Scm P 91/10/70
Hongkong and EEC:
the future is looking much rosier
"
Britain's entry into Europe may in fact bring greater benefits in the way of British-Hongkong trade.
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This rather rosier view of the future was put forward yesterday in the latest Bulletin published by the Hongkong General Chamber of Commerce.
The Chamber acknowledges the difficulties in reviewing the subject when the value of our reserves, our status under the EEC Generalised Preference Scheme, and the outcome of several important sets of international negotiations including GATT, IMF, and the LTA on textiles
are all under consideration.
Nevertheless, in a leading article called "Hongkong and Britain Another look at the
-
Another
IT
Balance Sheet," the chamber reach the conclusion that "there are grounds for hope."
"Experience with Germany, another EEC friend, has not been discouraging," it points out. The UK was a big market for Hongkong and one did not simply lose a big market overnight, although there might well be a period of adjustment, as there was when textile quotas were first introduced 14 years ago.
"With Britain's entry into the EEC it is clear that trade between Hongkong and Britain is into a new phase," the article says.
"For a start we are in the process of losing Commonwealth Preference.
"To some extent this has been compensated for so far by our inclusion in both the UK and EEC Generalised Preference Scheme.
"The main fear of exporters today is that the harmonisation of the UK scheme, which has been generally favourable to Hongkong, with the EEC scheme, which offers benefits to Hongkong's competitors, will not exactly help Hongkong's sales.”
They remained more bullish than bearish, however, pointing out at the same time that "what is even more important, the entry of the UK into the EEC does not spell the end of Commonwealth Preference between other members of the Commonwealth.”
"For example, as this article is being written, an announcement has reached the chamber from the New Zealand Government informing us that Hongkong will receive Commonwealth
1
Preference for as long as New Zealand continues to administer such preferences."
The Commonwealth remained an association covering approximately one third of the world's people. During 1972, Hongkong's imports from and total exports to these countries were greater than those from any other trading group the EEC, EFTA and Comecon included. The pattern had varied little over the post war period.
Last year Canada was Hongkong's fourth largest market, Australia came sixth, Singapore seventh, Malaysia twelfth, New Zealand thirteenth and Nigeria sixteenth.
Together the Commonwealth (excluding the UK) accounted for $ 1,929,6 million or 12.7 per
cent of total domestic exports in 1972.
Dealing with Britain's direct investment in Hongkong
the article is the first of two balancing up a much-debated earlier one on Hongkong's substantial value to Britain - the writer says that by August 1973, the number of wholly owned British industrial companies here had risen to 23, with a total investment of $115 million.
This was "evidence that the interest of UK industrialists in Hongkong, despite the current lure of Europe, has not ceased."
At the end of 1972 there were 832 companies from over 45 overseas countries registered in Hongkong. The largest group, 217, were American owned. The next largest
group. 106, were British.
Of these 21 were industrial as opposed to commercial - concerns, and represented a total investment worth $108 million. For purposes of comparison. industrial investment by other nations at the same time were U.S.$465 million, Japan $277 million, and Singapore $116 million.
Taking this along with indirect British investment, the British-orientated "hongs," supply of British technicians and managers to Hongkong companies, and a trade balance which was $856 million in Hongkong's favour last year, it was amply demonstrated - perhaps rather harshly - "on which side of the balance sheet the main benefits lie.”
HKK 6/3