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e-mail address : enquiry@tid.gov.hk

Ref. : CR EIC 110/10/2/16 

15 October 2004 

Dear Sirs,

Notice to Exporters

Series 1 (USA) No. 35/2004

Series 2 (EU) No. 26/2004

Series 3 (Countries other No. 24/2004
than USA & EU) 

Certificate of Origin Circular No. 11/2004

Textiles Control Arrangements from 2005 Onwards

Introduction

This notice informs traders of the outline of the modified textiles control arrangements from 2005 onwards, subject to the passage by the Legislative Council of the corresponding Import and Export (General) (Amendment) Regulation 2004 and Import and Export (Fees) (Amendment) Regulation 2004 which were gazetted on 15 October 2004. The modified textiles licensing and certification arrangements as set out in paragraphs 4-5 below will take effect from 1 January 2005. 

Elimination of Textiles Quotas 

2. In accordance with the World Trade Organization (WTO) Agreement on Textiles and Clothing (ATC), all quantitative restrictions on textiles and clothing (T&C) products among Members of the WTO (including Hong Kong) will come to an end by 1 January 2005. Hong Kong's T&C exports will then enjoy quota-free access to all markets.
   
   

3. Due to the existence of the Mainland-specific textiles safeguard measures, the importing end may continue to closely monitor T&C exports from the region including Hong Kong to guard against illegal transshipment or false claims of origin in an attempt to circumvent the safeguard actions. Hence, it is necessary to maintain a simple yet effective control system after 2004 to ensure origin compliance of Hong Kong's T&C exports. At the same time, to strike a balance between trade facilitation and regulation, the control system after 2004 will be substantially streamlined to make it more business friendly. 

Textiles Control System from 2005 Onwards 

4. Against the above background and to ensure continued and unrestricted access of Hong Kong's T&C exports to the world market, traders are requested to note that the proposed textiles control system for 2005 onwards will comprise the following: 

1. all quota-related operations ¹ will cease with effect from 1 January 2005;
   
   

2. Restrained Textiles Export Licences (Form 5 and Form 8) to Canada, the European Union (EU) and the United States (US) will be dispensed with;
   
   

3. the current Production Notification (PN) requirement applicable to all cut-and-sewn garments to Canada and the EU will be discontinued. The PN requirement will only apply to cut-and-sewn garments intended for export to places that have applied safeguard actions to imports from the Mainland (currently the US only). A validated PN will be required for supporting subsequent CO application for the products concerned; 
   
   

4. licensing requirements for commercial shipments of textiles imports and exports will be maintained to ensure that Hong Kong products would not be adversely affected by the application of Mainland-specific safeguard measures. Different licensing requirements will apply for "sensitive" and "non-sensitive" markets:

1.  "Sensitive" markets - All textiles exports to and imports from the Mainland, and exports to those economies which have invoked safeguard measures on T&C products of the Mainland (currently the US only) will have to be covered by either an Import Notification or Export Notification I/II completed by a trader registered under the Textiles Trader Registration Scheme (TTRS) or a consignment-specific export licence (Form 4) or import licence (Form 7) issued by the Director-General of Trade and Industry.
   
   

2.  "Non-sensitive" markets - Textiles imports and exports other than those set out in paragraph 4(d)(i) above will be covered by a comprehensive import or export licence respectively. A comprehensive licence will be valid for a period of 12 months to cover multiple shipments with no quantitative restriction for each consignment. Details of the application procedures for comprehensive licence will be announced in separate Notices to Exporters to be issued later.
   
   

3. All transshipment cargoes of textiles to or from any country or place will continue to be covered by a transshipment notification under the TTRS as in the current arrangement.

The above textiles licensing arrangements will be reviewed in late 2005, taking into account factors such as changes in the global trading environment after quota elimination, the extent of safeguard measures invoked by WTO Members on the Mainland, and the local manufacturing scene;

5. at present, licensing exemption is given to exports of accompanied personal textiles shipments. In a quota-free environment, licence for non-commercial shipments will no longer be required. Licensing exemption will be extended to (i) unaccompanied textiles articles for personal use of the sender or as bona fide gifts to another individual, and (ii) bona fide textiles gifts to an individual in an accompanied baggage; and
   
   

6. the Special Export and Import Licensing Scheme for export of piece-knitted garments to the US market will be discontinued after all textiles quotas are eliminated on 1 January 2005. At the same time, Hong Kong's origin rule for piece-knitted garments will be revised to be either "knitting of knit-to-shape panels" or "assembling of knit-to-shape panels into garments". Outward processing of non-origin conferring operations will be regulated under the Outward Processing Arrangement (OPA) as with other T&C products.

5. Traders should note that the Certificate of Origin (CO) system will remain largely the same after 2004 for all product types, including T&C products that are originated from Hong Kong. CO applications covering cut and sewn garments to places that have applied safeguard actions against imports from the Mainland will need to be supported by validated PN(s) covering the products concerned. Moreover, Factory Registration (FR) will be maintained, as a pre-requisite for manufacturers and subcontractors respectively intending to lodge a PN or apply for a CO. The Local Subcontracting Arrangement (LSA) will continue after 2004.
   
   

6. Further details on the textiles licensing and certification arrangements from 2005 onwards will be announced in separate Notices to Exporters to be issued later. 

Fees and Charges

7. With the abolition of quotas, quota-related textiles application and service fees will no longer be applicable after 2004. Pending the review on the overall textiles licensing arrangements in late 2005 (see paragraph 4(d) above), it is proposed that other textiles-related fees (including those relating to the lodgment of PN, application for import or export licence and related registrations) will remain unchanged. No fee will be charged for the comprehensive licence. Details of the fees and charges for textiles related services for 2005 onwards will be announced in separate Notices to Exporters to be issued later.

Enquiries

8. Should you require further information on this subject, please contact the following units:

Yours faithfully,

(Anthony HW SUEN)
for Director-General of Trade and Industry

1: Quota-related operations include Textiles Controls Registration (TCR), quota allocations, swing and flexibility provisions, free quota schemes, ect.

Note : The Chinese text of this Notice/Circular is for reference only. In case of discrepancies between the Chinese and the English texts, the English text shall for all purposes be conclusive