terms, in the first nine months of 1973 compared with 2% in 1972 and 3% in 1971. The United Kingdom provides Hong Kong's largest market for footwear accounting for 40% by value of domestic exports of this item in the first nine months of 1973 compared with 40% also in 1972 and 42% in 1971.
33. The United Kingdom became a member of the European Economic Community (EEC) on 1st January 1973 and adopted the Generalised Preference Scheme of the original six member states of the EEC with effect from 1st January 1974. As this scheme discriminates against Hong Kong in respect of textiles (including clothing) and footwear, it is causing considera- ble anxiety.
(iii) Federal Republic of Germany
34. Domestic exports to Hong Kong's third largest market, the Federal Republic of Ger- many, increased by 19%, in value terms, in the first nine months of 1973, but, as will be seen from Tables 9(a) and 9(b), export prices in this market increased by 17% in the period com- pared with 5% in 1972 and 10% in 1971, and consequently exports, in quantity terms, in- creased by only 2% compared with 30% in 1972 and 4% in 1971. Clothing accounted for 74% by value of total domestic exports to this market in the first nine months of 1973 compared with 75% in 1972 and 71% in 1971. During these three years, all cotton clothing was subject to quantitative restraint under a three year agreement between Hong Kong and the European Economic Community. During the calendar year 1973, Hong Kong exercised unilateral restraint on exports of polyester/ cotton and polyester garments to the Federal Republic. Nevertheless, in 1972, for the first time, domestic exports of clothing to the Federal Republic of Germany were larger, in value terms, than those to the United Kingdom, and continued so in the first nine months of 1973.
(iv) Japan
35. Just as the effective devaluation of the United States dollar in December 1971 and February 1973 resulted in a decline in Hong Kong's exports to the United States, in quantity terms, so did the effective revaluation of the yen in December 1971 and March 1973 lead to an increase in Hong Kong's domestic exports to Japan. As can be seen from Table 10, in the first nine months of 1972, domestic exports to Japan amounted to HK$335 million; but, in the first nine months of 1973, they more than doubled to HK$723 million. Export prices in this market in the first nine months of 1973 declined by 1% (whereas, for all countries, they
12
increased by 16%) and consequently domestic exports to Japan, in quantity terms, also more than doubled.
Domestic Exports to Hong Kong's Six Largest Markets, 1972–1973
Table 10
Country
Jan-Sep Jan-Sep
Change
1972
1973 (HK$ (HK$
million)
million) (%)
USA
4,527
4,999 10.4
UK
1,586
1,896
19.5
Federal Republic
of Germany
1,161
1,386
19.3
Japan
335
723 115.9
Australia
326
482
48.0
389
383 -1.7
11,201
13,680
22.1
Canada
All countries
36. There was an increase of 137%, in quantity terms, in domestic exports of clothing to this market and this was a significant factor accounting for the overall quantity increase in domestic exports to Japan. But export prices of clothing increased (by 13%) although this was less than that in respect of domestic exports of clothing exports to all countries (16%). There was also a very large increase, in quantity terms, in domestic exports to Japan of textile fabrics and textile yarn and thread.
Re-exports
37. In value terms, re-exports increased at a faster rate than domestic exports in the first nine months of both 1973 and 1972. Con- sequently re-exports, as a proportion of total exports (that is, domestic exports and re- exports), increased from 19% in the first nine months of 1971 to 21% in the corresponding period of 1972 and to 25% in the same period of 1973.
38. Re-exports of China origin accounted for 25% by value of total re-exports in the first nine months of 1973 and this compares with 22% in the same period of 1972. Re-exports of Japan and United States origin accounted for 14% and 13% respectively of total re-exports, in the first nine months of 1973 compared with 13% and 17% respectively in the same period of 1972. In the first nine months of 1973, 25% of re-exports, in value terms, was destined for Japan (re-exports to Japan increased by 89% in this period) and, of this amount, 22% was of China origin compared with 15% in the first nine months of 1972.