The changes to the Law on External Trade in Macau

Frederico Rato, Pedro Cortés and José Filipe Salreta of Rato Ling Lei & Cortés – Advogados in Macau look at the Law on External Trade

After an explosive growth of GDP of about 17.8% year-on-year between 2001 and 2014, Macau’s economy contracted 16.9%, with a slower trend observed in the 4th quarter 2015 and 1st quarter 2016 (14.4% and 13.3% GDP contraction, respectively). The recession is largely caused by a reduction in spending of visitors coming from Mainland China (as a consequence of the economic slowdown in the People’s Republic of China – PRC) and a sharp contraction of the so called VIP sector (or high rollers) in the Macau Special Administrative Region (MSAR)’s casinos.

Even before the negative impact of the international economic environment in the gaming industry, which represents the lynchpin of Macau’s economy, the government of the MSAR, in response to incitements from the Central Government of the PRC, enshrined in its electoral political program of 2014 the intention to diversify the local economy, by extending the linkage of cornerstone industries and promoting the joint development of the gaming industry and other related businesses, namely by using the know-how of the hospitality sector in the region to promote the conferences and exhibitions industry.

In order to facilitate the diversification of Macau’s economy, the MSAR Government submitted to the Legislative Assembly (AL) on March 27 2015 a proposal to amend Law No. 7/2003 (the Foreign Trade Act or FTA), which sought to simplify customs clearance procedures and facilitate operations covered by the use of “Temporary Admission” Carnets (ATA carnets) to promote the development of the conferences and exhibitions industry and the trade of goods with neighboring regions. The proposal was discussed, voted and approved in general terms in the AL in May 20 2015; however, due to the particularly complex matter and the need to articulate the technical and legal characteristics of the legislative proposal with international instruments, the assessment of each individual article was made in cooperation with the Government, which resulted in a final version of the bill to be voted on June 20 2016.

The legislative proposal contains three main points:

1) incorporation of ATA Carnets in the FTA regime (namely to facilitate and promote the internationalisation of the conventions and exhibitions industry in Macau);

2) insertion of the transit license regime, which submits the transit of goods in Macau to a prior license; and

3) clarification of the judicial framework on external trade.

The FTA enshrines the principle of freedom of movement of goods and other goods and products in Macau, subject to the exceptions set out therein. Currently, all export or import trade operations submitted to a special scheme or those relative to the export or import of goods previewed in the respective schedules in the FTA are subject to licensing. The remaining foreign trade operations are only subject to import or export declaration under the law, and the transit operations only require a simple declaration, without prejudice to foreign trade operations by baggage related to personal use or consumption goods or those previewed under international conventions.

In this regard, it should be noted that the ATA Convention, adopted in 1961, was only applied to Macau on October 6 2005 after the notification made by the PRC on the implementation of the Convention to the MSAR. Furthermore, the ATA carnet was only applicable to Macau after November 1 2010 with the appointment of the Macau Commercial Association by the Customs Service as the official issuer of ATA carnets.

Without prejudice to the direct application of the abovementioned Convention to Macau, and in order to prepare the review of the Administrative Regulation on foreign trade and the addition therein of the regime of “customs clearance before the declaration” of the ATA carnet, the bill introduces the definition of ATA carnet, as well as the possibility of using the same in place of import, export and transit declarations indicated above (without prejudice to foreign trade operations subject to licensing). The amendment thus seeks to facilitate the use of international customs instruments under the ATA Convention, encouraging more investment in Macau, in particular as regards the import and export of goods (not subject to license) for conferences and exhibitions.

The bill also creates the transit license regime (non-existent at the time) to better articulate the law with the existing provisions of Law No. 17/2009, which defines the drugs which are subject to licensing, conditions or authorisations of the Health Services of Macau or of the Macau Economic Services Bureau (DSE). It also aims to provide legal framing for other goods which may be subject in the future to transit licenses. Unlike the import and export licenses, this exception to the general rule of freedom of movement of goods is not detailed in the amended version of the FTA and shall be implemented by other laws and structured by administrative regulation.

Finally, the bill clarifies the possibility of appeal of administrative acts within the scope of the FTA, which currently could be made to the Administrative Court (TA) or the Second Instance Court (TSI), if the author of the administrative act was (for instance) the Director-General of the Customs Services, without prejudice to previous hierarchical appeal of the administrative decision. To harmonise the rules of the FTA with the provisions of the Basic Law on Judicial Organization (LBOJ), which attributes to the TSI the exclusive first instance jurisdiction on appeals of administrative acts and also acts related to customs matters (among others) practiced by the public administration bodies provided therein, the bill simplifies the appeals procedure, stipulating that the decisions indicated above can be appealed immediately under the LBOJ.

In conclusion, the amendment to the FTA analysed above reinforces the purpose of the Macau Government to diversify the MSAR’s economy. Given the weight the gaming sector and related industries possess in the local economy, the way forward is undoubtedly through the promotion of economic sectors that make use of the acquired know-how in these services by local businesses, thereby attracting new projects related to the conventions and exhibitions sector while facilitating the economic integration and the movement of goods with the neighboring regions of Zhuhai and Hong Kong.

Frederico Rato
Partner
Rato Ling Lei & Cortés - Advogados
Macau

Pedro Cortés
Partner
Rato Ling Lei & Cortés - Advogados
Macau

José Filipe Salreta
Partner
Rato Ling Lei & Cortés - Advogados
Macau