Licensing and notification requirements

In Hong Kong, under the Import and Export Ordinance and its subsidiary legislation, all textiles imports from and exports to the Mainland of China, and textiles exports to the USA, unless exempted, must be covered by consignment-specific textiles licences or notifications lodged by registered traders under the Textiles Trader Registration Scheme (“TTRS”). In addition, manufacturers producing cut-and-sewn garments in Hong Kong for export to the USA are required to lodge a Production Notification (“PN”).

However, having regard to developments in the global textiles trading environment, the Trade and Industry Department dispensed with these textiles control arrangements as from 21 November 2014: (1) to cease the licensing and TTRS notification requirements for all textiles imports and exports; and (2) to cease the PN requirement for all cut-and- sewn garments.

In other words, from 21 November 2014, all textiles imported to or exported from Hong Kong do not require any textiles licence. Traders registered under TTRS do not need to lodge notifications to cover their textiles shipments. Also, manufacturers are not required to lodge PN for any cut-and-sewn garments manufactured in Hong Kong. More information can be found in trade circulars from the Trade and Industry Department dated June 2014 and October 2014

Textiles Trader Registration Scheme

Notwithstanding the cessation of textiles import and export licensing requirements (see above), the Trade and Industry Department continues to provide the registration service under TTRS.

TTRS is a voluntary registration scheme provided for under the Import and Export (General) Regulations, Chapter 60 of the Laws of Hong Kong, subsidiary legislation A of the Laws of Hong Kong. Starting from 21 November 2014, companies with a valid Business Registration in Hong Kong, and which are importing textiles from the Mainland of China or exporting textiles to the Mainland of China or the USA, are eligible to apply for registration under the TTRS.

Under section 20X of the Legislative Council Ordinance, Chapter 542 of the Laws of Hong Kong, traders who have been registered under the TTRS for a period of 12 months immediately before making the application for registration as an elector, and are carrying on business as textiles traders, are eligible to be registered as electors of the Textiles & Garment functional constituency.

Competition law issues

The Competition Ordinance, Chapter 619 of the Laws of Hong Kong, (“CO”) came into full commencement on 14 December 2015. The key prohibitions take the form of two “Conduct Rules” of cross-sector application. The First Conduct Rule prohibits agreements and concerted practices (that is, cooperation arrangements between parties falling short of an ‘agreement’ as such) that have the object or effect of restricting competition in Hong Kong. The Second Conduct Rule prohibits a business with substantial market power from abusing that power by engaging in conduct that has the object or effect of restricting competition in Hong Kong.

Various exclusions and exemptions are provided for in the CO. For example, immunity from the Conduct Rules can be granted to an agreement or conduct that: (1) enhances economic efficiency (subject to satisfaction of prescribed criteria); (2) is performed by an undertaking entrusted with the operation of services of general economic interest; or (3) is made in compliance with a legal requirement.

This will impact on all organisations conducting business in Hong Kong.