Editor’s note

On April 12, the Hong Kong Legislative Council released the minute of its regular meeting, and the Secretary for Transport and Logistics made a speech and proposed on the issue of e-cigarette transshipment.

The government has been committed to prohibiting the entry of alternative smoking products into the Hong Kong market to protect public health. However, we have noticed that since April 30 last year, the ban on the transshipment of alternative smoking products through Hong Kong has seriously affected the air cargo transshipment business in Hong Kong. The Chinese Mainland is the world's leading production place for alternative smoking products, and Hong Kong is one of the most important transshipment hubs. Most alternative smoking products from the Chinese Mainland used to be transshipped overseas via Hong Kong. 

2FIRSTS has translated the minute of its regular meeting of Hong Kong Legislative Council on April 12 , as shown below.

IMPORT AND EXPORT (AMENDMENT) BILL 2023

SECRETARY FOR TRANSPORT AND LOGISTICS, said: President, I would like to propose the Second Reading of the Import and Export (Amendment) Bill 2023 ("the Bill").

The government has been committed to prohibiting alternative smoking products from entering the Hong Kong market to protect public health, but we have noticed that since April 30 last year, the prohibition of transshipment of alternative smoking products through Hong Kong has seriously affected Hong Kong's air cargo transshipment business. In fact, the Chinese Mainland is a significant producer of alternative smoking products globally, and Hong Kong is one of the most important transshipment hubs. Therefore, most of the alternative smoking products from the Chinese Mainland used to be transshipped overseas via Hong Kong. At the same time, alternative smoking products are high-value and heavy cargo, which is very important for the "consolidation" operation in the air transport industry. Therefore, the prohibition of transshipment of alternative smoking products through Hong Kong not only lost these high-value cargoes but also caused a chain reaction, causing the loss of other light-weight air cargo, which inevitably affected the cargo volume of Hong Kong's aviation industry.

Under the epidemic situation, although Hong Kong's air cargo has maintained consistent performance in 2020 and 2021, after the ban on the transshipment of alternative smoking products came into effect on April 30 last year, the average air cargo volume at Hong Kong International Airport from May to December previous year decreased 20% from the same period a year earlier. Although the Chinese Mainland authorities have gradually relaxed restrictions on cross-border land cargo since December last year, the air cargo volume at Hong Kong International Airport has yet to recover. Air cargo volume in January this year still fell nearly 27% compared to last year.

To maintain the competitiveness of Hong Kong International Airport and consolidate Hong Kong's status as an international shipping hub and international trade center in the "National 14th Five-Year Plan", we need to make legislative amendments as soon as possible. To prevent alternative smoking products from entering the local market, optimize the exemption and regulatory arrangements for alternative smoking products to deal with alternative smoking products that are transported from the Chinese Mainland to overseas markets via the Hong Kong International Airport.

Legislative proposal

Currently, the Smoking (Public Health) Ordinance (Cap. 371) ("the Smoking Ordinance") has exempted alternative smoking products that are "articles in transit" or "air transshipment cargo." Considering that the import and export controls on some prohibited items are currently included in the Import and Export Ordinance (Cap. 60), we propose including a new section in the Import and Export Ordinance to provide exemptions for intermodal alternative smoking products. The provisions currently contained in the "Smoking Ordinance" on the prohibition of importing alternative smoking products and the exemption of "articles in transit" and "air transshipment goods" will also be incorporated into the new part of the "Import and Export Ordinance," and the "Smoking Ordinance' will amend accordingly.

In order to respond to the concerns of medical and health groups that alternative smoking products may flow into the local market during the transshipment process, we will establish a new regulatory system for the intermodal transshipment of alternative smoking products under the Bill, which will be managed, supervised and enforced by the Customs. The relevant monitoring system has four major elements: pre-registration, security measures, pre-declaration, and real-time monitoring.

Alternative Smoking Product Co-transport Supervision System

(i) Pre-registration

Any person wishing to obtain an exemption for the intermodal shipment of alternative smoking products through Hong Kong must first register with the Commissioner of Customs and Excise. To obtain an exemption, alternative smoking products must be consigned from one place outside Hong Kong to another place outside Hong Kong in a pre-approved sea-air or land-air transfer.

(ii) Security measures

In order to effectively strengthen the Customs' supervision of alternative smoking products, whether it is sea-air or land-air transshipment, relevant companies or persons must install appropriate security equipment on relevant ships or vehicles following a set of monitoring measures established by the Customs, such as Install designated electronic locks on containers, or install closed-circuit television/global positioning system equipment to facilitate customs tracking of ships/vehicles, etc. Relevant monitoring measures will be implemented in the form of administrative guidelines so that they can be updated on time in response to technological progress and other changes in circumstances. Customs will also provide relevant policies to the public.

(iii) Pre-declaration

Relevant companies or persons must follow the current laws and requirements, submit to the Commissioner of Customs with advance cargo information and declare the arrival of each transshipment consignment of alternative smoking products in Hong Kong.

(iv) Real-time monitoring

The goods shall be transported safely to the satisfaction of the Commissioner of Customs and Excise and shall be subject to real-time monitoring throughout the transportation process. The alternative smoking products shall be transported to the Hong Kong International Airport for transshipment from the designated route. The cargo will remain on the incoming vessel/vehicle. It will be transported to the restricted area/surveilled enclosed area of ​​the airport immediately upon arrival under real-time monitoring. It will remain until departing by air for transfer to an overseas destination.

If a registered person violates the above regulatory requirements, the Commissioner of Customs may suspend or cancel his registration.

Increase Penalty

In addition to the above-mentioned new regulatory system, in order to strengthen the supervision of the transshipment of alternative smoking products, we propose to increase the penalty for the crime of importing alternative smoking products to be comparable to that of other illegal imports of prohibited items in violation of the Import and Export Regulations. If, upon conviction through the summary procedure, a fine of 500,000 HKD and imprisonment for two years can be imposed, or a sentence through the indictment procedure can be a fine of 2 million HKD and imprisonment for seven years, to increase the deterrent effect.

Consulting

We consulted the Legislative Council Panel on Economic Development on November 28 last year on the legislative proposal. Members generally supported the legislative proposal. Some Members even urged the government to exempt alternative smoking products transshipped from the Chinese Mainland via Hong Kong as soon as possible. Members of the Hong Kong Logistics Development Council as well as the logistics and air cargo industry, also believe that resuming the transshipment of alternative smoking products as soon as possible is crucial to Hong Kong's air cargo and overall economic development.

At the same time, we have contacted the medical and health groups and understand that they have expressed concerns that alternative smoking products may enter the local market during the transshipment process. We are confident that under customs enforcement, the new regulatory system can effectively reduce the risk of alternative smoking products entering the local market during transshipment and export through the Hong Kong International Airport under a safe and reliable control method. Customs and the Department of Health will continue to fight against the illegal import of alternative smoking products.

President, the legislative proposals have balanced the government's tireless work on tobacco control and responded to the urgent need of our logistics and air cargo transshipment business to maintain Hong Kong's status as an international trade center and aviation hub in the National 14th Five-Year Plan. The above legislative proposals will not affect the government's tobacco control efforts. I hope members will support the Bill so it can be passed and implemented early.

I, at this moment, make my remarks. Thank you, President.