XN000022-1973-10-17 — Page 86

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Wednesday, October 17, 1973

that uncertainties will continue for some time to come, and that there is

nothing which we can do about it. Meanwhile there is evidence of our

own currency maintaining its strength.

Today I can add little on the problem of our sterling holdings

and the unilateral offer of a 6-month guarantee announced by Her Majesty's

Government aimed at stabilising the market. As a major holder the Hong

Kong Government of course has a very strong interest in the stability of

sterling, and friendly exchanges continue with the Treasury about what

we might do in our own and the general interest.

Another major problem for our manufacturers has been a world-wide

general shortage of raw materials. I have been impressed by the tremendous

efforts made by our importers. The trading and industrial organisations also

have played a most helpful role in seeking out raw material sources, whilst

the Commerce and Industry Department has assisted with official representations

and coordination of effort.

A further difficulty looms ahead in the obligation of the British

Government, as from the 1st January, to make its first move towards

harmonization with the common external tariff of the E.E.C. Under the

accession arrangements, which involved the exclusion of textiles and footwear

from Hong Kong in the extension to Hong Kong of E.E.C. generalised proferences

this would involve progressive discrimination by Great Britain against

Hong Kong in respect of these products. Of course the other side of this

coin is that this was the price paid by the negotiators to obtain acceptance

by the B.3.C. of Hong Kong's inclusion in all other generalised preferences.

Nevertheless