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INDUSTRY AND TRADE
1986 but no agreement could be reached before the year ended. Further consultations have been scheduled for early 1987. Meanwhile, to avoid disruption in the trade, an interim arrangement has been implemented by Hong Kong to facilitate exports of textiles to Canada in 1987 pending the conclusion of an agreement.
The Multi-Fibre Arrangement was due to expire at the end of July 1986. Following intensive negotiations, agreement was reached to extend the MFA for five years until end-July 1991. An important feature of the Protocol of Extension is that textiles products of vegetable fibres and silk blends are brought under the scope of the MFA for the first time. Hong Kong played an active role in the negotiations leading to the conclusion of the protocol, co-ordinating closely with other developing exporting members - less developed countries (LDCs) – of the MFA to safeguard its trade interests.
Non-textiles Issues
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French Quantitative Restrictions: During the year, three products from Hong Kong were subject to unilateral quantitative restrictions when imported into France - digital quartz watches, toys and radios. Restrictions on these three products are to be lifted at the beginning of 1987.
Generalised Schemes of Preferences (GSP): GSP are operated by most developed countries to promote the exports of goods from developing countries and territories by providing duty-free or reduced import tariff treatment. Hong Kong benefits in varying degrees from these schemes.
In July, the EEC Commission reviewed the EEC GSP and proposed to exclude 16 Hong Kong products from GSP benefits. Hong Kong made a detailed submission opposing the exclusion to the commission in September. The EEC eventually decided to exclude only seven Hong Kong products from GSP benefits in 1987.
Hong Kong ceased to be a beneficiary of the New Zealand GSP as from July 1, 1986 as a result of the introduction in 1985 of New Zealand's new policy whereby existing benefi- ciaries with per capita GNP equal to or exceeding 70 per cent of that of New Zealand would lose their beneficiary status. However, following bilateral consultations held in April 1986 in Wellington, New Zealand agreed to apply to Hong Kong preferential tariff rates in respect of over 100 product items in which Hong Kong has a special trading interest. In July 1986, Australia introduced a revised system of tariff preferences for developing countries. Under the new system, preferential developing country tariff rates set at five percentage points below the normal tariff rates will apply to all dutiable products imported from any developing countries, except those which attract excise duties only.
The existing arrangements for textiles, clothing and footwear products will continue to apply, however, until the end of 1988.
The US GSP was extended for 8 years in January 1985 and Hong Kong continues to be a beneficiary. Under the extended scheme, the US President is required to conduct a general review to determine the extent of preferential treatment granted to beneficiary countries. Factors to be taken into consideration under the review are individual beneficiary's level of development, its competitiveness in respect of GSP articles and its trade practices.
Any modification made as a result of the review will take effect on July 1, 1987. The Hong Kong Government and private sectors have participated actively in the review. During 1986, two rounds of talks on the review were held with the United States.
Harmonised Commodity Description and Coding System (Harmonised System or HS). The HS is expected to be introduced in most significant trading entities, including Hong Kong, from 1988. Hong Kong is consulting with its major trading partners to resolve any