Parallel trading

No easy formula to resolve row over milk powder

Doubts about export restrictions can be removed by examining the finer details

PUBLISHED : Tuesday, 12 March, 2013, 12:00am
UPDATED : Tuesday, 12 March, 2013, 4:23am

Hong Kong parents have been baffled by the dwindling supply of powdered formula for some time. Many attribute the problem to parallel trading, which has diverted large quantities of milk powder from the local supply, causing the local demand to be unmet.

The government finally took steps to tackle the problem by amending the Import and Export (General) Regulations Cap 60A, adding powdered formula to its Schedule 2 and making it a restricted export item along with pesticides, some pharmaceutical products and rough diamonds.

The export of powdered formula to all places outside Hong Kong is now prohibited without a licence or exemption. Offenders are liable to a fine of up to HK$500,000 or two years' imprisonment.

The amendment exempts people who carry out no more than 1.8kg of powdered formula within 24 hours, and those who leave Hong Kong, with a child, carrying a reasonable quantity in unsealed containers for the child's consumption.

It was gazetted and came into effect on March 1. The Legislative Council's vetting is pending, so further refinements may still be possible.

Parallel trading per se is not an offence. In fact it is part of Hong Kong's economic freedom, which residents take pride in. The new measures gained wide local support but also attracted doubt and criticism.

The business sector questioned whether the measures were contrary to the free-trade policy and free market. Senior Counsel Alan Hoo even asked whether the restrictions were inconsistent with Article 115 of the Basic Law, which safeguards free trade. The government defended its move, and many legislators sided with the government.

If free trade is taken seriously as a constitutional principle, casting doubt on the constitutionality of this export restriction should not be seen as completely pointless. If someone sought a judicial review it might not be a bad thing. Yes, the courts may not always help to resolve practical problems, and it is the administration's duty to make policies.

But courts can certainly help to clarify principles that guide government acts and the exercise of its powers. The rule of law is a core value of Hong Kong - if we mean what we say.

Media commentaries on the mainland have been overwhelmingly negative about the restriction.

Some said the measure goes against World Trade Organisation regulations. Some criticised the penalties as too harsh. Some attacked the measures as discriminating against mainland compatriots. Some even likened the restriction to a "UN embargo" against the mainland.

These doubts can be removed by resorting to reason and looking at the details. The amendment actually serves a regulatory purpose, not complete prohibition. It targets all people who export the product to any destination.

The penalties are generally provided for the infringement of exporting Schedule 2 items, not specifically for powdered formula.

How the law is perceived and communicated is always quite different from what was intended. This case is especially complicated because the milk powder issue has become a point of intersection for a number of contradictions between Hong Kong and the mainland - an area where it is not easy to find a legal formula for resolution.



  • Assistant professor and senior programme director of law at the School of Professional and Continuing Education, University of Hong Kong
  • Is interested in the social and cultural aspects of law, popular legal culture, disability rights and rule-of-law education
  • Has published in all of these areas