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On December 20th 1999 , Macao became a Special Administrative Region (SAR) of the People's Republic of China , as agreed in 1987 by China and Portugal in the 'Sino-Portuguese Joint Declaration on the Question of Macao'. The Macao SAR's institutional arrangements are established in the Basic Law approved in 1993 as the mini-constitution of the SAR. As with Hong Kong , under the "One Country, Two Systems" principle, Macao 's social and economic systems as well as its lifestyle are preserved for 50 years after the handover. Macao enjoys a high degree of autonomy with executive, legislative and judiciary powers, as well as responsibility over all areas except defence and foreign affairs, which are handled by the Central People’s Government. The Basic Law states that the SAR conducts external relations in areas such as trade, economic financial and monetary affairs, shipping, communications and tourism, etc. Following the handover Macao SAR institutions have gone through a process of consolidation and the first legislative elections were held in September 2001 with a degree of participation of 52 %. Parts of the administration were restructured, improving, amongst others, police and customs efficiency. Macao is largely a services-based economy. Tourism and gaming are the main economic pillars of the territory. Following a prolonged period of contraction (1996-1999) well before the Asian financial crisis, Macao ’s economy improved substantially in the last four years especially upon the liberalisation of the gambling regime in 2002. GDP growth reached 10.1% in real terms for 2002, and is estimated to have reached 14% in 2003, in spite of the outbreak of SARS. Government forecasts a GDP growth of 7% for 2004. Unemployment remains high as manufacturing activities continue to relocate across the boundary to Mainland China to take advantage of cheaper production costs over there. With the introduction of generous relief measures and tax cuts since 2002 and the increase of public investment, social discontent has subsided. 2. Bilateral relations EU-Macao relations are based on a Trade and Co-operation Agreement concluded on 14 December 1992 , which came into effect on 1 January 1993 . This agreement covers trade and industrial, scientific and technical co-operation. A Joint Committee meets annually to oversee the operation of the Agreement and devises ways of developing trade and co-operation. The agreement remained in force after the transfer to Chinese sovereignty control. The Commission's 1998 Communication "Building a Comprehensive Partnership with China " stated that EU policy was to support Macao ’s high degree of autonomy. This policy stems naturally from the EU's strong economic links and historical ties with Macao . On 12 November 1999 the Commission adopted a Communication to the Council and the European Parliament, entitled “The EU and Macao : Beyond 2000” .In this communication the EU considers that the respect for the principles set out in the Basic Law of the SAR and the full implementation of the concept "one country, two systems" guarantee the specific social, economic and cultural identity of Macao. The Commission committed itself to monitor the situation in the territory by issuing annual reports. In its 2002 report, the Commission concluded that three years after the hand-over, the Macao SAR has continued its good start, and that it will endeavour to support Macao ’s stable development, in line with the ‘one country, two systems’ principle. Macao SAR disposes of an Economic and Trade Office (METO) accredited to the European Community, which ensures a regular dialogue between the EU and Macao on areas under the new SAR's responsibility, such as trade, economic relations and co-operation. On 15 March 2001 the Council of the European Union adopted a new visa regulation and the EU granted visa-free access to Macao SAR passport-holders as from 10 April 2001 . An EC-Macao re-admission agreement was finalized and initialled on the occasion of the ninth EC-Macao Joint Committee in Brussels , Belgium on 18 October 2002 . It was signed on 13 October 2003 in Luxemburg by Commissioner Chris Patten and the Italian Minister of Foreign Affairs Franco Frattini on behalf of the EC, and by Mrs Florinda Chan, Secretary for Administration and Justice on behalf of Macao SAR. The EU-Macao Cooperation in the LegalField Project was inaugurated on 3 December 2002 , featuring a series of seminars and training programmes to be executed for a period of 48 months for judges, procurators, government lawyers and other legal practitioners of the Macao SAR. 3. Trade relations Given its status as a separate customs territory as stated in the Basic Law, Macao continues to be treated by the EU as a separate entity for trade policy purposes. The EU was Macao's third largest trading partner and absorbed about 23% of its total exports, while 12 % of Macao's imports came from the EU in 2003 (Macao trade statistics). Total bilateral trade between the EU and Macao reached €1 billion in 2002. Macao 's trade surplus with the EU was €382 million (Eurostat). The EU was the third biggest investor in Macao after Hong Kong and China with 25 firms investing in the SAR in 2001. Total investment stock amounted to over €400 million. Macao 's membership in the WTO and liberal economic system offer favourable conditions for EU investments. EU-Macao Trade Statistics (€ million)
Source: Eurostat 4. Co-operation Since the signature of the Trade and Cooperation Agreement the EU has been investing some 1 million Euro a year in co-operation projects with Macao . The main past and present projects are the following: Training for the tourism industry (1999-2001). The EC co-operated with the Institute for Tourism Education to create in this institution a Regional Centre for Advanced Tourism Studies for the Asia/Pacific Region. European Studies Programme (1999-2001). The project has supported the Institute of European Studies in Macao in its work of disseminating knowledge about the EU in the region through a number of initiatives including the creation of a Masters Degree in EU studies. Services Development Programme (1999-2001). This programme aimed at advising Macao on ways to improve Macao 's services sector by defining a proper administrative and legal framework and setting the ground for adequate training infrastructure. Asia-Invest Programme (2001 and 2002). The programme provided co-funding for projects that brought together Asian and European companies in partnership. Two business-matching events were held in Macao in September 2001 and June 2002. EU-Macao Legal Co-operation Programme (2001-2005). The programme will help with training, workshops and seminars to develop Macao 's legal system and promote the rule of law in the SAR. Basic data
Trade Statistics
(Source: Statistics and Census Services, Macao SAR Government ) Latest update: March 2004
Reports:
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