Mr Stewart
(HKGD)
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Also, sochy, these comparisons are only valid if it is assumed that exports are distributed evenly
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Mr Thompson (HKGD)
HK/EEC TEDTILES AND CLOTHING
1.
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In my last minute (of 18 November) I said we were engaged in calculating the level of Hong Kong's exports of textiles and clothing to the EEC so far this year and comparing the 1977 figures with pro-rata ones for 1976 and those "initially proposed" (by Tran) for 1978.
2.
Detailed figures extend only until May of this year. To estimate exports since then we have to look at a more aggregated level of total exports of 'clothing' to major EEC trading partners these declined by 21% from January August 1976 to January August 1977. On the textiles side exports to the UK (the UK is 83% of the total EEC market in cotton fabrics) decreased by 18% from January August 1976 to January August 1977.
3. Overall the EEC's initial proposals' called for a decrease in Hong Kong's exports of about 15% from 1976 to 1978. By May 1977 exports of clothing and textiles in the sensitive categories had decreased 28% below the corresponding figure for 1976. This, however, is an average figure for all the categories. Precise 'quota utilisation' rates in each of the categories are as follows:
Category
Textiles
Cotton Fabrics Synthetic Fabrics
Clothing
Woven shirts
Woven blouses
Woven trousers Knitted shirts
Knitted sweaters
1977 utilisation of pro-rata 1978 quota
89.7% 62.2%
quantities. cr values?
85.0%
76.9%
104.9%
119.6%
68.4%
These percentages show by how much, in each of the categories, 1977 actual exports up to May were above or below the maximum permitted in the EEC's 'initial proposals' for a similar period in 1978.
4.
So the proposed quotas, at present rates of production, will only 'bind' Hong Kong exporters in two categories woven trousers (5% over) and knitted shirts (20% over). In all other categories Hong Kong manufacturers can expand present exports (by 10% at least) and still not violate quotas proposed for 1978. [Moreover if Hong Kong were to negotiate seriously with Tran the quota on knitted shirts could be raised so that the above quota utilisation rate would fall from 119.6% to 109.3%.]
CONFIDENTIAL
/ 5.