-17-
Hong Kong
36.
The textile policy of the Hong Kong Government is strongly influenced if not actually controlled by a handful of powerful industrialists who run the Textile Advisory Board. These men have made large fortunes out of the quotas and see every advantage in pursuing the policy of first pre-empting the market for low-cost textiles and then closing the market to competition, including competition from within Hong Kong. The United Kingdom Government, which is responsible for maintaining law and order in Hong Kong, must necesarily be mole concerned that the industrialists with the welfare of the population at large. Welfare in Ilong Kong is a function of employment and anything which increases the number of jobs is therefore to be welcomed. Hong Kong is very competitive in the manufacture of garments generally and there is every reason to believe that she would gain, in volume if not in value of trade, if the developed countries/pursued a liberal policy towards imports, Conversely, Hong Kong is such an important supplier in world trade that we have the power, through her, to put a stop to restrictive bilateral trading agreements.
37. It has been suggested that Hong Kong would not be able to control exports if restrictions were to be imposed under Article XIX. There is no prima facie reason why this should be so and, given the need for compensation, it would generally be in the interests of the importing country to agree to the control being exercised by the exporting country. It has also been suggested that the importing country might impose restrictions without reference to the G.A.T.T. and that this would be particularly damaging in the case of Canada if it led to the imposition of a penal surtax, but it is clear that the objectives set out in paragraphs 8-12 above would be unattainable if we allowed ourselves to be blackmailed into agreeing to policies which would, inter alia, undermine the authority of the G.A.T.T. Indeed, it is a corollary of