high degree of autonomy except in foreign affairs and defense. The Joint Declaration and the Basic Law state that Hong Kong's social and economic system, lifestyle, and rights and freedoms enjoyed by the Hong Kong people will remain unchanged for at least 50 years. The Basic Law calls for "gradual and orderly" progress toward the ultimate aim of electing the Chief Executive and all members of the legislature by universal suffrage sometime after 2007.

Hong Kong under Chinese sovereignty has continued to develop overall in a positive direction, with the Hong Kong Government committed to advancing Hong Kong's unique way of life and the PRC Government generally respecting its commitments regarding Hong Kong's high degree of autonomy. In the year from April 1, 1999 to March 31, 2000, Hong Kong remained a free society that extends basic civil liberties to its citizens every day, defines its identity in terms of being an open international city, and largely continues to make its own decisions in pursuit of its own identity and economic interests. Nonetheless, there were developments that raised concerns and continued to bear close attention, the most serious being the Hong Kong Government's request for the National People's Congress interpretation of the Basic Law following the Court of Final Appeal's "right of abode" ruling.

Hong Kong's civil service remained independent, and senior officers, including those initially appointed to senior posts by the British, remained in key posts. Hong Kong's export control system remained robust, with no signs of interference from Beijing. Hong Kong continued to play an important role as a regional finance center, actively participating in international efforts to rebound from the Asian regional recession while managing successfully the turn- around of its own economy. The Hong Kong press remained free and continued to comment critically on most issues, including the PRC and its leaders. Demonstrations -- often critical of the PRC -- continued to be held. Despite a PRC ban on Falun Gong in the mainland, which subjected thousands of practitioners to arrest and abuse, the movement continued to practice freely in Hong Kong and held numerous demonstrations and round-the-clock vigils outside the Beijing Liaison Office protesting the PRC government's mistreatment of their mainland brethren. Mainland Chinese companies were subject to the same laws and prudential supervision as all other enterprises. Indeed, Hong Kong's Independent Commission Against Corruption successfully prosecuted several Hong Kong officers of mainland companies.

The rule of law and an independent, world-class judiciary remained in place as pillars of Hong Kong's free and open society. The June 1999 interpretation (at the behest of the Hong Kong Government) of the Basic Law by the National People's Congress Standing Committee in the right of abode case did, however, raise serious questions about the authority of Hong Kong's highest court over the long term. Among other actions, Beijing's denial of numerous requests for U.S. military ship and aircraft visits to Hong Kong and its blocking of Pope John Paul II's planned visit, although within the central government's purview under the rubric of defense and foreign affairs, negatively affected Hong Kong's reputation as an autonomous, open, cosmopolitan, and internationally connected city. While Hong Kong residents enjoyed generally unfettered rights of expression and association, the same rights are not guaranteed to outsiders; in May, the Hong Kong Government denied visas to eleven prominent Chinese dissidents who had planned to participate in June 4 commemorations held annually in Hong Kong.

Hong Kong's political system continued to evolve. The legislature and free press utilized public fora to demand and obtain government accountability. There was public debate over the pace of democratizing elections for the legislature and chief executive, although the Hong Kong Government responded that now was not an appropriate time to consider changes to Hong Kong's political institutions. Likewise, there was controversy regarding the Government's abolishment of democratically elected municipal councils and the addition of appointed members to the district councils. Public debate on issues of law and democracy was active and vigorous and served to reconfirm the distinction of Hong Kong as a free society with free markets.

Hong Kong's openness and rule of law helped it to take maximum advantage of the internet and other emerging technologies. Liberalization of Hong Kong's telecommunications market brought new options for Hong Kong consumers and new opportunities for U.S. business. The government and private sector moved aggressively to develop Hong Kong's role as a regional hub for e-commerce and internet content.

The United States has substantial interests in Hong Kong and supports the Joint Declaration concept of "one country, two systems" for Hong Kong under Chinese sovereignty. In recognition of Hong Kong's high degree of autonomy, the United States continues to accord Hong Kong a special status distinct from the rest of China. The United States continues to lend support to Hong Kong's autonomy by concluding bilateral agreements, promoting trade and investment, arranging high-level visits, broadening law enforcement cooperation, bolstering educational, academic, and cultural links, and treating Hong Kong separately from the mainland for export control purposes.

This report covers significant developments during the past 12 months that affect U.S. interests in Hong Kong.

I. SIGNIFICANT DEVELOPMENTS IN UNITED STATES RELATIONS WITH HONG KONG, INCLUDING SIGNIFICANT AGREEMENTS ENTERED INTO FORCE BETWEEN THE UNITED STATES AND HONG KONG

A. ECONOMIC AND COMMERCIAL

Hong Kong is an active member of the World Trade Organization and the Asia Pacific Economic Cooperation forum. In these organizations, Hong Kong policymakers represent one of the world's most open and dynamic economies. Hong Kong is the world's ninth largest trading entity and ninth largest banking center, and has a per capita GDP approaching that of the United States. Both before and since July 1, 1997, Hong Kong officials and business leaders have been among the world's most articulate and effective champions of free markets, reduction of trade barriers, and universal most-favored-nation (normal trade relations) treatment. The Hong Kong Government has placed special emphasis on participation in multilateral economic institutions, believing such participation offers the best way to protect Hong Kong's long-term economic and commercial rights and interests. We have seen no evidence of efforts by Chinese central government authorities to limit Hong Kong's economic autonomy, and indeed Hong Kong and Beijing at times pursue different agendas in multilateral economic fora.

Hong Kong has enjoyed a high degree of autonomy as a separate customs territory. Customs border controls remain in place, and Hong Kong authorities continue to develop, implement, and enforce their own trade laws and regulations. Indeed, Hong Kong maintains its world-class technology trade controls regime. At all levels, Hong Kong trade and customs officials remain in place, with no personnel changes beyond ordinary rotations. In the WTO, APEC and other fora, Hong Kong has continued to press for further trade and investment liberalization, supporting APEC's initiative for duty-free e-commerce as well as efforts to launch a new round of trade liberalization in the WTO. As reflected in its position on labor and environmental issues at the WTO Ministerial meeting in Seattle in December, however, Hong Kong's approach did not always dovetail with U.S. trade priorities.

As a consequence of the Asian economic crisis, Hong Kong suffered its most severe economic downturn in 30 years. The Government's response to the downturn included running budget deficits in 1998 and 1999 (and possibly 2000) and temporarily suspending land sales to stabilize land prices. In addition, in August 1998 the Hong Kong Government took the highly controversial step of intervening in the currency, stock and futures markets, spending approximately U.S.$15 billion, to defend the markets from perceived manipulation by international investors. While criticized for departing from its usual non- interventionist policies, the Government offered assurances that this was a "one time" instance, and in November 1999 the Government launched a unit trust scheme on the local stock market called the Tracker Fund to begin divesting itself of stock holdings acquired during the intervention. This move was well-received by the market, which by early 2000 had surpassed its 1997 levels.

Because of the fundamental changes in the regional economy brought about by the crisis, the Hong Kong Government and business leaders began to reconsider Hong Kong's future economic direction and identity. As a result, in his 1998 policy address, Chief Executive Tung announced a vision for Hong Kong to become a center for high-technology services, a theme he expanded in the 1999 policy address as a goal to position Hong Kong as Asia's "world city" -- what New York is for North America, or London is for Europe -- an internationally-oriented provider of services to the region. The recent signing of a deal to develop a Disney theme park in Hong Kong also reflects this desire to make Hong Kong an international hub for services. A key condition for Hong Kong's aspirations, as acknowledged by Hong Kong policymakers, is open access to technology from the United States and other developed economies. For this reason, Hong Kong has a strong vested interest in rigorously enforcing what is widely-recognized to be a very effective export control system.

In his October policy address, Chief Executive Tung announced a liberal policy for air cargo services. The United States seeks to promote liberalization of air services, both passenger and cargo. U.S. and Hong Kong officials held informal discussions in January about revisions to the 1996 bilateral air services agreement. Formal negotiations are scheduled for mid- April.

Despite Hong Kong's high-tech plans, our most serious trade problem with Hong Kong is the continued availability of pirated movie, audio, and software compact discs and pirated trademark goods. This situation aroused serious concerns among American software and entertainment firms, and led the U.S. Trade Representative to put Hong Kong on the Special 301 Watchlist from early 1997 to early 1999. Over the past year Hong Kong has made substantial progress in the fight against copyright piracy -- introducing new legislation to control illicit production and reclassify piracy as a serious crime, increasing raids and seizures against retail outlets and pirate production facilities, and implementing tough deterrent sentences for convicted pirates. As a result of this progress, the U.S. Trade Representative removed Hong Kong from the Special 301 list in 1999. Piracy remains a problem, however, and U.S. officials have urged Hong Kong officials to consider additional steps, including passage of legislation to clearly criminalize corporate use of unlicensed software and proactive action against internet-based piracy.

Hong Kong ranks with Japan and European Union nations as a significant source of foreign investment capital, although outward investment totals dropped to about U.S.$22 billion annually due to the regional economic downturn. Hong Kong has invested U.S.$2.1 billion in the United States, mostly in manufacturing and in wholesale trade. Hong Kong is also the largest outside investor in mainland China, with over U.S.$150 billion in cumulative direct investment.

Hong Kong maintains few non-tariff barriers, and has moved steadily to reduce or remove what few restrictions exist. For example, beginning in 1998, Hong Kong moved to open the broadcast and telecommunications markets to greater competition. In a further step to open these markets, in early 2000 Hong Kong moved to issue new licenses in the wireless, satellite and cable sectors. A third of the new licenses included a major stake by U.S. companies. Hong Kong justifiably prides itself on supporting competition, though the absence of antitrust laws has led to domination of some service sectors by major local companies.

U.S. companies have a favorable view of Hong Kong's business environment, including its autonomous, impartial legal system and the free flow of information, low taxation, and well-developed infrastructure. The American Chamber of Commerce's annual business confidence survey of its members, conducted in mid-1999, reflects the renewed, though cautious, optimism for Hong Kong's improving business outlook. Among survey respondents, 84% indicated they believe the outlook in 2000 would be "good" or "satisfactory," up from 54% in the previous year, a trend expected to continue through 2004. Most of the respondents plan to either maintain or expand their investments or operations in the coming year. The Chamber's president noted that the survey would have been even more positive if it had been taken after the signing of the U.S.-China WTO agreement.

B. LAW ENFORCEMENT COOPERATION

Since reversion to China in July 1997, the already excellent law enforcement cooperation between the United States and Hong Kong has continued to improve. The U.S. Government has sought successfully to broaden its cooperative liaison and operational relationships with Hong Kong Government agencies, with particular attention to combating alien smuggling, illegal textile transshipment, money-laundering, counterfeiting of currency and travel documents, credit card fraud, Asian organized crime, violations of intellectual property rights, illegal high-technology transfer, and international drug- trafficking. The United States and Hong Kong also cooperate to facilitate the extradition of fugitives and provide mutual legal assistance in criminal cases.

U.S. agencies with law enforcement responsibilities present in Hong Kong include the U.S. Secret Service, the Immigration and Naturalization Service, the Internal Revenue Service Criminal Investigations Division, the U.S. Customs Service, the Drug Enforcement Administration, the Federal Bureau of Investigation, and the Department of State. In addition, the Commerce Department's Export Enforcement Bureau works closely with Hong Kong authorities on export control issues. See Section VI for additional information.

In March 2000, the President of the United States certified Hong Kong as fully cooperating with the United States in the international fight against narcotics. Hong continued its exemplary efforts to stop illicit narcotics from being trafficked across its boundary with China and through its port. Hong Kong authorities at all levels continued their close cooperation with U.S. and other law enforcement agencies to defeat drug trafficking. A bilateral extradition agreement in force since January 21, 1998, has been implemented smoothly. A Prisoner Transfer Agreement and a Mutual Legal Assistance Agreement, both signed in April 1997, came into force in April 1999 and January 2000, respectively.

In accordance with the resolution passed at the June 1998 Special Session of the United Nations General Assembly, amended legislation in October 1999 tightened Hong Kong's controls over the cocaine precursor chemical potassium permanganate by upgrading it from Schedule 3 to Schedule 2 on the Control of Chemicals Ordinance. As a result, the manufacture, import and export of potassium permanganate requires a license from the Commissioner of Hong Kong Customs and Excise. The transshipment, removal and storage of potassium permanganate are also strictly controlled. In October, Hong Kong hosted the second International Operational Meeting on Potassium Permanganate, which was co-sponsored by DEA and Hong Kong Customs.

To combat money-laundering, the Legislative Council passed new legislation in January 2000 to regulate remittance agents and money changers. The legislation, which will take effect later this year, requires these remittance agents to adhere to specific anti-money-laundering measures, such as recording customer identification and record keeping. In addition, the Hong Kong Government introduced a bill in the Legislative Council in December 1999 to strengthen the anti-money-laundering provisions in the Drug Trafficking Recovery of Proceeds Ordinance and the Organized and Serious Crimes Ordinance. The proposals raise the maximum imprisonment term for money-laundering and for failing to report a suspicious transaction.

The United States and Hong Kong continued to cooperate closely in combating illegal textile transshipments from China. Since September 1998, Hong Kong Customs has stepped up quota enforcement and during 1999 officers from Hong Kong and U.S. Customs conducted two rounds of joint factory visits to confirm the origin of Hong Kong-labeled apparel shipped to the United States. Over the past three years, Hong Kong has convicted more than 450 companies for origin-related fraud. These results have helped convince Hong Kong's mainstream apparel manufacturers that quota circumvention is an unacceptable business practice.

The Drug Enforcement Administration office at the Consulate worked closely with Hong Kong counterparts in the Customs Department and Police Force to detect and intercept illicit drug shipments, arrest drug smugglers and crack down on the narco-trafficking syndicates. DEA agents also worked with Hong Kong authorities to effect the extradition to the United States of drug-trafficking fugitives and to share evidence and testimony in cases against drug traffickers under the Mutual Legal Assistance Agreement. DEA agents based here also cooperated with Hong Kong law enforcement to investigate money-laundering activities related to proceeds from illicit drug trafficking. In the past year, cases managed by the Hong Kong DEA office resulted in over 30 arrests in the region. Of those, two fugitives arrested in Hong Kong were extradited to the United States, and two other extradition cases were pending as of March 2000.

The U.S. Secret Service continued to cooperate closely with Hong Kong Government agencies in the detection and suppression of counterfeit currency and other obligations of the United States. The Secret Service was also engaged in the enforcement of U.S. laws pertaining to access device fraud, including credit card and cellular telephone fraud. In addition, the Secret Service worked to protect certain senior U.S. Government officials who traveled to Hong Kong, including in the past year former President Bush.

The Office of the Senior Customs Representative worked closely with Hong Kong law enforcement agencies, especially the Customs and Excise Department, in combating illegal textile transshipment, money-laundering, stolen vehicle smuggling, illicit licensable commodity/high-technology transfer, intellectual property rights violations, fraud, internet crime and cyber-smuggling. U.S. Customs maintained close ties with the Hong Kong Police Force in investigating international auto theft cases, pursuing extradition of fugitives, and enforcing child pornography laws.

The Federal Bureau of Investigation's Legal Liaison Office worked with Hong Kong law enforcement agencies on a variety of criminal violations which affect the United States. Most cases fell into four categories: white-collar crime, which includes financial fraud, bank fraud and embezzlement, and fraud against the U.S. Government; organized crime with links to Hong Kong Triads, including trafficking of illicit narcotics, prostitutes, undocumented aliens and stolen vehicles; violent crime such as kidnapping, extortion, and murder; and international terrorism. As e-commerce began to develop in Hong Kong, the Legal Liaison Office also established a working relationship with the Hong Kong Police to combat cyber crime. In 1999, the Legal Liaison Office, through the assistance of the Hong Kong Police, arrested four fugitives in Hong Kong and successfully extradited two fugitives to the United States. As of March 2000, four extradition cases were pending before the Hong Kong courts.

Hong Kong's accessibility and numerous air and sea connections have made it, like other cities in the region, a transit point for alien smuggling. The combined efforts of Immigration Control Officers from the U.S., Hong Kong, Australia, Canada, New Zealand, and local airline staff in detecting mala fide passengers attempting to travel from and/or through Chek Lap Kok airport using altered or counterfeit travel documents resulted in the detection of 3530 forged or falsified travel documents in 1999. USINS worked closely with Hong Kong Customs and Immigration officials to stem a December 1999 upsurge in the use of shipping containers to smuggle illegal aliens. Dozens of aliens were intercepted on arrival in the United States in containers as a result of information supplied by the Hong Kong authorities. USINS also cooperated with the Hong Kong Immigration Department, the Hong Kong Police Force, and the Independent Commission Against Corruption to identify and disrupt smuggling syndicates, and to prosecute individuals involved in alien smuggling and related activities.

The Internal Revenue Service (Criminal Investigations Division) placed a Supervisory Special Agent in Hong Kong in February 1998 because of the increased prominence of Hong Kong as an offshore financial center and to assist with combating international money-laundering and income tax evasion. Since then, significant exchange of information involving suspicious financial transactions and alleged illegal activities between Hong Kong and the United States involving both U.S. and Chinese citizens has taken place. In 1999, the IRS Criminal Investigations Division officer worked closely with the Hong Kong Police Force, Hong Kong Customs and Excise Department, and other Hong Kong law enforcement agencies, assisting in numerous money-laundering and income tax evasion cases involving a variety of illegal activities including narcotics trafficking, stolen vehicle smuggling, bank fraud, and investment fraud.

U.S. Government agencies were involved in numerous and regular exchanges with their Hong Kong counterparts and offered training opportunities in a wide array of law enforcement areas. At U.S. invitation, Hong Kong officials involved in legislative, judicial, prosecutorial and law enforcement efforts to combat crime participated regularly in programs at the U.S.-sponsored International Law Enforcement Academy (ILEA) in Bangkok. The Drug Enforcement Administration provided training in interdiction operations at transportation depots such as airports and train stations and on money-laundering investigative techniques. U.S. Customs provided Hong Kong Police and Customs counterparts training in areas such as cyber crime, maritime interdiction, strategic export controls and cargo internal conspiracy. The FBI's Legal Liaison Office provided training to Hong Kong law enforcement agencies through regularly scheduled seminars and exchange visits. The U.S. Immigration and Naturalization Service trained local airline staff and immigration officers in the detection of altered and counterfeited documents.

C. BILATERAL AGREEMENTS

There are more than a dozen U.S.-Hong Kong bilateral agreements currently in force, including a stand-alone Air Services Agreement, an Extradition Agreement, a bilateral Prisoner Transfer Agreement that entered into force on April 18, 1999, and a bilateral Mutual Legal Assistance Agreement that entered into force on January 21, 2000. (Little progress has been made since 1997 on a U.S.-Hong Kong Bilateral Investment Agreement.) On the whole, these agreements have functioned very well, although Hong Kong legal requirements for "sovereign assent" by the PRC Government with respect to some international cooperation have in a small number of cases hindered timely cooperation.

In addition, in September a U.S. District Court judge ruled in a case involving extradition of a Hong Kong fugitive from the United States to Hong Kong that, for the purpose of extradition, Hong Kong was not a "country" and therefore the United States could not carry out extradition under the bilateral extradition agreement. (The United States does not have an extradition treaty with the PRC.) The U.S. Government has appealed the ruling, arguing that the ruling impermissibly intrudes upon the conduct of foreign affairs, in that the President and Congress have concluded that Hong Kong is a valid extradition treaty partner for purposes of the federal extradition statute. In the meantime, a fugitive from U.S. justice arrested in Hong Kong used the U.S. District Court ruling to argue that he cannot be extradited. The Hong Kong Courts, however, have so far upheld the extradition order, ruling that Hong Kong courts are not concerned with U.S. laws. The case may be appealed.

U.S. Consulate General operations have continued virtually without change since July 1, 1997. U.S. Navy port calls to Hong Kong had been maintaining their pre-handover frequency, but declined substantially for approximately half a year in the wake of the May 1999 mistaken NATO bombing of the Chinese Embassy in Belgrade. In late 1999, the regularity of port calls and aircraft visits began to return to previous levels (50-70 ships; 100 planes per year). In the Consulate General, the Office of Liaison Administration works with the Chinese Ministry of Foreign Affairs office in Hong Kong and the Hong Kong Government to receive permission for and arrange port calls and visits of U.S. military aircraft to Hong Kong.

II. OTHER MATTERS, INCLUDING DEVELOPMENTS RELATED TO THE CHANGE IN THE EXERCISE OF SOVEREIGNTY OVER HONG KONG AFFECTING UNITED STATES INTERESTS IN HONG KONG OR UNITED STATES RELATIONS WITH HONG KONG

A. UNITED STATES INTERESTS IN HONG KONG

United States interests in Hong Kong are substantial. U.S. trade, investment, and business with Hong Kong flourish in a virtually barrier-free environment. In 1999, U.S. exports to Hong Kong totaled U.S.$12.5 billion. U.S. direct investment in Hong Kong through 1998 amounted to U.S.$20.8 billion. Over 1,100 resident American firms employ an estimated 250,000 Hong Kong workers (10% of the workforce), and Hong Kong's open society and attractive living environment are home to an estimated 50,000 American citizens. (Included in this total are a number of dual nationals, who are not counted by Hong Kong authorities as resident Americans.)

Cooperation between the Hong Kong Government and the U.S. Consulate General remains broad, effective, and mutually beneficial. The United States enjoys strong cultural and educational relations with the people of Hong Kong, including a very large flow of tourists and students in both directions. The United States has significant interests in promoting economic and business relationships; maintaining a cooperative law enforcement relationship; and continuing access to Hong Kong as a routine port of call for Navy ships. With the end of Beijing's six-month denial of numerous U.S. requests for military port calls and aircraft visits, Hong Kong has resumed its role as a premier liberty port for U.S. forces in the Pacific.

The United States also has strong interests in the protection of human rights, the promotion of democratic institutions, the free flow of information, the freedom of people to practice the religion of their choice, the development and protection of the rule of law, and the protection of individual liberties. Hong Kong residents share many values and interests with Americans and have worked to make Hong Kong a model of what can be achieved in a society that values freedom. Hong Kong is an open and tolerant society, in which both local and foreign non-governmental organizations continue to operate freely and representatives of the media work with few restrictions.

Protection of American interests is enhanced by Hong Kong's continued autonomy, stability and prosperity after reversion to Chinese sovereignty; the operation of a full-service Consulate General; the protection of civil liberties; and the preservation of Hong Kong's legal system. The United States works closely with the Hong Kong Special Administrative Region Government and communicates our views on Hong Kong to the Hong Kong government, the central government authorities in Beijing, and the people of Hong Kong.

B. DEVELOPMENTS AFFECTING U.S. INTERESTS IN AND RELATIONS WITH HONG KONG

As it was before reversion, Hong Kong -- now a Special Administrative Region (SAR) of China rather than a dependent territory of the United Kingdom -- remains dynamic, prosperous, and stable. Hong Kong continues to welcome interaction with foreigners and is friendly to American and international business interests.

Along with others in the region, Hong Kong's economy suffered a significant downturn during the Asian Economic Crisis, registering a decline of around 5.1% in gross domestic product in 1998. However, by late 1999, the economy showed signs of recovery, resulting in modest growth of 1.8% in 1999. The Government registered modest fiscal deficits for 1998 and 1999, and is also expected to run a deficit in 2000. Nonetheless, Hong Kong enjoys a number of positive factors, including accumulated personal wealth from several years of unprecedented growth, massive fiscal and foreign exchange reserves, virtually no public debt, a strong legal system, and a strong and rigorously enforced anti-corruption regime. The lengthening of the recovery period and the need for restructuring, as Hong Kong's advanced, high-cost, service-based economy continues to evolve, pose difficult challenges and choices for Hong Kong's Government.

The Electoral System

Controversy over Hong Kong's system of representative institutions continued during the reporting period. The Government's abolition of two grassroots-level Municipal Councils when their terms expired at the end of 1999 sparked vigorous public debate. Although most observers agreed the Councils had failed to deal successfully with challenges in such areas as health and food hygiene, many favored merging the two bodies, rather than eliminating altogether a level of democratically elected government. Democracy advocates also strongly attacked the Government's decision to increase the proportion of appointed seats to the local District Councils as a backward step.

The debate over the pace of democratic development continued. Some democracy advocates urged amendment of the Basic Law to allow universal suffrage immediately for the Chief Executive's post and for all Legislative Council seats, while others pushed the Government to hold early discussion of instituting universal suffrage in 2008. Although the heads of the main pro- Beijing and pro-business parties publicly supported full suffrage in 2008, many members of the two parties and other sectors of society wanted to proceed more slowly; some opposed eliminating functional constituencies even after 2007, when permitted by the Basic Law. The Government opposed immediate democratization and would only say that consultations on post-2007 electoral schemes should begin "at an appropriate time." (Details on the democratization debate are in Section VII, Development of Democratic Institutions in Hong Kong.)

Update on the Public Order and Societies Ordinances and the Adaptation of Laws (Interpretative Provisions) Ordinance

Since the handover, the Government has required licenses for demonstrations. From April 1, 1999, to March 31, 2000, the police did not deny any applications for a permit to demonstrate. There are, on average, four demonstrations per day, a rate slightly higher than the pre-handover rate. Police authorities say they try to place minimum constraints on demonstrations, consistent with the need to maintain public order. There have been complaints by some demonstrators, however, who complain that demonstrations are often limited to "designated areas" where they attract little public attention and that police sometimes outnumber demonstrators at demonstrations.

Following the handover, human rights groups were concerned that the Societies Ordinance passed by the Provisional Legislature could be used to restrict political activity. The Societies Ordinance required that new societies must apply for registration within one month of establishment, and stipulated a number of grounds on which registration could be denied. Since the handover, however, no limits have been applied or proposed. In fact, 11,156 societies have been registered, including 6972 of them in 1999, and no applications for registration have been denied. Significantly, the law does not require religious organizations to register. The Falun Gong spiritual movement, banned in mainland China, is legally registered, and Hong Kong Government officials have said publicly that it may continue to operate without restrictions as long as its practitioners observe Hong Kong law. The "Never Forget June 4 Organization," however, whose constitution calls for the end of one-party rule in China, claims that the police have delayed its registration.

The Provisional Legislature passed the Adaptation of Laws (Interpretative Provisions) Ordinance in April 1998. The Ordinance replaced the word "Crown" with the word "State" in hundreds of existing Hong Kong laws. Government officials stated that the change was a technical fix, necessary for the continued implementation of pre-handover laws, that did not offer a wholesale exemption from laws. Critics were concerned, however, that the change could place Chinese government organs in Hong Kong -- particularly the New China News Agency (renamed the Liaison Office of the Central People's Government) -- above some laws, since laws which previously did not apply to the Crown now did not apply to the (Chinese) State. The Hong Kong Government reviewed seventeen laws passed since the handover and determined that the State should be subject to fifteen of them. One ordinance, on registration of social workers, was judged not relevant to the State. In 1999, however, the most controversial law, the Personal Data (Privacy) Ordinance, was deemed not to apply to State organs.

Article 23 of the Basic Law: Treason, Subversion, and Foreign Political Organizations

Article 23 of the Basic Law provides that Hong Kong shall enact laws on its own to prohibit the following: subversion, secession, treason and sedition against the Chinese Government; theft of Chinese state secrets; political activities by foreign political organizations in Hong Kong; and the establishment of ties between Hong Kong and foreign political organizations. In the reporting period, the process of developing this legislation continued at a deliberate pace. The Government publicly stated that there was no firm timetable to submit draft legislation to the Legislative Council. In the meantime, the Government promised that, in addition to consulting with the mainland, it would study how Western governments have dealt with the issues involved, and would conduct wide and genuine public consultations on any eventual draft legislation.

ILO Comments on Repeal of Labor Laws

In October 1997, the Provisional Legislature repealed two labor laws passed in June 1997 and amended a third, removing the new legislation's statutory protection against summary dismissal for union activity. The Government argued that existing law already offered adequate protection against unfair dismissal arising from anti-union discrimination. Also in October 1997, the Provisional Legislature gazetted the Employment and Labor Relations (Miscellaneous Amendments) Bill. This bill permits the cross-industry affiliation of labor union federations and confederations and allows free association with overseas trade unions (although notification of the Labor Department within one month of affiliation is required). It removed, however, statutory protection for trade unions' right to engage employers in collective bargaining. The bill also banned the use of union funds for political purposes; required the Chief Executive's approval before unions can contribute funds to any trade union outside of Hong Kong; and restricted the appointment of persons from outside the enterprise or sector to union executive committees.

In November 1998, the International Labor Organization concluded that the new labor ordinance breached ILO Conventions 87 and 98 and recommended that the Government take legislative action to remedy the situation. The Government responded in May 1999 and in November the ILO Committee on Freedom of Association discussed the case. The ILO noted that the Government was actively reviewing the requirement restricting union office to persons actually employed in the industry or occupation of the trade union concerned. (The government also noted that persons outside the industry could hold union office with the approval of the Registrar of Trade Unions and no such request had ever been denied.) The ILO, however, reiterated its call for the government to repeal the restrictions contained in the Employment and Labor Relations (Miscellaneous Amendments) Ordinance (ELRO).

The ILO also reiterated its call on the Hong Kong Government to take steps to repeal the ELRO's restrictions on the use of union funds. The ILO noted that Hong Kong's existing provisions protecting against dismissal of workers on grounds of union activities were insufficient and urged the Government to provide statutory protection against all acts of anti-union discrimination. The Committee expressed "deep regret" that there was no consensus in the Hong Kong legislature on promoting collective bargaining through legislation and urged the government to adopt appropriate provisions which respect freedom of association principles.

The Civil Service

The independence of Hong Kong's professional and efficient civil service played a key role in ensuring a smooth transition to Chinese sovereignty in the first two years since the handover. Local and international confidence in the "one country, two systems" formula had been enhanced by the retention of senior civil servants from the colonial government. The civil service retains its reputation for independence and clean governance. Senior civil servants credibly assert that they make decisions on their own without receiving instructions from or holding consultations with the Central Government.

The notable exception to the image of independence of the civil service was the reassignment in October 1999 of Cheung Man-yee, the head of Hong Kong's government-funded radio and television network (RTHK), to head Hong Kong's office in Tokyo. The timing of the move gave rise to public concern that it may have been politically motivated and Beijing-instigated. Long criticized by pro- Beijing figures for being too critical of Hong Kong government policies, Cheng was reassigned shortly after the network broadcast comments by a Taipei representative explaining Taipei's cross-strait policy. Chief Secretary Anson Chan, who for many embodies the independence and professionalism of the civil service, strongly denied that Cheung was being punished, and Cheung's successor -- her former deputy -- reaffirmed the network's editorial independence.

Senior civil servants are increasingly called upon to respond to questions from the legislature. Partially in response to growing public dissatisfaction over the expense of the civil service and the Government's poor handling of the 1998 bird flu and red tide problems, but also responding to the perception within senior ranks of the civil service that reform was necessary, in early 1999 Chief Executive C. H. Tung announced a package of civil service reforms. Reforms proposed included performance-based pay, new entry procedures and lower entry-level salaries aimed at making civil service pay and benefits more comparable to private sector levels, and a voluntary redundancy scheme. To date, only changes in intake procedures and salaries have been implemented, while other proposals remain under review.

HKSAR Passport and Visa Regime

The HKSAR passport is issued only to Chinese nationals holding Hong Kong permanent identity cards, as provided in the Joint Declaration and the Basic Law. The HKSAR passport incorporates security features that are close to state- of-the-art, and production and distribution are subject to strict safeguards. Only the Hong Kong Immigration Department has authority for issuance; as of December 31, 1999, it had issued 1,033,337 HKSAR passports. It will take several more years to issue new HKSAR passports to all Hong Kong residents eligible to acquire them.

China confirmed before reversion that the British National Overseas (BNO) passport would continue to be honored. In keeping with its position on dual nationality, however, China recognizes the BNO passport as a travel document only, and not as dispositive evidence of the bearer's citizenship. Accordingly, most Hong Kong residents are entitled to hold BNO passports and HKSAR passports concurrently.

The Hong Kong Government continues to seek visa-free access for the HKSAR passport to countries currently enjoying visa-free access to Hong Kong. As of February 2000, sixty-nine countries had agreed to grant visa-free entry to bearers of the passport.

At present, U.S. citizens visiting Hong Kong for a temporary stay of less than 90 days may enter without a visa. The ability of the United States to reciprocate -- that is, to offer visa-free entry to the United States to holders of the HKSAR passport -- is limited and governed by section 217 of the Immigration and Nationality Act, 8 U.S.C. Section 1187. The United States currently issues ten-year multiple entry visas to those who obtain visitor visas; this is the maximum now available to tourists of all nationalities who are required to have visas under U.S. law.

People's Liberation Army Hong Kong Garrison

The PLA Hong Kong Garrison continued to be a largely unseen and symbolic presence in Hong Kong. Since arriving and occupying former British military facilities, the Garrison has been out of the public eye. Garrison officials repeatedly note that its primary role is national defense. As provided for in the Basic Law, the Garrison may assist the Hong Kong Government in maintaining public order and disaster relief, but only if requested by Hong Kong's Chief Executive and approved by the Central Military Commission. On invitation from the Hong Kong Government and with the permission of the Central Government, the PLA Garrison participated again in Hong Kong's annual Search and Rescue Exercise. The United States also participated in that exercise.

As a rule, PLA soldiers, sailors, and airmen continued to remain within their barracks. When they do venture out into the Hong Kong community, they normally travel in civilian clothes and as part of a PLA-organized activity. For example, garrison troops performed martial arts and a synchronized drill before a large and enthusiastic Hong Kong crowd gathered to celebrate the PRC's fiftieth birthday in October. The PLA Hong Kong Garrison does not engage in public security work, has minimal interaction with the Hong Kong disciplined services, and does not engage in any business activities.

III. THE NATURE AND EXTENT OF UNITED STATES-HONG KONG CULTURAL, EDUCATIONAL, SCIENTIFIC AND ACADEMIC EXCHANGES, BOTH OFFICIAL AND UNOFFICIAL

A. EXCHANGES

Hong Kong-America Center: The Hong Kong-America Center has been in operation since 1993 with support from four local universities: the Chinese University of Hong Kong, Baptist University, the University of Hong Kong, and City University. A major mission of the Center is to increase mutual understanding between Hong Kong and the United States. USIA provided a Fulbright Scholar each year to serve as co-director of the Center and provided support for its programs and activities, and the Department of State will continue this support. The Center's Board of Governors is made up of prominent American and Hong Kong leaders from the business and academic communities. In 1999, seminar projects focused on distance education (i.e., correspondence courses and online education via the internet). As a result of these activities, twenty scholars will contribute towards a book taking stock of the latest developments in distance education in Asia.

Advisory Services for Study in the United States: An important component of the Hong Kong-America Center is the Institute of International Education (IIE) Hong Kong. IIE provides educational advisory services and conducts outreach programs for schools and thousands of Hong Kong students who wish to pursue studies in the United States. It also organizes university fairs and briefs American educators on opportunities/student flows in Hong Kong. IIE's 1999 U.S. University Fair and U.S. Boarding Schools Fair were well attended, both by Hong Kong visitors and American schools.

Fulbright Program: The Hong Kong Fulbright program operates independently from the one in China. Due to a recent increase in the number of Hong Kong institutions of higher education, a fourth U.S. lecturer has been added to the program. The Hong Kong Fulbright program now supports four U.S. lecturers and three to four U.S. students in Hong Kong each year, which is an important element in maintaining American links with Hong Kong's institutions of higher learning. A Hong Kong lecturer taught communications in a U.S. midwest college under the scholar-in-residence program in the 1999-2000 academic year. The University of Minnesota has started a three-year education exchange partnership on civic and citizen education with the Hong Kong Institute of Education under the university affiliation program.

Artistic and Intellectual Exchanges: Budget cuts forced USIA and the Department of State to curtail sponsorship of visits to Hong Kong by American performing and visual artists and presentations by American artists and lecturers at Hong Kong cultural institutions. Most such exchanges now are left to initiatives of the private sector, or are arranged directly between Hong Kong institutions and American counterparts. In March, 2000, however, an American digital library expert's consultations with the Hong Kong Central Library on its new digital development project was jointly supported by the Department of State, Global Technology Corps and the Hong Kong Government.

Promoting American Studies: The Department of State continues USIA's long-term support of the degree-granting program of the American Studies Program established at the University of Hong Kong in 1992. A Fulbright scholar is assigned to the Program each year. The University is developing a new Center of American Studies to enhance its research capacity. To enhance American Studies curriculum content in secondary education, a Hong Kong Government Curriculum Officer participated in a USIA-supported American Studies Summer Institute in 1999.

International Visitor Exchanges: The International Visitor Program supports a wide variety of professional exchanges for candidates sponsored by the Consulate General. In 1999, fourteen individuals (three more than in 1998) traveled to the U.S. on these study tours. The 1999 visitors included five journalists, one educator, one social worker, one customs (anti-narcotics) official, and five other officials from Hong Kong. The Voluntary Visitor Program supported programs for visitors traveling to the U.S. on their own. Voluntary Visitor programs were arranged for two Hong Kong legislators and for a group of Hong Kong welfare policy officials who were interested in welfare reform.

Unofficial Academic Exchanges: There are seven universities in Hong Kong, plus a handful of other well-established educational institutions catering to specialized studies such as performing arts, teacher training, as well as open and distance learning. Exchanges between Hong Kong and U.S. universities have grown over the last decade, ranging from short-term visits by American faculty and summer programs for students to ambitious multi-year exchanges of faculty and staff. Apart from joint degrees, collaborative research projects are also growing in number. In general, Hong Kong educational institutions view academic linkages with the United States as beneficial exercises involving a practical exchange of ideas and sharing of resources and experiences.

About four thousand Hong Kong students come to the United States each year for graduate and undergraduate study. During the1999 calendar year, the Consulate General issued 3,746 visas for study in the United States and 591 visas for exchange visitors. It is estimated that 8,000 Hong Kong students are studying in the U.S. at any given time, and that approximately 60,000 graduates of U.S. institutions live and work in Hong Kong. The Consulate General actively encourages student exchanges by supporting student counseling, arranging programs for visiting American faculty and board members, continuing liaison with alumni groups in Hong Kong, participating in educational fairs, and advising on U.S. visa requirements.

Unofficial Exchanges -- Tourism and Business Travel: In 1999, the U.S. Consulate General issued over 82,000 non-immigrant visas to residents of Hong Kong. An average of around 2,000 Americans enter Hong Kong for business or pleasure every day, contributing to an annual tourist total from the United States of some 780,000 people, an increase of about five percent over 1998.

B. PUBLIC DIPLOMACY

During 1999-2000, USIA and the Department of State continued to sponsor programs designed to better equip local media with the tools needed to promote professional practices and to address Hong Kong journalists' concerns. A speaker's program in February 2000 brought a U.S. academic to Hong Kong to discuss media ethics, press credibility, journalism education and local media issues. Programming is also aimed at informing reporters and other persons of influence in Hong Kong about U.S. foreign policy positions that affect the bilateral relationship.

The Consulate played an important role in public diplomacy after the mistaken bombing of the Chinese Embassy in Belgrade in May 1999. In response to large but peaceful demonstrations in Hong Kong, the Consulate focused on making sure that statements of regret by American officials including President Clinton, Secretary Albright and the Consul General, as well as background information on U.S. policy in Kosovo, were distributed as widely as possible. When, after a six-month period of greatly reduced visits, Beijing resumed approving U.S. naval port calls, the Consulate continued to highlight the benefits to Hong Kong of being an open, international city and arranged press tours to visiting ships and media coverage of community service activities by crewmember volunteers. Consulate media support also extended to Congressional delegations, U.S. Cabinet and sub-Cabinet members, and other Administration officials coming to Hong Kong to assess various aspects of the political, economic and social situation.

Through Worldnet interactive programs, Digital Video Conferences and speaker programs, the Consulate's Public Affairs Section continues to inform Hong Kong's media, the business community, the public sector, academic and non-governmental organizations about U.S. policies and priorities. Programs in 1999-2000 focused on topics including the rule of law, judicial independence, the Asian financial crisis, U.S.-China-Hong Kong relations, democracy and press freedom, Y2K, WTO, intellectual property rights, international money laundering, illegal alien smuggling, environmental protection, and congressional parliamentary procedures.

The Public Affairs Section continues to maintain close liaison with the Foreign Correspondents Club, the News Executives Association, the Hong Kong Journalists' Association, the Federation of Hong Kong Journalists and the Freedom Forum Asia Center, both formally and informally. Since Hong Kong's handover, the Public Affairs Section has maintained contact with official Chinese information outlets, including the Press Office of the Ministry of Foreign Affairs Commission Office and the Liaison Office of the Central People's Government in Hong Kong (formerly known as the New China (Xinhua) News Agency in Hong Kong).

IV. THE LAWS OF THE UNITED STATES WITH RESPECT TO WHICH THE APPLICATION OF SECTION 201(A) HAS BEEN SUSPENDED PURSUANT TO SECTION 202(A) OR WITH RESPECT TO WHICH SUCH A SUSPENSION HAS BEEN TERMINATED PURSUANT TO SECTION 202(D), AND THE REASONS FOR THE SUSPENSION OR TERMINATION, AS THE CASE MAY BE.

There were no such suspensions or terminations during the period from April 1, 1999 to March 31, 2000.

V. TREATIES AND OTHER INTERNATIONAL AGREEMENTS WITH RESPECT TO WHICH THE PRESIDENT HAS MADE A DETERMINATION DESCRIBED IN THE LAST SENTENCE OF SECTION 201(B), AND THE REASONS FOR EACH SUCH DETERMINATION.

There were no such determinations for the period April 1, 1999 to March 31, 2000.

VI. COOPERATION BETWEEN HONG KONG AND THE UNITED STATES IN THE AREA OF EXPORT CONTROLS

There are no significant problems between Hong Kong and the United States in export control cooperation. As called for in the Sino-U.K. Joint Declaration and the Basic Law, Hong Kong has remained a separate customs territory, has enjoyed a high degree of autonomy in the export controls area, and has maintained what is widely considered one of the world's finest export control regimes. Hong Kong's export control system is unusually transparent and local authorities cooperate closely with U.S. counterparts to ensure compliance with relevant export control regimes. As part of the Joint Commission on Commerce and Trade that they established in 1999, Hong Kong and the Chinese central government have set up a working group to discuss export control issues and explain Hong Kong's system. We have seen no evidence, however, of Chinese central government interference in Hong Kong export control decisions. Chinese central government officials have made clear on several occasions that they consider export controls a trade -- not foreign policy -- issue, and thus within Hong Kong's sphere of autonomy. Hong Kong officials assert their belief that continued access to high technology from the West is an important element needed to realize Hong Kong's vision of becoming a major internet IT hub.

Hong Kong has a long history of effective strategic trade controls; it first began licensing trade in sensitive goods in 1950. In view of its effective control regime, Hong Kong has benefited since 1992 from the import of most controlled high technology dual-use items under general license exceptions. The legal basis of Hong Kong's export control regime is the 1955 Import and Export (Strategic Commodities) Ordinance, which governs imports or exports of weapons or military-related equipment, nuclear, chemical, or dual-use items. The Hong Kong Import and Export Ordinance is regularly reviewed and amended as necessary to incorporate the most up-to-date provisions agreed upon by the major international control regimes. Hong Kong also is one of the few governments to have a brokering law, which allows the authorities to prosecute Hong Kong-based individuals who support efforts outside of Hong Kong to divert or acquire weapons of mass destruction.

Hong Kong's trade control regime has several unique features, including an import license requirement (as well as the more common export license requirement), carrier responsibility to ensure sensitive commodities are properly licensed, and licensing control over certain sensitive goods even if they are merely in transit. Particularly important is the import license requirement, which allows Hong Kong authorities to track controlled commodities coming into the SAR, as well as those that leave its customs territory. Hong Kong's licensing procedures are two-phased. In the first phase, a technical assessment of the product is made by Hong Kong Government engineers to determine if the item is controlled and to evaluate its technical capabilities. This technical assessment is followed by a risk assessment that, in the case of particularly sensitive goods or items going to sensitive markets, requires detailed end-use inquiries. These end-use statements are then evaluated in light of the technical capabilities of the goods. A computerized Hong Kong "watch list" is also employed to guard against exports to countries or individuals of special proliferation concern.

Hong Kong's Customs and Excise Department enforces preventive controls that include selective routine checks at entry/exit points and searches of vehicles and vessels to ensure that all strategic trade shipments have been approved by the Hong Kong Government. Both random and targeted searches are conducted, during which cargo manifests are scrutinized. A dedicated team of Hong Kong Customs officers also conducts pre- and post-shipment checks at various locations in the SAR to ensure that strategic goods are actually delivered to the proper destinations and used for the purposes described.

Hong Kong and U.S. Government officials continue to exchange information, including in-depth exchanges on specific export control issues such as proliferation concerns and diversions. In October 1997, Secretary of Commerce William Daley and Hong Kong Secretary for Trade and Industry Denise Yue signed an "agreed minute" on ways to enhance cooperation, including semi-annual interagency meetings to exchange information and provide updates. Five such meetings have taken place, most recently in March, with the next round scheduled for September 2000 in Washington, DC. At the meetings to date, representatives from five U.S. agencies briefed Hong Kong on the latest trends and issues in control policy and on relevant U.S. legislation. Hong Kong officials reviewed their control system, made specific suggestions for training and technical expertise, and reiterated their commitment to maintaining the strongest possible control system.

Although Hong Kong is not a member of the various international control regimes, it has committed to maintaining the standards of those regimes via its own laws. To support this commitment, the United States, Great Britain, Japan and Australia have agreed to keep Hong Kong authorities informed on changes in the regimes. The United States agreed specifically to brief Hong Kong regularly on the Missile Technology Control Regime (MTCR), and has provided several such briefings already. From November 1996 to May 1997, a U.S. Department of Commerce Bureau of Export Administration technical expert was seconded to the Hong Kong Trade Department, providing technical assistance and serving as a liaison. This U.S. secondee was followed by an Australian official and now a Japanese who is performing a similar function. The United States has been invited to provide another secondee, and that invitation is currently under consideration.

Department of Commerce representatives in Hong Kong regularly carry out pre- license checks and post-shipment verifications on companies in Hong Kong as part of the dual-use licensing, vetting and post-issuance process. Likewise, Department of State and U.S. Customs officers carry out Blue Lantern checks on munitions items. In both cases, Hong Kong officials are neither informed of such checks nor involved in making them. The importance of these checks was underscored by a 1997 General Accounting Office (GAO) report that stated that such checks were a key factor in determining whether Hong Kong continued to maintain an effective export control system. These efforts are supplemented by regular visits by Department of Commerce experts, who spend several days at a time in Hong Kong conducting pre-shipment and post-shipment verification checks.

The United States and Hong Kong closely cooperated in investigations stemming from the 1996-97 re-export of U.S. high-performance computers from Hong Kong to China's Changsha University. The re-export resulted in an apparent violation of Hong Kong law and a possible violation of U.S. law. The Hong Kong authorities are prosecuting the case. U.S. authorities are closely following the progress of Hong Kong's prosecution.

A May 1999 report by a House Select Committee (the Cox report) expressed concern about potential transshipment of sensitive technology through Hong Kong, and especially the lack of Customs inspection of Chinese People's Liberation Army (PLA) vehicles when they cross the boundary between Hong Kong and China. This issue was the subject of a dialogue between U.S. and Hong Kong authorities, in which Hong Kong reaffirmed its commitment to exercising customs control over all cross-boundary movements, including those of PLA vehicles and personnel. Hong Kong officials maintain that there is an established mechanism whereby PLA boundary crossings are notified in advance and documentation is checked at the boundary control point. In addition, Hong Kong officials affirmed that under Article 14 of the Hong Kong Basic Law, members of the PLA garrison are required to abide by the laws of the SAR, including the relevant customs laws. The United States has seen no evidence that the PLA garrison in Hong Kong has been used as a conduit for transferring sensitive technologies to the mainland. In addition, as noted above, an active program of U.S. government post-shipment verifications helps ensure that any effort to transfer licensed materials out of the SAR would be subject to detection.

VII. THE DEVELOPMENT OF DEMOCRATIC INSTITUTIONS IN HONG KONG, INCLUDING DETAILED INFORMATION ON THE STATUS OF, AND OTHER DEVELOPMENTS AFFECTING, IMPLEMENTATION OF THE SINO-BRITISH JOINT DECLARATION ON THE QUESTION OF HONG KONG

Hong Kong is a free society with individual freedoms and rights protected by law and custom dating from British colonial rule, which ended on July 1, 1997. Since that date, Hong Kong has been a Special Administrative Region of the People's Republic of China as prescribed by the 1984 Sino-British Joint Declaration and the Basic Law, a "mini-constitution" for Hong Kong approved in 1990 by China's National People's Congress.

Executive powers are vested in a Chief Executive who was selected before reversion by a 400-person Selection Committee of Hong Kong residents, who were, in turn, chosen by a 150-person Preparatory Committee composed of Hong Kong and mainland representatives appointed by the Chinese central government. In 2002, the Basic Law calls for a "broadly representative" 800-member Election Committee to choose the Chief Executive. There is no mechanism for the Chinese central government to remove the Chief Executive, but he or she can be forced to resign under certain circumstances outlined in Article 52 of the Basic Law.

A. BASIC LAW AND ITS CONSISTENCY WITH THE JOINT DECLARATION

The Joint Declaration is an agreement between two sovereign nations, the United Kingdom and the People's Republic of China, that is registered internationally with the United Nations. Although some critics in Hong Kong contend that certain elements of the Basic Law violate the Joint Declaration, neither party to the agreement has made that claim.

In February 2000, British Foreign Secretary Robin Cook reported to Parliament in the sixth "Six-monthly Report on Hong Kong, July-December 1999" his government's belief that "the Governments of China and the Hong Kong SAR remain committed to safeguarding Hong Kong's fundamental systems and way of life." The report noted several concerns, including about the independent judiciary and power of final adjudication, the elimination of the municipal councils, PRC refusal to allow a Hong Kong legislator to enter the mainland for a conference, and the continuation of Radio Television Hong Kong's editorial policy, but welcomed the fact that these subjects were widely debated in the Hong Kong media, the Legislative Council and elsewhere in Hong Kong. Overall, the British assessment of the implementation of "One Country, Two Systems" was positive, noting that developments to date "augured well for the future governance of Hong Kong."

B. THE OPENNESS AND FAIRNESS OF ELECTIONS

There were no elections of the legislature or chief executive during the reporting period. The next legislative elections are scheduled for September 2000. Under the Basic Law, the 2000 legislative elections will see four additional geographic, universal-suffrage seats (totaling 24), and the number will rise to 30 in the 2004 race, while the number of seats chosen by the Election Committee correspondingly declines. Meanwhile, the number of electors on the Election Committee which chooses the chief executive in 2002 and 2007 will increase to 800. After 2007, the Basic Law allows the possibility of amending the Basic Law to eliminate the 30 functional constituencies in favor of universal suffrage elections for all legislative seats and the chief executive, but provides no timeframe for this to occur.

Many advocates of open, representative elections believed that the system of limiting universal-suffrage seats to 20 (soon 24), using proportional voting for those seats, and cutting back the franchise in many functional races effectively stacked the deck against pro-democracy forces. No major political parties, however, boycotted the 1998 elections on the basis of the existing electoral arrangements.

The Government made strong and credible efforts to demonstrate that the actual conduct of the elections within the electoral framework would be clean and fair. C.H. Tung appointed Woo Kwok-Hing, a highly respected jurist, to head the Electoral Affairs Commission, a job he had also held (with great integrity and efficiency) during the pre-handover 1995 elections. The Government made no moves to restrict any Hong Kongers, including Beijing's vehement critics, from voting, operating a political party, demonstrating, holding public meetings, or standing for office. There were no substantial complaints of polling place irregularities in the 1998 elections.

The November 1999 District Council elections were free and fair. The 33% turnout for these local elections showed an interest on the part of Hong Kongers beyond Legislative Council races. Some politicians who had never stood for popular election were able to obtain valuable political experience running for public office in a more open and visible contest involving a wide range of constituents and their varying interests.

C. THE DEBATE ON DEMOCRATIZATION

Hong Kong's democratic aspirations are rising within a shifting political system. Groups such as Martin Lee's Democratic Party and the Frontier movement, which includes outspoken democracy activist Emily Lau, continue to support amendment of the Basic law to allow universal suffrage for the Chief Executive's post and for all Legislative Council seats earlier than 2008, but in the reporting period these groups focused their efforts on pushing the Government to hold early discussion of universal suffrage in 2008. This effort gained support in January 2000, when the heads of the main pro-Beijing (DAB) and pro-business (Liberal) parties publicly stated support for direct elections with universal suffrage in the 2008 Legislative Council elections. Many in these two parties and other sectors of society want to proceed slowly; some are loathe to eliminate functional constituencies even after 2007, when permitted by the Basic Law. The Government opposes immediate democratization, stating only that consultations on post-2007 electoral schemes should begin "at an appropriate time."

Another aspect of democratization under debate is the power of the Legislative Council vis-à-vis the Administration. The power of the legislature is curtailed by voting procedures requiring majorities in each of the directly elected and functionally elected halves of the legislature on certain bills and by limits on the types of legislation which may be formally proposed by the legislators. With an "Executive-led" tradition, Hong Kong has never had a strong legislative branch, but reformers argue that as residents of a Special Administrative Region of China rather than a British colony, the Hong Kong people now deserve a legislature with real power to protect their interests. Such reformers -- mostly pro-democracy parties and like-minded independents -- are trying to augment legislators' power to introduce bills, currently restricted by the Basic Law in broad areas affecting political structure, Government operations, and public expenditure. In January 2000, however, the Government blocked a Legco member's proposed bill on collective bargaining arguing that it fell outside Legco's powers. Reformers also want to eliminate crippling requirements for concurrent majorities of the functional members and non-functional members to pass certain kinds of legislation. In January 2000 three Frontier legislators introduced a motion to amend the Basic Law to repeal some of the restrictions, but the motion was voted down. Separately, the head of the main pro-Beijing party advocated moving to a ministerial system of government to resolve what he characterized as increasingly contentious legislative-executive relations. Chief Executive Tung ruled out a ministerial system, however, saying that government was working far more effectively than critics thought.

Yet another focus of the broadening democratization debate was the December 1999 abolition of the mid-tier elected local government Municipal Councils. Each composed of 50 members, the two bodies -- the Urban Council and the Regional Council -- provided municipal services to urban areas (Hong Kong/Kowloon) and the New Territories, respectively. Eighty Council members were elected; 20 were appointed by Chief Executive Tung after the handover. Most Hong Kongers agreed the Councils had been derelict in providing for environmental hygiene and public health, leading to unsanitary conditions and, most notoriously, the "bird flu" scare of 1998. After extensive public consultations, the Government proposed a bill to abolish the Municipal Councils. Human rights and democracy activists protested the abolition saying that the councils served much needed political and party-building functions. They also argued that, although there was public dissatisfaction with the councils, most of the public preferred to combine the function of the district and municipal councils into one body over devolution of the municipal councils' responsibilities to the civil service. A bill calling for a referendum on the abolition of the councils was defeated.

Similar controversy erupted regarding the 18 District Boards, comprising 468 members who coordinate provision of environmental, safety, and other services at the local district level. The government decided to raise the total membership in the boards -- renamed District Councils -- to 519 in 2000, but also to increase the number of appointed seats so that 102, or about one-fifth, would be appointed rather than elected. The Government justified this move on the grounds that many individuals who could play a useful role in public service but might not be willing to stand for election could be involved in the work of the Councils. The reaction from the pro-democracy camp was a swift and angry denunciation of what it termed another retrograde action.

D. TREATMENT OF POLITICAL PARTIES

Hong Kong's political parties are small, young organizations, lacking the mass membership, historical traditions, and institutional foundations of American and European parties. Yet all are intensely active in legislative races, and most are also aggressive at the district level. In addition to Martin Lee's Democratic Party, the Frontier group which includes outspoken democracy activist Emily Lau stands for democratization and human rights, as does Christine Loh's Citizens Party, which in addition stresses environmental issues. Membership of the Democratic Alliance for the Betterment of Hong Kong (DAB) is primarily lower income, older voters, but the party is attempting to broaden its appeal. The Liberals and the Hong Kong Progressive Alliance represent business interests. Smaller parties and many independents in and out of the Legislative Council articulate a wide variety of economic, political, and ideological positions and actively participate in elections.

There are no limitations in the Joint Declaration or the Basic Law on political parties, although Article 23 of the Basic Law provides that the Government shall pass statutes prohibiting parties from establishing ties with overseas political organizations. Although many were concerned before the handover that the Central Government might use a broad definition of "subversive" activities or some kind of loyalty oath to bar certain parties or individuals critical of Beijing from participating in elections, nothing of the sort has happened. Nor has the 1997 amendment to the Societies Ordinance, which initially caused a stir by re-instituting a registration requirement on political parties, been used to ban or restrict political organizations in any way. The Employment and Labor Relations Ordinance prohibits the use of union funds for political activities, a prohibition the ILO says contravenes freedom of association principles.

All of Hong Kong's parties have remained active, aggressively contesting the November 1999 District Council elections and preparing for the September 2000 Legislative Council campaign.

Many democratic activists complain that the Government does not include representatives from the democratic parties in important functions and delegations, thus contributing to the impression that the pro-Beijing parties are favored by the Government. For example, the Hong Kong Government excluded democrats from Hong Kong's delegations to the PRC's fiftieth birthday celebrations in Beijing in October and to the Macau handover ceremonies in December. Moreover, PRC authorities did not permit a number of Hong Kong activists to visit the mainland. In September, Beijing cancelled the visit of prominent Hong Kong legislator Margaret Ng, who had protested the Hong Kong Government's request for NPC interpretation in the right of abode case. Activists said these restrictions on travel by those who disagree with Beijing might have a chilling effect on political debate in Hong Kong.

The Consulate General maintains good contacts with the full spectrum of public and political opinion in Hong Kong. The United States continues to encourage leaders of Hong Kong political parties to meet with visiting Members of Congress. We encourage party leaders and staff to participate in the International Visitors Program (several did so in the reporting period), and maintain contacts with non-governmental organizations to provide international recognition of and support for local party development.

E. JUDICIAL AND LEGAL DEVELOPMENTS

Common law precedents previously in force and the Basic Law (which incorporates the International Convention on Civil and Political Rights) provide substantial and effective legal protections against arbitrary arrest or detention. Articles 25 and 35 of the Basic Law stipulate that all Hong Kong residents shall be equal before the law and shall have access to the courts. Suspects must be charged within 48 hours of arrest or released. The average length of pre- conviction incarceration does not exceed 80 days. Legal aid lawyers are available to any person in Hong Kong, resident or non-resident, who meets a means test and a merits (justification for legal action) test. This Government- funded legal assistance is free or heavily subsidized. Due process is scrupulously observed in Hong Kong. In 1999, there was some controversy as to whether many right of abode applicants were eligible for legal aid.

The Court of Final Appeal was created on July 1, 1997 to replace the U.K.'s Privy Council as Hong Kong's highest court. The Basic Law provides that the courts of Hong Kong shall be vested with independent judicial power with jurisdiction over all cases "except acts of state such as defense and foreign affairs" (Article 19), and exercise judicial power independently, free from any interference (Article 85). Judges enjoy security of tenure until retirement age (60 or 65 depending on date of appointment) and adequate remuneration.

Appointments to the bench are made by the Chief Executive on the recommendation of a Judicial Officers Recommendation Commission composed of the Chief Justice, the Secretary for Justice, two senior judges, a solicitor and a barrister (selected by their respective organizations), and three eminent lay persons. Any recommendation of the Commission must have the approval of seven of its members, thus giving the legal profession near veto power and effectively denying a veto to the Government representatives. The Basic Law (Article 92) provides that judges' qualification for office must be assessed on the basis of their professional competence in the law, judicial temperament, and personal conduct. Thirty-five percent of Hong Kong judges are expatriates from other common law jurisdictions. At least one of the Court of Final Appeal's five judges is a non-permanent judge from another common law jurisdiction.

The Hong Kong press and public play a vital role in ensuring the independence of the judiciary. Since the handover, the press, the Law Society, the Bar Association, legislators, and human rights groups have on several occasions been extremely critical of court rulings or actions taken (or not taken) by the Department of Justice (see below).

According to the Basic Law (Article 158) Hong Kong courts may interpret provisions of the (Basic) Law which are within the limits of the autonomy of the Region. However, if the courts need to interpret provisions of the (Basic) Law concerning affairs which are the responsibility of the Central People's Government, or concerning the relationship between the Central Authorities and the (Special Administrative) Region, and if such interpretation will affect a judgment, the courts of the (Special Administrative) Region shall, before making their final judgments which are not appealable, seek an interpretation of the relevant provisions from the Standing Committee of the National People's Congress. When the Standing Committee makes an interpretation of the provisions concerned, the courts, in applying those provisions, shall follow the interpretation of the Standing Committee. The National People's Congress' vehicle for interpretation is its Committee for the Basic Law, composed of six mainland and six Hong Kong members. The Hong Kong members are nominated by the Chief Executive, the President of the Legislative Council and the Chief Justice.

In January 1999, the Court of Final Appeal issued rulings in three cases, known collectively as "the Right of Abode ruling." The ruling declared some Hong Kong immigration regulations (discriminating against children born out of wedlock in the mainland to Hong Kong fathers) inconsistent with the International Covenant on Civil and Political Rights (ICCPR) subsumed in the Basic Law and confirmed that all children of Hong Kong residents had right of abode in Hong Kong, including those whose parents did not enjoy the right of abode at the time of their children's birth. The ruling also asserted the Court's right of judicial review over not only the Basic Law, but also over acts of the National People's Congress as they affected Hong Kong. In February, in response to criticism from Mainland legal scholars and officials, the Hong Kong Government requested an unprecedented "clarification" of the Court's assertion of the right of judicial review from the Court of Final Appeal. The Court responded with a brief statement stressing that it did not question the power of China's NPC to interpret the Basic Law, but reserved its power to test acts of the NPC against the Basic Law. Human rights activists and some legislators expressed concern that the clarification set a "dangerous precedent."

At the time, the "clarification" appeared to have forestalled further action by the Central Government. In May, however, the Hong Kong Government asked the Standing Committee of the National People's Congress to interpret two provisions of the Basic Law relevant to the part of the Court of Final Appeal's Right of Abode ruling. The purpose was to obtain reinstatement of Hong Kong ordinances denying right of abode to mainland-born children born before at least one parent had become a Hong Kong permanent resident and requiring mainland-born children born after at least one parent had become a Hong Kong permanent resident to first obtain certain Hong Kong Government- and PRC Government-issued documents. (The Hong Kong Government accepted the Court's ruling that the ICCPR required giving children born out of wedlock the same rights as those born to married couples.) The Government submitted its request to the Standing Committee after giving the Hong Kong legislature only 24 hours to consider a motion endorsing the Chief Executive's decision to seek interpretation. Democratic legislators boycotted the vote, wearing black to mourn the "death of justice." Hundreds of Hong Kong lawyers, who viewed the request as a post-judicial remedy which undermined the authority and independence of Hong Kong's judiciary, marched in protest.

The NPC interpretation, issued in June, implied that the Court of Final Appeal erred in not seeking NPC interpretation before it issued its ruling because the Basic Law clauses on which its ruling was based involved "matters involving the relations between the central government and the Hong Kong SAR." The legal effect was everything the Hong Kong Government had wanted. The NPC declared that the original legislative intent of one of the Basic Law articles, as expressed in a 1996 Preparatory Committee Document, was that at least one parent had to have had right of abode at the time of the child's birth in order to confer that right upon the child. The NPC also declared that these children must apply for approval for entry into Hong Kong. Although the status of the litigants in the original case(s) was unchanged, the effect of the interpretation was to reduce the number of people eligible for right of abode in Hong Kong from 1.6 million (Hong Kong Government estimate) to 160,000.

An additional right of abode case dealing with mainlanders who sought to exercise their right of abode without mainland-issued documents permitting them to stay, was heard by the Court of Final Appeal in October. On December 3, the Court ruled that the NPC had the authority to interpret the Basic Law, that the NPC's June interpretation of the Basic Law was therefore binding, and that the interpretation upheld the Government's previous documentation and time of birth requirements.

As a result of these decisions, Hong Kong saw during the past year a great deal of attention and debate over rule of law issues and the autonomy of Hong Kong's judiciary. The debate continued early in 2000; in his speech opening the legal year, the Chief Justice underlined the necessity for the government to explain and defend the fundamental principle of judicial independence, whether or not any particular decision is in its favor. For its part, the government reiterated strong support for the independence of the judiciary and for maintenance of the rule of law in Hong Kong. While refusing to rule out entirely the possibility of a future request for interpretation, senior government officials said such requests would be exceptional in the extreme. They also made clear their belief that frequent recourse to interpretation of the Basic Law was neither necessary nor advisable.

F. INTERNATIONAL HUMAN RIGHTS CONVENTIONS

In November, the UN Human Rights Committee in Geneva heard the first post- handover report on Hong Kong under the International Covenant on Civil and Political Rights, the first time the UN had examined Hong Kong's human rights record since the handover. The report -- drafted wholly by the Hong Kong Government and transmitted to the United Nations through Beijing, but unedited by the Central Government -- was presented primarily by Hong Kong Government officials; the official PRC delegation head did little more than introduce the Hong Kong delegation before departing. Hong Kong non-governmental human rights organizations gave an informal briefing to the UNHRC before the hearing. The UNHRC praised the report for its quality and for the role of NGOs in its participation. The Committee also expressed concern in a number of areas, including: NPC Standing Committee power to interpret the Basic Law; the elimination of municipal councils; and the proposal for a government-appointed press council. Visiting Hong Kong in March 2000, UN Human Rights chief Mary Robinson urged the Hong Kong Government to establish an independent human rights monitoring body.

In May 1999, Hong Kong submitted a report under the Convention against Torture. In June, Hong Kong submitted a separate report under the International Covenant on Economic, Social, and Cultural Rights. Hong Kong also submits a report as part of the Chinese delegation under the Convention on the Elimination of All Forms of Discrimination against Women.

G. FREEDOM OF EXPRESSION

Hong Kong has a tradition of free speech and a free press. Political debate remains dynamic and raucous, and a wide range of political opinion and commentary is well represented in the media. Hong Kong people speak freely to the press, and the media freely cover any and all topics that free media cover in other free press jurisdictions around the world. Numerous views and opinions, including those independent or critical of the Hong Kong and PRC governments, were aired in the mass media, in public fora, and by political groups throughout the past year. Hong Kong press coverage of the PRC is extensive and frequently critical. Hong Kong continues to be a hotbed of speculation over changes in leadership and policy in Beijing, and different theories are freely aired in the press. Hong Kong's free media continue to serve as a forum for the views of mainland commentators and dissidents.

Radio Television Hong Kong (RTHK), the government-operated broadcaster, continues to carry material critical of the Special Administrative Region Government; some observers say it has been more critical of the Government than it was of the previous colonial Administration. Talk radio programs appear to operate without limitation in criticizing local leaders and China's policies toward Hong Kong. Political cartoonists continue to satirize, and sometimes savage, prominent political figures in Beijing and Hong Kong in ways unimaginable in the rest of China's media or in the papers of many of Hong Kong's more tightly controlled Asian neighbors. Last fall, RTHK broadcast a piece on its "Letter to Hong Kong" program by Cheng Anguo, Taiwan's de facto representative in Hong Kong, commenting on Lee Teng-hui's "two-state theory." The broadcast sparked wide debate, including calls for the privatization of RTHK as a way to eliminate the possibility that the Government could or should direct the network's editorial policy. The SAR government spokesperson criticized Cheng's behavior as "improper," while RTHK's director, Cheung Man-yee, countered that RTHK is a public forum open to different voices. Ms. Cheung later accepted an appointment to be the trade representative for the Hong Kong SAR Government in Japan. Although Cheung publicly denied she was under pressure to quit her job at RTHK, many credible observers saw her transfer as punishment for the broadcasting agency's uninhibited reporting and commentary, including a long record of criticizing the Hong Kong Government. Her successor, however, vowed to continue the organization's editorial independence.

In August 1999, in response to increasing public complaints about deteriorating standards of ethics in Hong Kong print media, particularly in the realm of privacy invasion, the Privacy Subcommittee of the Law Reform Commission put out for public consultation the idea of a government-appointed press council "with teeth" to protect individuals from invasion of privacy by the media. Immediately, several media organizations, as well as numerous human rights organizations and activists, announced their vehement opposition to a press council. Although initially neutral on the proposal, Chief Executive Tung eventually stated a preference that the media find a way to regulate itself. The issue is still under discussion, and in February 2000 four news associations joined to unveil a code of ethics for journalists to be recommended to newspaper owners and reporters after consultations end in May.

In November 1999, in a case in which a news group sued RTHK for defamation, the Court of Final Appeal upheld the constitutional protection of free speech and ruled in favor of RTHK, noting that "no narrow approach should be taken to the scope of fair comment on a matter of public interest."

In March 1999, the Court of Appeal had ruled unanimously that the PRC and Hong Kong flag ordinances which created the offense of desecration of flags were inconsistent with the Basic Law because they violated the ICCPR subsumed in the Basic Law. The Government appealed. In a judgment issued December 15, the Court of Final Appeal overturned the lower court's ruling, declaring that the anti-flag desecration provisions were consistent with freedom of expression protections in both the Basic Law and the ICCPR. The Hong Kong Government welcomed the decision, but stressed that freedom of expression lived on in Hong Kong by quoting one of the CFA judges as follows: "Beneath the national and regional flags and emblems, all persons in Hong Kong are -- and can be confident that they will remain -- equally free under our law to express their views on all matters whether political or non-political: saying what they like, and how they like."

In April, several prominent Chinese dissidents including Wang Dan were denied visas to enter Hong Kong to attend human rights related events in Hong Kong. In June, and again in September, Hong Kong legislators active in human rights and rule of law were denied permission by Beijing to travel to the mainland. In all these cases, critics argued that such policies had a chilling effect on political debate and free expression in Hong Kong.

The freedom to demonstrate remained alive and well in Hong Kong. Public demonstrations, often critical of the PRC, continued to take place with regularity. The annual June 4 commemorative candlelight vigil attracted 70,000 participants. Falun Gong, banned in the mainland in July, continued to act freely in Hong Kong, both in the practice of their beliefs and in the conduct of protests against PRC Government abuses of the human rights of their mainland brethren.

VIII. THE NATURE AND EXTENT OF HONG KONG'S PARTICIPATION IN MULTILATERAL FORA

A. FULL MEMBERSHIP

Asian Development Bank (ADB)
Financial Stability Forum
International Textiles and Clothing Bureau (ITCB)
Network of Aquaculture Centers in Asia and the Pacific (NACA)
Pacific Economic Cooperation Council (PECC)
World Meteorological organization (WMO)
World Trade Organization (WTO)
World Customs Organization (WCO)

B. ORGANIZATIONS IN WHICH THE HKSAR PARTICIPATES AS PART OF THE PRC DELEGATION

Asia-Pacific Postal Union (APPU)
Food and Agriculture Organization (FAO)
International Atomic Energy Agency (IAEA)
International Bank for Reconstruction and Development (IBRD)
International Civil Aviation Organization (ICAO)
International Criminal Police Organization (INTERPOL)
International Development Association (IDA)
International Finance Corporation (IFC)
International Hydrographic Organization (IHO)
International Labor Organization (ILO)
International Mobile Satellite Organization (INMARSAT)
International Monetary Fund (IMF)
International Telecommunications Satellite Organization (INTELSAT)
International Telecommunication Union (ITU)
United Nations Commission on Narcotic Drugs (UNCND)
United Nations Conference on Trade and Development (UNCTAD)
United Nations Development Program (UNDP)
Universal Postal Union (UPU)
World Intellectual Property Organization (WIPO)

C. ASSOCIATE MEMBERSHIP

Asia-Pacific Telecommunity (APT)
Economic and Social Commission for Asia and the Pacific (ESCAP)
International Maritime Organization (IMO)

D. OTHER ORGANIZATIONS IN WHICH HONG KONG PARTICIPATES, AND FOR WHICH SINO-BRITISH JOINT LIAISON GROUP (JLG) AGREEMENT WAS NOT REQUIRED FOR HONG KONG'S CONTINUED PARTICIPATION

(Note: The following list includes only some of the over 300 international organizations and conferences in which the HKSAR Government and officials of the HKSAR participate.)

Asia Pacific Economic Cooperation (APEC)
Australian Council of Auditors-General
The International Consortium on Government Financial Management
Commonwealth Association of Tax Administrators
East Asian Regional Branch of International Council of Archives (EASTICA)
Eastern Regional Organization for Planning and Housing (EAROPH)
Financial Action Task Force (Established following the G-7 Summit in July 1989)
Index Foundation International Association of Assessing Officers
International Association of Insurance Fraud Agencies (IAIFA)
International Association of Insurance Supervisors (IAIS)
International Association of Lighthouse Authorities
International Association of Ports and Harbors
International Consortium on Government Financial Management
International Council on Archives (ICA)
International Function Point Users Group
International Government Printers' Association
International Ombudsman Institute
International Organization for Standardization
International Structured Systems Analysis and Design Method Users Group
National Conference of Standards Laboratories
Organization for Economic Cooperation and Development (OECD)
OECD Committee on Financial Markets
OECD Trade Committee
Permanent International Association of Road Congress (PIARC)
Quality Assurance Institute Transport Research Board
United Nations Environmental Program (UNEP)
The Global Environment Information Exchange Network
The Network for Environmental Training at Tertiary Level in Asia

E. INTERNATIONAL ORGANIZATIONS IN WHICH HONG KONG NO LONGER PARTICIPATES

Asian Productivity Organization (APO) -- withdrew July 1997

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