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Following is the speech by the Chief Executive, Mr Donald Tsang, at a luncheon in honour of the President of the European Commission, Mr Jose Manuel Barroso, today (July 18) (English only):

Mr President, Mrs Barroso, distinguished guests, ladies and gentlemen,

Mr President, it is a tremendous pleasure to welcome you to Hong Kong and welcome to you, Mrs Barroso, as well. I sincerely hope you enjoy your stay in Asia's world city. We would have honoured your visit with a luncheon at Government House, but that particular building is undergoing some renovations at the moment. That's why we are here, instead, savouring the splendid service of one of Hong Kong's world-class hotels.

First of all, Mr President, I would like to congratulate you on your successful visit to the Mainland. The EU was a staunch supporter of China's accession to the World Trade Organization four years ago. That event has spurred the Mainland's economic development and facilitated greater trade and investment flows between China and Europe. It is heartening to see your continuing efforts towards strengthening the Sino-European relationship, which is one of the most important in the world today. We in Hong Kong are proud to play a key role in this crucial partnership. Last year, one-fifth of the total trade between the EU and the mainland of China was routed through our seaport and our airport. And Hong Kong provides many of the business services that smooth the flow of commerce between the two of the world's largest, biggest markets.

I am glad you were also able to pay a visit to our sister Special Administrative Region, Macao, to experience the historic ties with your own homeland and speak some Portuguese. Now you are on your final stop before flying home. From our point of view, we believe you have saved the best until last.

Since the visit to Hong Kong of President Santer in 1998, the EU has been extremely active, most notably with the successful introduction of the euro and last year's expansion to 25 members. Both of these are remarkable milestones, which show what can be achieved with vision and co-operation among nations.

In recent years, Hong Kong has accomplished a great deal as well, having successfully battled through the Asian financial crisis, a painful economic restructuring and the SARS epidemic outbreak. Now, I am happy to report that we are in the midst of a sustained economic recovery. Trade between Europe and Hong Kong has grown steadily over the years, and last year it surged by 15%. There is a strong European presence here ? in business, education, charity work, culture, cuisine and consumer products ? all of which adds to the unique cosmopolitan nature of our world city. As more and more Europeans came here to do business, the stock of inward direct investment from the EU grew to more than 37 billion euro by the end of 2003. There are now over 1,500 EU companies with regional or local operations in our city.

These figures reflect Europe's increasing confidence in Hong Kong. Eight years after the transfer of sovereignty, "One Country, Two Systems" has proven to be a workable and successful policy. The Basic Law preserves the way of life, all the freedoms that Hong Kong enjoyed before 1997 are here.

At the same time, we are more important to the Mainland today than ever before. We have worked hard at economic partnership with the Mainland, concluded two stages of the Closer Economic Partnership Arrangement, or CEPA as we called it in Hong Kong, entered into Pan-Pearl River Delta co-operation, and attempted many other initiatives. One of the happy outcomes has been a blossoming of investment opportunities for European and other foreign businesses through Hong Kong. By leveraging on our many advantages, including our close ties with the Mainland, and through the can-do spirit of Hong Kong people, we have fortified our status as an international service hub for finance, trade, logistics, tourism and information.

Now we are poised for even bigger and better things. Hong Kong Disneyland, the first Disney theme park in China, will open in just eight weeks from today. Other new tourist attractions and a sprawling new exhibition centre will also be opening in the coming few months. We are building new railways, highways and bridges to smooth the cross-boundary flows of people and goods. We are also staging the equestrian events of the 2008 Beijing Olympics here.

And, as you know, Mr President, Hong Kong has been entrusted with hosting the World Trade Organization's Sixth Ministerial Conference in December. This is an honour and a responsibility that we take very seriously. Hong Kong has one of the most open and free economies in the world, and we remain fully committed to the development of the multi-lateral trading system. We will make sure that the Hong Kong Ministerial is well organised. We will respect the exercise of freedom of expression and demonstrations under Hong Kong law, while at the same time ensuring the orderly conduct of the meeting, and minimising any inconvenience to the public. And we will do whatever we can to facilitate a positive outcome to the negotiations.

Mr President, as the world becomes smaller and more inter-connected, and as China becomes an increasingly important and responsible player in the global economy, exciting new opportunities are opening up for European businesses. Hong Kong is the ideal platform to take advantage of these opportunities ? whether it be investing in the Mainland or doing business with outward-looking Mainland enterprises. Let us continue to work together for our mutual benefit.

And now, ladies and gentlemen, may I invite you to rise and join me in a toast:

To President and Mrs Barroso, and to the enduring friendship between Europe and Hong Kong. To the European Union.

Ends/Monday, July 18, 2005

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