INDUSTRY AND TRADE
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context of this free trade policy Hong Kong's commercial relations are designed to ensure that Hong Kong's trading rights in overseas markets are protected and its international obligations are fulfilled. The most important of these rights and obligations are contained in the GATT and the MFA.
GATT
Hong Kong is the world's 11th largest trading entity in terms of the value of its merchandise trade. Given the externally-oriented and open nature of its economy, Hong Kong contributes to, and relies on, the healthy functioning of the multilateral trading system. Hong Kong has, therefore, always been a staunch supporter of the GATT and the free trade principles it espouses. Hong Kong participated in the activities of GATT for many years as a British dependent territory before becoming a separate contracting party to the GATT in 1986. This status, which underlines Hong Kong's autonomy in the conduct of its external commercial relations, will extend beyond 1997.
During the year, Hong Kong continued to participate actively and constructively in the extended GATT Uruguay Round of multilateral trade negotiations.
Hong Kong worked closely with other exporters of textiles and clothing in the International Textiles and Clothing Bureau to press for the phasing out of MFA restrictions and the integration of the textiles sector into the GATT. Hong Kong played a full role in forging consensus on the extension of the MFA, thereby helping to bridge the gap between the expiry of the MFA and the implementation of a Uruguay Round agreement.
Textiles
Bilateral agreements negotiated under the MFA govern Hong Kong's textiles exports to Austria, Canada, the European Economic Community (EEC), Finland, Norway and the United States.
The bilateral textiles agreements with the United States and Canada expired on December 31, 1991. Consultations in July led to the conclusion of a new four-year Hong Kong/United States Textiles Agreement covering the period 1992 to 1995. The new agreement is in essence a roll-over of the last bilateral agreement with some changes. In August 1991, Hong Kong also reached agreement with Canada on a two-year extension of the Hong Kong/Canada textiles agreement. The terms and conditions of the new agreement, covering 1992 and 1993, are identical to those in the previous agreement.
The bilateral textiles agreement with Finland expired in December 1991. Consultations in May resulted in a new two-year Hong Kong/Finland Textiles Agreement covering 1992 and 1993 with respectable improvements in growth and product coverage. The number of categories under restraint was cut from five to four.
In line with its liberalisation policy, the Swedish Government abolished all restrictions on textiles imports from August 1, 1991 and terminated all its textiles agreements with its trading partners, including Hong Kong, from that date. As a result, exports of textiles to Sweden after July 31, 1991, do not have to be licensed against quotas.
Two rounds of consultations were held between Hong Kong and the EEC in 1991. The first was to address the adjustment of textiles quotas for exports to the Federal Republic of Germany to take account of the unification of Germany with effect from October 3, 1990. The second concerned the extension of the current bilateral textiles agreement with the