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 You are in: Under Secretary for Political Affairs > Bureau of East Asian and Pacific Affairs > Releases > Reports > 2001

U.S.-Macau Policy Act Report

U.S.-Macau Policy Act Report as of March 27, 2001 as Required by Section 204 of P.L. 106-507
Released by the Bureau of East Asian and Pacific Affairs



I. Significant Developments in U.S. Relations with Macau, Including any Determinations Made under Section 203 (of the Macau Policy Act)

A. Protection of Intellectual Property Rights
B. Combating Illegal Textile Transshipment
C. Law Enforcement Cooperation
D. Visa Reciprocity for Macau Residents
E. Bilateral Agreements
F. Determinations under Section 203 (none)

II. Significant Developments Related to the Change in the Exercise of Sovereignty over Macau Affecting United States Interests in Macau or United States Relations with Macau and the People’s Republic of China

A. United States Interests in Macau
B. Developments Affecting U.S. Interests in and Relations with Macau

Economic and Commercial Developments
The New Government
Human Rights Respected
Assessment of Rule of Law and Independence of the Judiciary
Article 23 of the Basic Law: Treason, Subversion, and Related Crimes
Tackling Crime: Police and Commission Against Corruption Reform
Creation of a Customs Department
Border and Export Controls
Passport and Visa Regime

III. The Development of Democratic Institutions in Macau

IV. Compliance by the Government of the People's Republic of China and the Government of the Republic of Portugal with Their Obligations under the Joint Declaration

A. PRC Organizations and Officials in Macau
B. Post-handover Macau SAR-PRC Agreements

V. The Nature and Extent of Macau's Participation in Multilateral Forums

A. Full Membership
B. Part of the PRC Delegation
C. Associate Memberships
D. Other Organizations in which Macau Participates

After 450 years of Portuguese colonial administration, Macau became a Special Administrative Region (SAR) of the People's Republic of China (PRC) on December 20, 1999. Macau's status since reverting to Chinese sovereignty is defined in the Sino-Portuguese Joint Declaration (1987) and the Basic Law, the SAR's mini-constitution promulgated by China's National People's Congress (NPC) in March 1993. Under the concept of "One Country Two Systems" articulated in these documents, Macau is promised a high degree of autonomy except in defense and foreign affairs. As stipulated in the Joint Declaration and the Basic Law, Macau officials, rather than officials from the Central Government of the PRC, run Macau through the exercise of separate executive, legislative, and judicial powers. Macau will maintain its own separate currency, customs territory, immigration and border controls, and police force. The Joint Declaration and the Basic Law specify that Macau's social and economic system, lifestyle, rights, and freedoms are to remain unchanged for at least 50 years.

Macau under Chinese sovereignty has developed in an overall positive direction, with the Macau government committed to enhancing Macau's economy, tackling a serious crime problem of many years' duration, and preserving the SAR's freedoms and unique way of life. Macau officials generally run Macau and make their decisions pursuant to Macau's own identity and interests. Macau remains a free society that extends basic civil liberties to its residents every day. Despite concerns about some harassment of Falun Gong practitioners by police and security officials -- especially since December 2000 -- Falun Gong adherents continue to be allowed to practice in public and senior Macau officials have stated that they are free to conduct their legal activities without interference. Macau's civil society and democratic institutions remain weak, and there are important limitations imposed in the Basic Law on legislators' ability to initiate Private Member Bills. Nevertheless, the Legislative Assembly plays an important role in shaping legislation. The PRC generally has respected its commitments regarding Macau's high degree of autonomy. Representatives of the PRC in Macau, including the Ministry of Foreign Affairs, the Central People's Government Liaison Office, and the People's Liberation Army Garrison, have maintained a low profile except on ceremonial occasions.

In recognition of Macau's high degree of autonomy, the United States continues to accord to Macau a special status distinct from the rest of China. For example, the sanctions imposed on China after the June 1989 violence in Tiananmen Square (section 902 of P. L. 101-246) do not apply to the Macau SAR. The U.S. government supports Macau's autonomy by strengthening bilateral ties (e.g., by concluding bilateral agreements such as the Memorandum of Understanding on Cooperation in Enforcing Textile Quotas and Preventing Illegal Transshipment of Textiles in September 2000), promoting trade and investment, where possible granting maximum validity visitor visas, arranging high level visits, broadening law enforcement cooperation, and bolstering academic and cultural links.

This report covers developments affecting U.S. interests in the 15 months since the handover (December 20, 1999 through March 2001). These interests include: preservation of Macau's free market economy; continuation of Macau's unique way of life, particularly respect for civil liberties and human rights; efforts to combat Intellectual Property Rights (IPR) piracy and illegal textile transshipment; and law enforcement cooperation to prevent transnational crime and money laundering.

I. Significant Developments in U.S. Relations with the Macau SAR including any Determinations Made under Section 203 (of the Macau Policy Act)

A. Protection of Intellectual Property Rights (IPR)
Over the past several years, one of the top issues on the U.S.-Macau bilateral economic agenda has been the protection of intellectual property rights. Following the mid-1990's crackdown on the production of unlicensed optical discs (DVD’s and VCD’s) in the People's Republic of China, Macau saw a surge of pirate manufacturing and retailing. Further contributing to this problem was a general climate of lawlessness, with IPR pirates often enjoying protection from "Triad" criminal gangs. As a result, pirate manufacturing exploded, with Macau origin products surfacing as far away as South America. In 1998, in reaction to this growing problem, Macau was placed on USTR's "Priority Watch List," one of the highest categories of scrutiny under the Special 301 trade practices review.

During 1999 and 2000, the Macau government made gradual progress in strengthening IPR laws, tightening controls over DVD and VDC manufacturing, and stepping up street-level IPR enforcement. The most dramatic progress came after the government's decision, in late 1999, to establish a separate Intellectual Property Department within Macau Economic Services (MES). This bureaucratic reform brought a dramatic improvement in communications with U.S. copyright industry associations and created a cadre of officers within MES who have clear responsibility for cracking down on Macau's CD piracy problem. As a consequence of this crackdown (which coincided with a general decline in Triad violence following the handover), several CD manufacturing lines were removed completely from the Macau SAR. The results of this effort were a visible decline in the number of pirated discs seized at Macau's borders -- from 1.3 million in 1998, to 800,000 in 1999, to fewer than 100,000 in 2000.

As a result of these improvements in legislation and a stepped-up enforcement effort, Macau graduated to USTR's Special 301 Watch List in April 2000. At the time of this announcement, and during a subsequent "out of cycle review," USTR signaled that Macau's outright removal from the Special 301 list would require progress also in the courts, which have been slow to convict and impose the sort of stiff jail sentences against pirate manufacturers that would deter future activity. Macau did implement an expedited prosecution arrangement that was used in 2000 to speed up punishment of accused pirate retailers. In manufacturing cases, however, court decisions came slowly and lacked any deterrent effect. For instance, in September 2000 Macau's Court of Final Appeal returned a guilty verdict relating to a 1998 seizure of nearly 200,000 pirated discs. Although the pirated discs and related equipment were confiscated, the accused received only an eight-month suspended sentence, meaning there was no jail time associated with one of Macau's largest seizures of pirated items.

In late 2000 and early 2001, MES continued to cooperate closely with U.S. industry associations to uncover pirate manufacturers and neutralize pirate retailers. As a result of these actions, more than 700,000 pirated DVD’s and VCD's were seized and 6 VCD/DVD replication lines were closed. Macau also made progress in implementing a 2000 decree to require the use of only licensed software by government offices, and began discussions with U.S. industry about how to ensure that private businesses use only licensed software.

B. Combating Illegal Textile Transshipment
Macau-origin textiles and apparel continue to enter the United States under quotas separate from those of China. In September 2000, following two years of negotiations, Macau and the United States reached agreement on a Memorandum of Understanding (MOU) for cooperation in enforcing textile quotas and preventing illegal transshipment. This issue had become a major irritant in the bilateral relationship. The United States in July 1999 barred the entry into the United States of apparel manufactured by certain Macau firms found to be illegally transshipping, closed, or unable to produce records to verify production. This MOU provided for information exchange and enforcement cooperation to tackle the continuing problem of Mainland China-origin textiles and apparel illegally exported to the United States by Macau companies as made in Macau goods. Given the large role that textiles and apparel play in Macau's economy, this MOU should help significantly to stabilize the U.S.-Macau commercial relationship. In addition, its approval demonstrates the new SAR government's apparent commitment to preserving Macau's international reputation and upholding its WTO obligations. The United States will continue to closely monitor Macau's compliance with the MOU.

C. Law Enforcement Cooperation
Historically, and since reversion, law enforcement cooperation between the United States and Macau has been limited and carried out on a case-by-case basis. This reflects both the paucity of criminal cases with a U.S.-Macau nexus and a lack of established procedures or reliable institutionalized arrangements for such cooperation. More formal cooperation is inhibited by the absence of bilateral Extradition and Mutual Legal Assistance agreements and enabling Mutual Legal Assistance in Criminal Matters legislation in Macau. Negotiation of such agreements is a long-term objective of the United States. The U.S. government is seeking to broaden its cooperative liaison and operational relationships with Macau government agencies, with particular attention to IPR protection, narcotics trafficking, alien smuggling, illegal textile transshipment, and money laundering, and is finding an increasingly receptive partner. U.S. law enforcement agencies assigned to the U.S. Consulate General in Hong Kong, including the Department of State Bureau of Diplomatic Security, 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, and the Federal Bureau of Investigation are all in regular contact with their Macau counterparts. U.S. INS officers conduct document training in Macau for immigration and airline staff and enjoy a productive working relationship with their counterparts. Customs officials conduct joint factory inspections and quota enforcement investigations.

At U.S. invitation, Macau officials involved in legislative, judicial, prosecutorial, and law enforcement crime fighting efforts have since reversion participated regularly in programs at the U.S.-sponsored International Law Enforcement Academy (ILEA) in Bangkok.

D. Visa Reciprocity for Macau Residents
U.S. citizens traveling to Macau do not need visas if staying less than 30 days. In recognition of this treatment and the highly secure new Macau SAR travel documents which contain many tamper-resistant features (see Section II (B) below), the United States grants 10-year multiple entry visas to eligible Macau residents coming to the United States as tourists or for short-term business purposes. As a result of passage of the Macau Policy Act, Macau residents will be able to participate in future lotteries under the Diversity Visa Program.

E. Bilateral Agreements
In addition to the September 2000 bilateral MOU for Cooperation in Enforcing Textile Quotas and Preventing Illegal Transshipment (see above), nine pre-reversion bilateral agreements remain in effect:

  • Air Transport Agreement (entered into force 7/3/96)
  • Parcel Post Agreement (entered into force 8/1/74)
  • International Express Mail Agreement (entered into force 10/1/83)
  • Memorandum of Understanding on Operation of the INTELPOST Field Trial (entered into force 5/21/85)
  • Administrative Arrangement relating to a Visa System (entered into force 8/21/81)
  • Agreement relating to Trade in Cotton, Wool, and Man-made Fiber Textiles and Textiles Products (entered into force 1/9/84)
  • Agreement relating to Trade in Textiles and Textiles Products (entered into force 5/21/94)
  • Tax Reimbursement Agreement (entered into force 10/21/98)
  • Modified Open Skies Aviation Agreement (entered into force 7/3/95)

The most important of these is the July 3, 1996 Modified Open Skies aviation agreement that gives carriers of both sides broad flexibility to implement air services between the United States and Macau. Some U.S. carriers have investigated commercial aviation opportunities in Macau, but the size of the bilateral aviation market is limited. There are as yet no direct air passenger services between the United States and the Macau SAR; limited cargo service has begun.

F. Determinations under Section 203
Section 203(2) of the Macau Policy Act stipulates that whenever the President determines that Macau is not sufficiently autonomous to justify treatment under a particular law or provision of the United States different from that accorded the PRC, the President may issue an order suspending the application of such laws or provisions to Macau. No determinations under section 203 have been required.

II. Significant Developments Related to the Change in the Exercise of Sovereignty Over Macau Affecting United States Interests in Macau or U.S. Relations with Macau and the People's Republic of China

A. United States Interests in Macau
United States interests in Macau include protection of American citizens, maintenance of Macau's free market economy; preservation of Macau's unique way of life, particularly respect for civil liberties and human and labor rights; efforts to combat IPR piracy and illegal textile transshipment; and law enforcement cooperation to prevent transnational crime and money laundering. The extent of Macau's high degree of autonomy also serves as an important indicator of China’s respect for its international commitments.

There are nearly 600 American citizens resident in Macau, engaged in activities ranging from business to academia to missionary work. Approximately 85,000 Americans travel to Macau each year as tourists. U.S. direct investment in Macau is relatively small, inhibited by pre-handover bureaucratic red tape and the small size of Macau’s domestic market. The United States officially provides only 5% of Macau’s imports (U.S. $60.3 million), but this figure does not include substantial re-exports that come through Hong Kong.

The U.S. Consulate General in Hong Kong performs a full range of services and operations in Macau under a March 25, 1997 U.S.-PRC Agreement on the Maintenance of the U.S. Consulate General in Hong Kong.

B. Developments Affecting U.S. Interests in and Relations with Macau
Economic and Commercial Developments

Macau faces a challenging economic environment as it moves further into the post-transition phase and emerges from a long recession. Macau has a small open economy that is highly dependent on the gambling and related tourism industries and apparel exports. It faces stiff competition both from nearby Hong Kong's high-powered, highly developed services economy and the cheap labor and abundant land across the border in Mainland China. In response, the government is moving to increase competition in the gambling industry and to find a niche in the emerging high tech economy of the region.

After experiencing a four-year economic contraction from 1996-99 caused by the Asian financial crisis and a depressed tourism sector, the Macau SAR government estimates that the economy grew by 4% in real terms in 2000. Export-geared manufacturing and a tourism recovery drove this growth. However, weak domestic consumption (and increasing purchases of consumer goods by Macau residents across the border at Zhuhai, China), high unemployment, and a stagnant construction sector retard full economic recovery. Private sector forecasts project real GDP growth at 2-3 percent in 2001. Macau's nominal GDP totaled U.S. $6.2 billion in 1999, and GDP per capita was U.S. $14,145, but the median income was U.S. $7,215.

An improved security situation underpinned the tourism recovery, after a spate of pre-reversion gangland killings had damaged Macau's reputation as a tourist destination. Tourist arrivals in 2000 numbered nine million, 22% more than in 1999 and 20 times Macau's population. Approximately 55% of tourists are Hong Kong residents. The tourism industry, consisting of gambling, hotels, restaurants, and entertainment, is the main pillar of Macau's economy and accounts for about 40% of GDP. Taxes on gambling generate about 43% of total government revenue. Macau plans to restructure the gambling industry in 2001 by ending the exclusive monopoly held by the Macau Tourism and Amusement Company (Sociedade de Turismo e Diversoes de Macau -- STDM) since 1962. The Macau government hopes that greater competition in the industry will bring wider economic benefits.

Total exports, including domestic exports and re-exports, are equal to about one-third of the Macau SAR's GDP. In the first ten months of 2000, they jumped by 15% over the same period in 1999 to U.S. $2.1 billion. Domestic exports, which consist predominantly of textiles and apparel, account for about 85% of total exports. The Macau SAR's main markets are the United States and the European Union, which purchase about one-half and one-third, respectively, of total exports. Imports rose by about 11% to U.S. $1.9 billion in the first ten months of 2000. Major imports include fabrics, machinery, fuels, and lubricants. China supplies about 40%, and Hong Kong and Taiwan about 15% and 10%, respectively, of total imports. Macau recorded a global trade surplus of U.S. $243 million in the first ten months of 2000.

In the first 11 months of 2000, the government budget registered a surplus of U.S. $112 million, down by about 38 percent from the same period in 1999. The government attributed the drop to a decline in revenue from equity and property transactions (down by 82%) and sales of capital assets (91%). The government has prepared a balanced budget for 2001. The government has no public debt. Macau's currency, the Pataca, is indirectly pegged to the U.S. Dollar through a currency board system. In 2000, foreign exchange reserves stood at U.S. $3.3 billion, up 2% from 1999.

The construction sector has been weak since 1997. Residential, commercial, and industrial building construction dropped sharply in the first ten months of 2000 from the same period the previous year. Unofficial statistics indicate that Macau had over 30,000 vacant residential units at the end of 2000. Nevertheless, the economy is expected to get a boost in 2001 from the completion or launch of several large projects: a satellite-television production center, the world's eighth highest observation tower, and a private sector U.S. $75 million Fisherman's Wharf-style entertainment center along the harbor. Public sector investment programs include: on-going extensions at the Macau International Airport, planned complementary infrastructures at the Taipa-Coloane Land Reclamation Site, Macau Sports Complex - Olympic Swimming Pools in preparation for the 2005 East Asia games, and extension of the Guangzhou–Zhuhai railway into Macau. Opportunities for American companies lie in large infrastructure projects and telecommunications, in food-related and retailing franchise operations in Macau's Entertainment Wharf, and potentially in a more liberalized gaming/tourism industry.

Macau's unemployment rate peaked at 7% in mid-2000 before dropping slightly to 6.6% toward the end of last year. The primary causes of the high unemployment rate are the weak domestic demand and the relocation of labor intensive industrial processing over the border to Zhuhai in China. Macau has a relatively liberal policy for the import of unskilled labor from the Chinese Mainland, although the government has faced pressure to reduce this migrant labor as a means of lowering unemployment. Officials expect the unemployment rate to stabilize in 2001 as the economy continues its recovery.

Macau has begun to liberalize its telecommunications industry, aiming to make the SAR a more attractive venue for high tech investment. In October 2000, the government issued two new mobile telephone operators licenses to Hutchison and SmarTone, breaking the historic monopoly enjoyed by CTM (Companhia de Telecomunicacoes de Macau). Hutchison Telephone Company's bid includes Motorola of the United States and NTT DoCoMo of Japan. There is no fixed limit on the number of Internet Service Provider (ISP) government licenses. Despite these positive steps, Macau's information technology industry is still in its infancy, and will face continued competition from both Hong Kong and Shenzhen.

Various factors, including gambling's predominant role in the economy and Macau's lack of foreign exchange controls create an environment susceptible to money laundering. Organized crime groups are associated with the gambling industry through such activities as racketeering, loan sharking, and prostitution. As a result, it is likely that this industry in particular may provide an avenue for the laundering of illicit funds. Macau has passed anti-money laundering legislation, but there is little active enforcement. For example, Macau law requires the filing of suspicious transaction reports, but only a small number of these reports have been filed and none has led to prosecutions. In a positive step, Macau has agreed to a joint review of its anti-money laundering regime by the Overseas Group of Banking Supervisors and the Asia Pacific Group of the Financial Action Task Force, which will be conducted in April 2001. The planned restructuring of the gambling industry also provides an opportunity for Macau to put in place a stronger anti-money laundering regime for this sector.

The New Government
Cooperation between the Macau SAR government and the U.S. government is broad, effective and mutually beneficial.

The Macau SAR government is headed by Chief Executive Edmund Ho. Ho was chosen by a Selection Committee composed of 200 Macau residents appointed by the Preparatory Committee (the committee responsible for transition issues composed of 60 Macau and 40 Mainland representatives appointed by the NPC -- see section IV below). During the spring 1999 campaign, Ho and his opponent, banker Stanley Au, explained their views to the public and members of the Selection Committee. In the May 15, 1999 election, Ho, a Canadian-educated banker who had served ten years in Macau's Legislative Assembly, received 163 votes to Au's 34. Ho pledged to maintain Macau's unique way of life, cultural diversity, and freedoms. His March and November 2000 Policy Addresses focused on improving Macau's economy, reining in a serious crime problem by reforming Macau's police and anti-corruption institutions, and improving government services. Ho's approval ratings remain high.

Ho's new government, formally appointed by the PRC State Council on his recommendation, is made up of five policy secretaries. Three came from public service, either in the local government, the civil service or the police force. Two were from the private sector, one a businessman who has also been a member of the Chinese People's Political Consultative Committee (CPPCC), and the other the principal of a pro-Beijing high school. All are Macau-born ethnic Chinese. All are regarded as moderate professionals. Their average age is 45. The appointment of a Portuguese-speaking senior civil servant as Macau's Secretary for Administration and Justice (who serves as Acting Chief Executive in the Chief Executive's absence) was welcomed by the Macau public and the international community as a symbol of continuity and the SAR government's commitment to preserving Macau's unique cultural heritage and way of life. Because the Portuguese colonial administration "localized" the senior levels of Macau's civil service very late (Portuguese policy secretaries, for example, remained in office until the handover), Macau's government and civil service are relatively inexperienced. While this inexperience and lack of confidence have led to some greater centralization of decision making at the top levels of the Macau government, there has nevertheless been substantial stability, both in personnel (the bulk of the civil service has remained since the handover) and policymaking, in the Macau government.

The Chief Executive consults an Executive Council (ExCo), which he appoints, before introducing bills to the Legislative Assembly, formulating administrative regulations, or (per Article 58 of the Basic Law) dissolving the legislature. ExCo members tender their advice on an individual basis, but the Council's conclusions are presented as collective decisions. ExCo deliberations are confidential -- neither the ExCo’s agenda nor minutes of its deliberations are publicly available. The current ExCo is composed of the five policy secretaries and five prominent, generally pro-Beijing, legislators.

Macau's Legislative Assembly was founded in 1979 and included legislators elected directly and indirectly and appointed by the Colonial Governor. The current Assembly, which includes eight legislators elected region-wide under a proportional representation "list" system, eight elected by a very small electorate representing various interest groups and trade unions, and seven appointed by the Chief Executive, took office in 1996 and will serve through the transition period until its term expires in the fall of 2001. Not all of the appointed legislators remained in the "through train" legislature. In 1999, the Chief Executive reappointed only one of the seven legislators appointed by the Governor, replacing six predominantly Portuguese legislators with ethnic Chinese. Because the Chief Executive does not have the power to issue Decree Legislation, which the Colonial Governor frequently exercised, the Legislative Assembly has more de jure power than it did before the handover. Executive-legislative branch relations are generally cooperative. However, the Basic Law (Article 75) contains substantial limitations on the types of legislation individual members may introduce: "bills which do not relate to public expenditure or political structure or the operation of the government may be introduced individually. . . . The written consent of the Chief Executive shall be required before bills relating to government policies are introduced."

Human Rights Respected
Macau citizens enjoy rights of freedom of assembly, speech, association, and petition (of the government) that are enumerated in domestic law. In addition, the International Covenant on Civil and Political Rights (ICCPR) is subsumed in the Basic Law and justiciable in Macau courts. Macau citizens regularly hold demonstrations on a variety of issues ranging from demands for crime control, to complaints about unemployment, to protests over the treatment of Falun Gong practitioners in the PRC. Registration of organizations is optional, not required by law. Macau has no death penalty.

Macau citizens enjoy freedom of religion and that right is enshrined in the 1998 Freedom of Religion Ordinance. Missionaries conduct their activities without interference in Macau. The Catholic Church, whose status in Macau has been important because of the centuries of Portuguese administration, plays a substantial role in education and social welfare work. (The Macau Catholic Church recognizes Papal authority in the Vatican.) Senior Macau government officials have said that members of the Falun Gong spiritual movement, banned on the Mainland since October 1999, may continue their legal activities without interference from the government. Macau's several dozen practitioners regularly perform qi gong exercises in Macau parks and public areas and pass out literature protesting the PRC government's treatment of practitioners on the Mainland. However, the U.S. government has publicly and privately expressed concern that since the December 2000 celebrations of the first anniversary of the handover there has been some police harassment of Falun Gong members. This has involved identification checks at police stations and, in one instance, the midnight search of the leader of the Falun Gong community's house because of an anonymous report that he was holding guns and bombs (nothing was found). During the anniversary celebrations, Macau immigration authorities prevented the entry of foreign Falun Gong practitioners, although Falun Gong and democracy activists report that they have traveled to Macau without interference before and since. The Procurator General's office is investigating claims by an Australian practitioner that she was beaten by a police or immigration officer when she attempted to enter Macau during the anniversary period.

Macau's press operates without interference from the government. There are a variety of privately owned daily and weekly newspapers, and radio and television stations produced in Cantonese, Mandarin, and Portuguese, though the Portuguese-language sector has shrunk since the handover. Hong Kong and international newspapers and television broadcasts are freely available and hold a very substantial market share. The editorial line of the Chinese-language press tends to be pro-China. In one sense, the outspokenness of the local press has increased since the handover -- the press now demands greater accountability and transparency from government officials and editorials have been more critical of the SAR government than of the former Portuguese colonial government.

One gap in Macau's human and labor rights protection is the absence of domestic legislation providing a statutory collective bargaining right or protection from anti-union discrimination.

Assessment of Rule of Law and Independence of the Judiciary
Continuity of Laws: With effect from December 20, 1999, the Standing Committee of the Chinese National People’s Congress (NPC), acting on the recommendation of the Preparatory Committee, repealed 15 Macau laws deemed inconsistent with the Basic Law (Article 145). These included legislation on the elections and procedures of the Legislative Assembly, laws on the structure of Macau's courts (see below), and laws on the hiring of Portuguese civil servants. Soon after the handover, the Legislative Assembly replaced many of these laws with new laws establishing institutions required by the Basic Law, e.g., a law on the Macau SAR government structure created an Executive Council, the successor to the Governor's Consultative Assembly described in the repealed Law on the Consultative Assembly. Articles 8, 18, and 145 of the Basic Law stipulate that, with the exception of these 15 laws, local laws and other normative acts in force before the handover shall be maintained, unless repealed or amended according to procedures set out in the Basic Law.

With the exception of ten laws listed in Annex III of the Basic Law (including, for example, laws on the Chinese flag, emblem, and anthem and the PRC Nationality Law), PRC laws do not apply in the Macau SAR. The Standing Committee of the NPC may add to or delete from the list of laws in Annex III after consulting with the Macau Basic Law Committee and the Macau SAR government, but Article 18(3) of the Basic Law states that laws listed in Annex III shall be confined to matters outside the limits of Macau’s autonomy. Eight PRC laws were listed in the original Basic Law; two additional laws -- the June 1999 PLA Garrison Law (Macau) and the Law on Special Economic Zones -- were added to Annex III by the NPC Standing Committee per the August 1999 recommendation of the Preparatory Committee.

The Basic Law stipulates that, as is the case in Hong Kong, while the courts may rule on matters that are "the responsibility of the Central People's Government or concern the relationship between the central authorities and the SAR," before making their final (non-appealable) judgments on these matters, the court must seek an interpretation of the relevant provisions from the Standing Committee of the Chinese National People's Congress. The courts are then obliged to apply the NPC interpretation in their judgments. While consistent with the Chinese constitution, this provision, if used frequently, could erode the final authority of the Macau SAR courts. To date, however, no interpretation has been sought.

The Judiciary: Consistent with the Basic Law, legislation passed on the day of the handover substantially reorganized Macau's colonial court system, creating a Court of Final Appeal (previously the highest appeal courts were Portugal's Supreme Court of Justice and Constitutional Court) and establishing an Administrative Court. Prosecutorial functions are performed by the Procurator General, whose office, like its Portuguese counterpart, enjoys substantial autonomy from the government and the courts. Procurator General Ho Chio Meng, who, in accordance with, the Basic Law was appointed by the State Council on the recommendation of the Chief Executive, is a Guangdong-trained lawyer and former judge who had served as Deputy Commissioner of the pre-handover High Commission Against Corruption. A shortage of locally trained, bilingual (particularly literate in Chinese) lawyers may hamper the expansion of the legal system and cause an increased reliance on Mainland-trained lawyer. However, this is to some extent mitigated by a requirement of two years of supplementary training for lawyers who have not graduated from a Macau or Portuguese law school.

On the basis of the four criteria below it is the assessment of the State Department that Macau's judiciary is independent:

Freedom from overt political interference: The Basic Law vests the Macau SAR with independent judicial power, including that of final adjudication, except in cases involving defense or foreign affairs which are outside the scope of Macau's autonomy. There have been no complaints of which the United States is aware of any official, local or PRC, attempting to interfere with a decision of any court. On several occasions the courts have ruled against the SAR government.

The integrity of the appointment process: Judges of the SAR courts at all levels are appointed by the Chief Executive on the recommendation of an independent commission composed of local judges, lawyers, and eminent persons from other sectors. Judges are chosen on the basis of their professional qualifications. Except for the President of the Court of Final Appeal (Chief Justice) who must be a Chinese citizen with no right of abode elsewhere, the Basic Law allows the appointment of foreign judges. Four of Macau's 23 judges are Portuguese.

Security of tenure: Expatriate judges are appointed on contract. Local judges are appointed for life. Judges cannot be transferred, suspended, retired, or dismissed unless they are convicted of a crime or serious infringement of duty. In such cases, disciplinary procedures are filed and conducted by a Council of Magistrates and judges have the right to contest the findings.

Adequate remuneration: Judges receive monthly salaries ranging from U.S. $13,000 (104,000 Patacas) for the President of the Court of Final Appeal to U.S. $5,700 (45,500 patacas) for judges of the Primary Court in service for less than three years. By comparison, senior civil servants earn approximately U.S. $5,750 (46,000 Patacas) per month.

Article 23 of the Basic Law: Treason, Subversion, and Related Crimes
Article 23 of the Basic Law states that "the Macau SAR shall enact laws on its own to prohibit any act of treason, secession, sedition, subversion against the Central People's Government, or theft of state secrets and to prohibit foreign political organizations or bodies from conducting political activities in the Region, and to prohibit political organizations or bodies of the Region from establishing ties with foreign political organizations or bodies." Because Portuguese laws dealing with crimes against the state specifically expired on December 19, 1999, there are currently no laws dealing with crimes of this sort. Some democracy and human rights activists are concerned that broadly drawn legislation on sedition and subversion could threaten fundamental freedoms and civil liberties. However, no proposed draft legislation or decisions on the content of the laws relating to Article 23 have yet been announced. The U.S. government has urged Macau to undertake widespread public consultation on these laws as they are drafted to ensure that they are consistent with Macau's legal tradition and the International Covenant on Civil and Political Rights, as reflected in the Basic Law.

Tackling Crime: Police and Commission Against Corruption Reform
In the 15 months since the handover, the serious law and order problem spurred by gangland-style inter-Triad (organized crime) disputes has diminished measurably, due to a number of factors, including: better Macau-Guangdong province cooperation, the prosecution and conviction of Triad Boss Wan Kuok-koi (aka "Broken Tooth") in Macau in November 1999 and of one of his senior lieutenants across the border in Zhuhai, and improvements in Macau police discipline, training, and organization.

The division of Macau's security forces into three branches under separate commands (the 3,400-strong Public Security Police primarily responsible for maintaining law and order, the 300-strong Judicial Police responsible for serious crime investigations and the 1,000-member Marine Police responsible for sea border patrol and anti-smuggling functions) created, as the Secretary for Security told the press, "absurd inefficiencies." Legislation placing the Public Security Police and the Judicial Police under the supervision of the Secretary for Security but directly answerable to the Chief Executive was enacted in January 2001. The Marine Police will later be reorganized and subsumed into a yet to be established Customs Department (see below). The new command structure is expected to be in operation by mid-2001 under Commandant-General Jose Proenca Branco, one of the first graduates of Macau's Security Forces Academy. The Secretary for Security has publicly pledged to root out corruption among the police.

In August 2000, the Legislative Assembly passed legislation which reconstituted the pre-handover High Commission Against Corruption as the Commission Against Corruption, drastically increasing the budget and manpower of the Commission and granting it powers of arrest and detention. The Commission Against Corruption has also increased cooperation, including training, with Hong Kong's Independent Commission Against Corruption. The number of complaints of corruption handled by the Commission has increased dramatically as a result of these changes and a public outreach campaign launched by the Commission. However, the Commission's overall effectiveness remains constrained by legislation limiting the scope of its authority to public, not private, sector corruption. Critics of the Commission charge it has not tackled complaints against senior officials.

Creation of a Customs Department
Macau maintains its status as a separate Customs Territory. The Basic Law requires the establishment of an independent Customs Service, along the lines of Hong Kong's. At present, the customs function is split between the inspectors of MES (who handle internal enforcement of matters like textile quotas and IPR law) and the officers of Macau Marine Police and Customs (who control ports of entry and Macau's offshore waters). In July 2000, as provided for in the Basic Law, the State Council announced its appointment of Marine Police Commander Choi Lai Hang, who was nominated by Chief Executive Ho to be Macau's first Customs Commissioner. At the same time, the Macau SAR government announced the formation of an interagency task force to determine the organization of the new Customs Service and prepare the legislation establishing the new body. Although this task force was scheduled to complete its work in late 2000, that has not happened because of differences over how best to integrate the Marine Police with the MES Inspectorate.

The United States has a strong interest in ensuring that the new Customs Service, however it is designed and staffed, is effective and sustains the progress that MES is making on issues such as IPR protection and textile quota enforcement. In addition, the creation of a new and effective Macau Customs Service will provide an opportunity to increase cooperation on other issues of concern including strategic trade controls and anti-money laundering enforcement. With this in mind, the U.S. Consulate General in Hong Kong has encouraged senior officials to move ahead quickly with the establishment of the new service.

Border and Export Controls
Macau maintains its own border, customs, and entry and exit controls. The Macau coast is patrolled by the SAR's own marine police.

The licensing and regulation of trade through Macau is governed by a Foreign Trade Decree that entered into force in January 1999. This law gives MES and other government departments broad authority to regulate the import or export of sensitive products (ranging from firearms to CD manufacturing lines). In addition, under Article 12 of the 1999 law, the Macau Chief Executive may unilaterally impose a prior licensing requirement for any strategic goods. To date, the Chief Executive has not exercised this prior licensing authority for any goods. Enforcement of this licensing requirement and inspection of incoming goods is the responsibility of Macau Marine Police and Customs.

As a practical matter, Macau's ability to maintain international export control standards is very limited. An independent Customs Service has yet to be formed, and those officers now policing the airport, border, and harbor have little technical competence to identify sensitive goods. Moreover, there is currently no system in place to regulate trade in dual use commodities. May 1999 Department of Commerce regulations established Macau as a separate export control designation; the Macau Policy Act stipulates that U.S. export control laws, regulations, and practices shall apply to Macau in the same manner and to the same extent that they apply to the PRC.

In February 2000 and February 2001 MES participated for the first time in the annual Asian Export Control Seminar hosted by the government of Japan. In that forum, Macau acknowledged the shortcomings of its current system and expressed its intention to strengthen its export control mechanisms. In addition, Macau authorities have expressed interest in international export control training, either from the United States or from other regional partners such as Japan. With U.S. encouragement, Macau hosted a May 2000 visit by an international delegation from representatives of the Missile Technology Control Regime. This team concluded that Macau is eager to work with the international community to improve, but has much to do before it achieves an effective system of strategic trade controls.

Passport and Visa Regime
Macau maintains its own immigration policy and independent entry and exit controls. Over 25 million people, the vast majority of them from Hong Kong and the PRC, enter Macau each year. Passports and travel documents are checked by the SAR's Immigration Service, which is authorized to permit or refuse entry and to determine the duration of stay based on reciprocity guidelines. Travel into China from Macau requires completing departure procedures and getting an exit stamp.

The Macau Identification Service issues its own travel documents, which are recognized by the United States and other countries, including: the Macau SAR passport and a Macau SAR Travel Permit (issued to non-permanent residents and non-Chinese citizens who are permanent residents of Macau). In addition, the Portuguese government issues Portuguese passports to citizens of Portugal, defined according to Portuguese Nationality Law as persons born in Macau before November 20, 1981 regardless of the parents' nationalities. Those born in Macau after November 20, 1981 are Portuguese only if either parent has Portuguese nationality. Approximately 25% of Macau residents are entitled to Portuguese citizenship.

Visa policies are determined by Macau legislation and administered by the Macau Immigration Service. Current legislation allows the Chief Executive to add countries to the visa waiver list by executive order. In a demonstration of this autonomy, Chief Executive Ho authorized the continued acceptance of the "Republic of China" (Taiwan) passports as valid travel documents after reversion. (ROC passports are not accepted in the PRC.) However, in December 2000 during the celebrations for the first anniversary of the handover, many international and Hong Kong Falun Gong practitioners, as well as several democracy activists from Hong Kong, were denied entry into Macau. They have traveled to the SAR without incident before and since.

III. The Development of Democratic Institutions in Macau

The current Chief Executive was selected by a Selection Committee composed of 200 Macau residents chosen by the Preparatory Committee (60 Macau and 40 Mainland representatives appointed by the Chinese government). The Basic Law provides that the Legislative Assembly shall enact an Election Law determining how members of a 300-member Election Committee to select the Chief Executive in 2004 will be chosen. Amendments to the method for selecting the Chief Executive for terms after 2009 may be made with the endorsement of two-thirds of the Legislative Assembly and the Chief Executive's consent. Any such amendment must be reported to the Standing Committee of the NPC for approval. However, unlike Hong Kong's, Macau's Basic Law does not posit "universal suffrage" as an ultimate goal in choosing the Chief Executive or the legislature.

An annex to the Basic Law prescribes that the number of directly elected legislators will be increased from the present eight directly elected to ten in 2001 and 12 in 2005. The number of indirectly elected legislators will increase from the current eight to ten in 2001. The number of appointed legislators will remain at seven, for a total of 23 legislators in the current Assembly, 27 in the 2001-2005 Assembly, and 29 in the 2005-2009 Assembly. Like changes to the method for selecting the Chief Executive, after 2009 amendments changing the terms for election of legislators may be made with the endorsement of two-thirds of the Legislative Assembly and the Chief Executive's consent. Any such amendment must be reported to the Standing Committee of the NPC for approval.

The Legislative Assembly passed a new Law on the Election of the Legislative Assembly on February 21, 2001 formalizing the expansion of the legislature noted above and allowing civil servants to run for the legislature if they go on leave without pay after their election. The new law raises the number of signatures required on a nomination petition from the pre-handover 100 to 300. It also requires the signature of one quarter of the registered groups in each of the four functional (indirectly elected) constituencies.

With the exception of the Legislative Assembly, Macau's democratic institutions remain weak.

Although there is growing support for civil service and police reform, there is little public pressure for democratization or broader government restructuring. Macau's civic organizations are not well developed. Notable exceptions, such as the Residents' Associations (kaifongs), have historically been regarded as pro-Beijing.

There are no political parties and few civic groups organized specifically to deal with political issues. Most of the civic organizations that run candidates for election come together for the purpose of the election and disband shortly thereafter. Macau's proportional representation system favors small political groups in the direct elections. In the 1996 elections, 12 groups ran candidates on "lists." Half of them won seats. More than 75,000 voters – 64% of those registered -- cast ballots. In contrast, there were only 1,148 electors representing 233 associations who voted for the indirectly elected legislators.

Macau's two Municipal Councils, like the Legislative Assembly, are composed of directly and indirectly elected, and appointed representatives. In August 1999 the Preparatory Committee decided that prior to the establishment of the municipal organizations prescribed in the Basic Law, the pre-handover Municipal Councils would be reorganized into Provisional Municipal Organs of the SAR. Virtually all of the pre-handover Councilors continued to serve on the Provisional Councils, whose terms will expire no later than December 31, 2001. They have responsibility for culture, recreation, and public sanitation functions. Before the handover the Councils had the power to enact municipal legislation on municipal services. However, no municipal councilor has attempted to table such legislation since the handover because the Basic Law stipulates that while the Macau SAR may establish municipal organizations to provide culture, recreation, and environmental sanitation services, these organizations "are not organs of political power." The government is currently drafting legislation setting out election procedures for the Municipal Councils. Various options have been proposed, ranging from procedures to make the elections more democratic, to amalgamation of the two current Municipal Councils, to abolition of the current councils with their functions subsumed by the SAR government. There has been little public or press debate on the future role of these organs. However, democracy activists have noted that they provide an important training ground for future politicians and civic activists.

IV. Compliance by the Government of the People's Republic of China and the Government of the Republic of Portugal with their Obligations under the Joint Declaration

A. PRC Organizations and Officials in Macau
Since the handover, PRC official organizations in Macau, including the Ministry of Foreign Affairs and the Central People's Government Liaison Office, have maintained a low public profile and have not interfered in areas over which Macau exercises a high degree of autonomy. In a December 20, 2000 speech in Macau to commemorate the first anniversary of the handover, Chinese President Jiang Zemin reiterated China's commitment to the One Country Two Systems arrangement, non-intervention in Macau's autonomy, and respect for the Basic Law. However, Jiang also said that the Macau SAR should "take concrete measures to defend the national interests and the authority of the Central Government and should never allow anyone to stage any activities in Macau against the Central Government or to split the country." Jiang also warned Macau, and Hong Kong, that the media "should pay attention to their social responsibilities."

The establishment of a People's Liberation Army Garrison in Macau under the June 1999 PRC Garrison Law (Macau) was controversial because there had been no Portuguese military presence in Macau since the 1970's and the establishment of a garrison was not mentioned in the Sino-Portuguese Joint Declaration. Between 500 and 600 People's Liberation Army (PLA) soldiers are stationed in Macau, primarily as a symbolic presence to underscore Chinese sovereignty. The remainder of the 1,200-strong Macau garrison resides just across the Chinese border in Zhuhai. Although the Basic Law states that the Macau SAR government may "when necessary" ask the central government to allow the garrison to assist in maintaining public order or disaster relief, Chief Executive Ho has said that in keeping with the Basic Law, the garrison will play no role in internal security. Nonetheless, the arrival of the garrison on December 20, 1999 was welcomed by the Macau public as a deterrent to violent crime. The garrison's drills are a mini-tourist attraction, but the garrison has otherwise maintained a low profile, with soldiers generally wearing civilian clothing when off-base and not engaging in any business activities.

B. Post-handover Macau SAR-PRC Agreements
No Macau-PRC agreements have been concluded since the handover, although Macau and the PRC are in the final stages of negotiating an Agreement on Service of Documents in Civil and Criminal Matters. The Secretary for Security announced in March 2000 that Macau and the PRC would discuss a prisoner transfer agreement (many of the prisoners in Macau jails come from the Mainland), but no agreement has been concluded.

IV. The Nature and Extent of Macau's Participation in Multilateral Forums

Macau submitted a report under the Convention on the Elimination of Racial Discrimination in 2000 and will submit a report under the International Covenant on Civil and Political Rights in late 2001. Macau's reports are transmitted to the UN through Beijing, which does not edit them.

Macau participates in the following multilateral forums:

A. Full Membership

  • World Trade Organization
  • International Textiles & Clothing Bureau
  • Customs Cooperation Council
  • World Meteorological Organization
  • World Health Organization West Pacific Regional Committee
  • Asian and Pacific Development Center (associate member)
  • United Nations Educational, Scientific and Cultural Organization (associate member)
  • Economic & Social Commission for Asia and the Pacific (associate member)
  • Asia-Pacific Telecommunity (associate member)

Macau is a founding member of the WTO and participates in WTO deliberations through the SAR's economic and trade office in Brussels.

B. Part of the PRC Delegation

  • International Criminal Police Organization (Interpol)
  • Asia-Pacific Postal Union
  • Universal Postal Union
  • International Telecommunications Satellite Organization
  • International Civil Aviation Organization
  • International Labor Organization
  • International Court of Justice
  • International Monetary Fund
  • United Nations Commission on Narcotic Drugs
  • World Intellectual Property Organization
  • International Bank for Reconstruction & Development
  • International Telecommunications Satellite Organization
  • Hague Convention on Private International Law*

*(Macau is a party to several "conferences" of the Convention in which the PRC participates merely as an observer, for example, the International Convention on Civil Aspects of the Abduction of Children.)

C. Associate Memberships

  • International Maritime Organization
  • World Tourism Organization

D. Other Organizations in which Macau Participates
The following is a partial list of other international organizations in which the Macau SAR government and Macau officials participate:

  • International Navigation Mark Association
  • European Telecommunication Bureau (associate member)
  • International Coalition of Family Organization
  • Asian Conference & Tourist Association
  • International Hotels Association
  • Asia-Pacific Tourism Association
  • World Bank Saving Association
  • Oriental Region Public Administration Organization
  • Coalition of Portuguese, African, American & Asian Major Cities
  • International Labor Monitor Association
  • Postal Workers Association in Lusophone Countries
  • International Construction and Industrial Safety Committee
  • Coalition of International Consumers
  • Union of International Librarians
  • International Archives Committee
  • International Archives Committee East Asian Sub-committee
  • Developing Countries European Statistics Center
  • International Statistical Information Association
  • International Sampling Statisticians Association
  • International Official Statistical Association
  • Asian Academic Athletics Union
  • Asian Academic Soccer Union
  • International Statistical Institute
  • Asia-Pacific Labor, Sanitation & Safety Organization
  • SEANZA Organization
  • OFFSHORE Organization
  • International University Student Sports Union
  • Asia Pacific Group of the Financial Action Task Force (observer)
  • Asian Ombudsman Association
  • International Ombudsman Institute
  • International Association of Prosecutors

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