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maintain a steady 12%-15% increase by value per annum.
Nevertheless,
with the full weight of the population "bulge" still to be felt (in the
1961 census 40% of the population were under 15), the maintenance of prosent
standards of living (more so any improvement in those standards) depends
on the ability to expand industriel production and exports. These in turn
depend partly on the extent to which industry can improve quality and
productivity and diversify both its products and its narkots. There
aro signs that industry recognises and is prepared to grapple with those
problems. Basically, however, Hong Kong's economy rests on the opportunity
to trade; it is, and will always be, very vulnerable in the event of any
general downturn in world trade or the adoption of more protectionist
policies by countries constituting its major markets.
11.
For these reasons Hong Kong depends heavily on the maintenance
of the most favoured nation principle in trade and other G..T.T. rules
and she values highly her rights under the G...T.T. and the Long Term
Arrangement on Cotton Textiles. Her fear is that these rules will either
be increasingly flouted or they will be changed to her detriment. If this
were to happen she could be placed in a special category of countries
(perhaps with Japan), exposed to unfavourable discrimination.
Common Market
12.
Hong Kong is also concerned with the formulation of a Common
Commercial Policy in the European Common Market (when this takes place)
and hopes that the hitherto liberal policies of e.g. Holland and Germany
will outweight the illiberal inclinations of France. (Hong Kong has a
representative attached to the British Embassy in Brussels). If Britain
were to enter the E.E.C., Hong Kong would almost certainly before long be
required to face the imposition of the Common external tariff on her
exports to Britain. In some sectors of her exports this could have
serious offects. What special safeguards night be sought for Hong Kong in forthcoming negotiations for our entry are the subject of discussions
with representatives of the Colony at the present time.
Hong Kong Department,
October, 1967.
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