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of keeping its channels of trade open, and has, therefore, been willing to consider restrictions on exports in those fields where importing countries have been able to show that imports from Hong Kong were disturbing their local industries. The policing of such agreements after they have been concluded can, also, be shown to have been remarkably effective.
2.
Your para.3 I regret I am unable to estimate the proportions of foreign and indigenous investments in Hong Kong industry. All the information we have available is contained in Jeaffreson's letter of 3rd February to Jackson. The information contained in this letter is based on a survey of industries carried out by the Commerce and Industry Department, but cannot be looked on as all-embracing, and also takes no account of the many Hong Kong registered companies which have more or less of a U.K. interest behind them. It was because of the impossibility of distinguishing amongst this latter category between those companies which may properly be called indigenous and those which should be called foreign which led to the exclusion, from the figures forwarded by Jeaffreson, of the "190 Japanese commercial sub- sidiaries and firms wholly or partly owned by British nationals". Though these would probably fall in the "foreign investment" category referred to in paragraph 3 of your savingram, the proper classification for these enter- prises is difficult to establish, and there are almost certainly, of course, also many others which have not been included. I continue to doubt the wisdom of providing this information to the AFI/CIO but if you feel there would be any advantage in doing so, I would have no objection. On the other hand I feel it might be pointed out that of a total industrial labour force in Hong Kong of 407,830 workers, only 9,760 are employed in establishments wholly owned by U.5. interests. In establishments with part U.. participation the figure is a mere 6,770. These figures represent 2.39% and 1.64% respectively of our industrial labour force.
3.
I will be interested to know the latest developments regarding the picketing of stores carrying tailored clothing from Hong Kong by the Anal- gamated Clothing Workers of America. I am under pressure at this end to take appropriate action but until I hear from you further, we will continue to be guided in this respect by Jackson's letter of 13th January 1967 to Sum.
4.
Your pera.▲ The subject of fines for breaches of labour legislation must be looked at in the context of the local structure of industry. I forward, for your use and for use where necessary, a geographical and numerical break-down of industrial undertakings as at 31st December 1965. This shows that more than a third of the total number of undertakings employs less than ten workers each and that more than 70% employ less than fifty workers each. Although no analysis has been made of the size of the factories against which prosecutions were initiated, it is known that generally it is the smaller factories which most frequently infringe the law. Hence, the scale of the fines is not disproportional to the scale of operation of the factories concerned. This relationship has not been demonstrated by the bare statistical tables in the departmental annual report.
5.
The break-down attached to this savingram covers the position at the end of 1965. I expect to have similar information on the position at the end of 1966 in abour two months' time but I anticipate that the pattern will not be materially changed.
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