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INDUSTRY AND TRADE
23 per cent of all domestic exports. By the end of the year there had been a sharp reduction in forward orders. The Commerce and Industry Department combined with leading trade and in- dustrial associations to conduct surveys to ascertain the immediate and likely long-term domestic implications of the surcharge.
For Hong Kong there was also disappointment over the once- promising prospects of widespread liberalization of world trade flowing from the Kennedy Round of negotiations under the GATT. The Colony was represented by an observer at the United Nations Conference on Trade and Development earlier in the year. Although it has achieved a substantial measure of growth in the light in- dustrial field, it shares the needs and aspirations of all developing countries. The Colony also participated in negotiations in Geneva with the United States under Article XXVIII of the GATT re- garding compensation for administrative adjustments to United States tariff schedules.
The importance of Hong Kong's textile exports both as a factor in international trade and in the Colony's own economy gives special significance to frequent international negotiations on the subject. Exports of cotton textiles to four countries were under restraint during the year as a result of invocation by Hong Kong's trading partners of the provisions of the GATT Long-Term Textile Arrangement. United States restrictions covered 36 categories comprising 97 per cent of the Colony's exports for the second year of the Arrangement as a result of protracted negotiations during 1963. Lengthy negotiations again preceded agreement on the level of exports during the third year of the Arrangement beginning 1st October 1964. The agreement finally concluded involves controls over an even wider range of textile categories representing over 98 per cent of the Colony's exports to the United States. It includes an acceptable growth rate and solutions to a number of difficult classification problems. In June Canada, which had previously invoked the Arrangement in respect of six garment categories, requested restraints on a further 32 categories covering the whole range of cotton piecegoods and one other garment category. Subsequent negotiations reduced the list of fabric categories to six. Agreement on restraint levels for these and the seven garment categories, together with a growth factor, was reached before the start of the third Long-Term Arrangement year. Restrictions on