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mechanisms such as the Hong Kong/Guangdong Cooperation Joint Conference and the CEPA Joint Steering Committee.

Bilateral Investment Promotion and Protection Agreements

Hong Kong has bilateral investment promotion and protection agreements with 14 economies: Australia, Austria, Belgium/Luxembourg, Denmark, France, Germany, Italy, Japan, Republic of Korea, the Netherlands, New Zealand, Sweden, Switzerland and the United Kingdom. A primary objective of these agreements is to assure overseas investors of the stable investment environment in Hong Kong.

Trade in Textiles

Over the years, exports of certain Hong Kong textile and clothing products to the European Union, Canada and the United States have been subject to quantitative restrictions. In accordance with the WTO Agreement on Textiles and Clothing (ATC), all such quantitative restrictions among members of the WTO (including Hong Kong) will be eliminated by January 1, 2005. Hong Kong's textiles exports will have quota- free access to world markets, including the traditionally restrained markets in Europe and North America. With the elimination of textiles quotas, Hong Kong's textile import and export arrangements will be suitably streamlined to facilitate trade while maintaining necessary controls to safeguard the interest of Hong Kong's textile trade. Hong Kong has been closely monitoring the implementation of the ATC and the operation of the Textiles Monitoring Body, the WTO's supervisory body of the ATC. Through cooperation with the International Textiles and Clothing Bureau (of which Hong Kong is a member), Hong Kong and a group of textile exporting developing countries have been working together to ensure that the liberalisation process under the ATC is on course, and to explore possibilities for further liberalisation.

Hong Kong continues to cooperate with its trading partners to combat illegal transhipment of textiles. Among other things and to promote understanding of Hong Kong's anti-transhipment efforts, Hong Kong Customs officers conduct joint factory observation visits in conjunction with US Customs representatives. Such visits are not acts of law enforcement. In 2004, two rounds of joint factory observation visits were conducted.

To combat false declarations of origin and values of goods and illegal transhipment of textiles, the Customs and Excise Department in 2004 carried out 84 411 factory and consignment inspections and

inspections and 1 507 investigations. The department also conducted 977 'blitz' check operations on textile consignments at various import and export control points. It successfully prosecuted 1 059 companies and individual offenders, resulting in the imposition of fines amounting to $26.94 million. It operates a monetary reward scheme to elicit information on textiles origin fraud.

Trade in Strategic Commodities

To ensure that Hong Kong has continued access to advanced products and technologies to sustain its economic development and that Hong Kong will not be used as a conduit for illicit diversion of strategic commodities, the Government maintains a comprehensive import and export control system to monitor the flows of