IN CONFIDENCE
5.
TEXTILES
Hong Kong is very dependent on her exports. 80% of her manufactured
goods are exported: two to three times the proportion of most other countries. Of her exports 40% are garments (value in 1973 over £600 m.) and 10% textiles (value in 1973 about £150 m.). Her principal markets are the United States and the enlarged EEC - at present the UK imports from Hong Kong more textiles than the other eight EEC members put together. From this it is clear that any restrictions on Hong Kong's trade, especially in her major markets, create widespread fears and tend to lead to over- reaction. As a free port and a dependent territory Hong Kong is also very conscious that she has herself little bargaining power.
Hong Kong therefore has a clear and substantial interest in any
moves to control international trade in textiles. The international
textile trade has for some years been governed through GATT agreements. The latest of which, the GATT Multi-Fibre Agreement, was signed at the end of 1973 and runs for four years from 1 January 1974. The Agreement recog- nises the special conditions surrounding world trade in textiles and that it is necessary to formalise the operation of restraints to allow for flexibility, legitimate growth and so on. Hong Kong has acceded to the agreement. Hong Kong is unusual among developing countries in recognising that international agreement covering trade in textiles is desirable and that without established guide-lines the powerful importing countries would be free to negotiate or impose the restrictions which their highly protectionist domestic textile industries are constantly demanding.
The most emotive issue in connection with Hong Kong's external trade in textiles, concerns the EEC Generalised Scheme of Preference (GSP). Hong Kong has been a beneficiary of the EEC GSP since it was established in 1972. However, the Community excluded Hong Kong in respect of textiles and footwear. As part of the terms of our accession to the EEC, the UK aligned to the Community's GSP with effect from 1 January 1974. Previously, the UK had excluded all textiles from the British GSP.
IN CONFIDENCE
3.