CONFIDENTIAL # 3
15
Not 10
-77pt is affected
above
State
6.
6.1
Other consequences
It might be argued that Hong Kong should reduce
its dependence on exports of textiles and clothing generally
and to the EEC in particular.
6.2
On the first point, the Hong Kong Government
is encouraging diversification by, for example, developing
industrial estates particularly for use by those who wish
to develop new industries in Hong Kong and by missions to
encourage overseas companies to use Hong Kong as a
manufacturing base. But the fact is that, for the
foreseeable future, the manufacture of textiles and clothing
will continue to dominate Hong Kong's industry. Certainly,
for diversification to compensate fully for the level of
cut-back the EEC are apparently envisaging would take many
years.
6.3
Nor, on the second point, is it easy to find
alternative markets to the EEC for textiles and clothing.
The scope in the significant markets Hong Kong has already
established by competitive enterprise is limited by quota
arrangements or unilateral import restrictions.
To increase
exports to the remainder is at best difficult; and they
offer much less in terms of magnitude than the EEC. Hong
Kong's ability to respond flexibly to economic difficulties
is considerable. But it is of little avail against
physical limitations to trade.
/6.4 ·
+
1.