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Background Briefing Paper
Appendix A. WH/1
UK TRADE WITH HONG KONG, 1984
In 1984, UK trade with Hong Kong reverted to a normal
pattern after the exceptional years of 1982 and 1983. The proportionate
UK trade deficit was smaller than in the years preceeding 1982.
2.
Tables 1 and 2 attached give statistics of UK-Hong
Kong trade as recorded in the UK and Hong Kong, respectively.
It should be noted that exports are recorded on a f.o.b. basis
(free on board, i.e. before adding cost of shipping to destination),
while imports are recorded on a c.i.f. basis (carriage, insurance
and freight, i.e. including cost of shipping from port of shipment).
Thus a country's own trade statistics will exaggerate its trade
deficits, e.g. in a case where trade was actually in balance, a
trade deficit, equal to the cost of shipping, would be recorded.
2.
In 1984, UK exports to Hong Kong grew by 23% and nearly
overtook UK exports to Japan. Given the UK's vast trade deficit
with Japan, Hong Kong still justifies its description by HMG Ministers
as "Britain's foremost market in Asia". Statistics for UK trade
with its main markets in Asia, Hong Kong, Japan, India and China,
are shewn in Table 3 attached.
4.
When imports are attacked as alledgedly causing
unemployment (most economists refute any simple causal relationship),
it is trade in manufactures that is considered. UK trade in manufactures
with Hong Kong compares well with UK trade with her main industrialised
trading partners as shewn by the export/import ratios in Table 4.
5.
There is a common misconception that the UK export
performance is lower in Hong Kong than in the world generally.
This arises, typically, from comparing the UK share of the total
Hong Kong import market at about 4% with the UK share of world
trade, which is quoted as being about 8%. In fact, these two figures
are not comparable. The UK share of world trade at 8% relates,
firstly, to trade in manufactures and, secondly, to exports of
'main manufacturing countries' only.
6.
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