INDUSTRY AND TRADE
21
Re-exports increased substantially during 1980, accounting for 31 per cent of the combined total of domestic exports and re-exports. The principal commodities re-exported were textile yarn, fabrics, made-up articles and related products; pearls, precious and semi-precious stones; electrical machinery, apparatus and appliances; watches and clocks; and clothing. The main countries of origin of these re-exports were China, Japan and the United States. The largest re-export market was China, followed by the United States, Indonesia, Singapore, Taiwan and Japan.
International Commercial Relations
Hong Kong's external commercial relations are conducted by the Trade Industry and Customs Department within the framework of a basically free trade policy. Hong Kong practises, to the full, the rules of the General Agreement on Tariffs and Trade (GATT), and virtually the only restrictions maintained on trade are those required by international obligations. Most prominent among these are restraints on textile exports to most major trading partners. All these restraint arrangements were negotiated under the Arrangement Regarding International Trade in Textiles, commonly known as the Multi-Fibre Arrange- ment (MFA). A feature of the MFA is the Textiles Surveillance Body (TSB) which super- vises its implementation. In 1980, a Hong Kong representative sat on the TSB as an alternate member to the representative of the Republic of Korea.
As a result of negotiations under the MFA, bilateral agreements were concluded during the
year with Finland and Switzerland, while the agreements concluded with Austria and Sweden in 1979 will remain effective until January, 1981, and March, 1981, respectively. Under the terms of these agreements, exports of certain textiles from Hong Kong to these countries were placed under restraint or surveillance.
The current bilateral agreement with the European Economic Community has a duration of five years from January, 1978, and covers all of Hong Kongs' exports of cotton, man- made fibre and wool textiles to the EEC. Exports in 49 categories of textile products are under specific restraint, while exports in the remaining categories are subject to the Export Authorisation Scheme operated by the Trade Industry and Customs Department.
Protracted textile consultations held with the United States during the second half of 1979, were finally concluded in January, 1980. As a result of these consultations, Hong Kong conceded that in 1980 it would limit utilisation of swing for certain cotton and man-made fibre apparel product categories, and that it would not use the carryover and carryforward provisions of the agreement on these categories.
The Hong Kong/United States administrative arrangement on trade in certain non- rubber footwear came into effect in October, 1978, and was continued into 1980. Hong Kong has declined to consider specific mechanisms to limit the volume of its exports of non- rubber footwear to the United States, but has agreed instead to institute a certification of origin system.
The current bilateral textile agreement with Canada has a duration of three years from January, 1979, and covers most of Hong Kong's exports of cotton, man-made fibres and wool textiles to Canada. Exports in 26 categories of textile products are under specific restraint, while exports in a few remaining categories are subject to the Export Authori- sation System operated by the Trade Industry and Customs Department.
Norway's action against imports of various textile items, which was introduced on January 1, 1979, under Article XIX of the GATT, remained in force during the year. The action was in the form of global import quotas but it had a discriminatory effect against Hong Kong. Following a complaint made by Hong Kong to the GATT Council in July,