86
INDUSTRY AND TRADE
possible at that stage to say what detailed arrangements would be made.
Trade with the six Common Market countries during the year continued to reflect to some extent the levelling up or down of individual tariffs as they moved toward the Common External Tariff. France maintained its policy of refusing liberalization to Hong Kong products and, although quotas were increased, their total value was still too small to encourage development. Trade with countries in the European Free Trade Association was stable, recording only slight increases both in imports and exports.
Another matter of great importance_to Hong Kong was the negotiations between the British and Japanese Governments to con- clude a treaty of commerce and navigation. It was plain from the outset that an important issue would be the disinvocation by the United Kingdom of Article XXXV of the GATT and the sub- sequent removal of restrictions on the entry of Japanese goods into Britain. The competition with which Hong Kong would in this event be faced could seriously damage the Colony's export trade to Britain at a time when Hong Kong's trade with that country might be in difficulties as a result of alterations in the structure of Commonwealth Preference. The importance of the issue to the Colony and the problems it presented were made plain to the British Government on various occasions, and early in August the Financial Secretary discussed Hong Kong's position with the British negotiators in Tokyo and the Japanese Ministry of Foreign Affairs. The treaty and protocols, which include some safeguards of value to Hong Kong, were signed in London on 14th November and ratification is expected to follow by the spring of 1963. The treaty does not automatically apply to Hong Kong although there is provision for extending it to cover the Colony, with or without modifications.
Negotiations were conducted with the Government of the Federation of Rhodesia and Nyasaland to secure compensation for discrimination against Hong Kong introduced when the Federal tariffs were constructed in 1955. At that time 13 items of manu- factured goods, representing 85 per cent of Hong Kong's exports to the Federation, were withdrawn from the list of goods entitled