XN000022-1977-10-05 — Page 6

WEDNESDAY, OCTOBER 5, 1977

HK'S 1978 OUTLOOK REASONABLY GOOD, GOVERNOR SAYS

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THE GOVERNOR, SIR MURRAY MACLEHOSE, TODAY PREDICTED THAT HONG KONG'S ECONOMIC AND FINANCIAL OUTLOOK FOR 1978 IS +REASONABLY GOOD, BUT A PROPER ASSESSMENT IS IMPOSSIBLE UNTIL THE OUTCOME OF THE EEC NEGOTIATION IS KNOWN.+

OUTLINING THIS OBSERVATION, SIR MURRAY, IN HIS ADDRESS TO THE LEGISLATIVE COUNCIL TODAY, SAID OUR TRADING FORTUNES SHOULD BE FAVOURED BY THE FALLING LEVEL OF STOCKS EXPECTED IN GERMANY AND THE PROSPECT OF INCREASED CONSUMPTION IN THE UNITED KINGDOM,

+MOVEOVER, OUR EXPORT PRICES IN HONG KONG DOLLARS HAVE REMAINED STABLE SINCE THE MIDDLE OF 1976- ALTHOUGH THERE WAS SOME APPRECIATION OF THE HONG KONG DOLLAR IN THE SECOND HALF OF 1976 AND EARLY 1977, IT HAS DEPRECIATED IN THE LAST FEW MONTHS,+ HE SAID.

+SO WITH WORLD PRICES INCREASING AT ABOUT 8 TO 9 PER CENT A YEAR, OUR COMPETITIVE POSITION IS BEING GRADUALLY REGAINED.

+GIVEN THE COMPARATIVELY OPTIMISTIC FORECASTS FOR WORLD TRADE IN 1978, THE UNDERLYING CONDITIONS FOR MORE RAPID GROWTH IN OUR DOMESTIC EXPORTS COULD BE PRESENT, AT LEAST FOR THE WIDE FIELD OF

ITEMS NOT SINGLED OUT FOR DISCRIMINATORY TREATMENT BY THE EEC. AND LET US REMEMBER THESE ACCOUNTED FOR 90 PER CENT OF OUR TOTAL DOMESTIC EXPORTS TO THE WORLD AS A WHOLE IN 1976, + HE SAID.

REFERRING TO HIS RECENT VISIT TO LONDON AND BRUSSELS, SIR MURRAY REMARKED, THE COMMUNITY SHOWS EVERY SIGN OF WISHING TO IMPOSE ON US A MORE RESTRICTIVE REGIME THAN HITHERTO. THE PRINCIPAL FEATURES WOULD BE A ROLL-BACK OF QUOTAS FOR 1978 TO THE 1976 LEVEL OF IMPORTS- BUT FOR EIGHT SENSITIVE ITEMS, FOR SO CALLED +PRINCIPAL SUPPLIERS ONLY AND HONG KONG IS ONE OF THESE THE QUOTAS WOULD BE CUT BACK BELOW THE 1976 LEVEL OF TRADE.+

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+ IT IS OF COURSE ALMOST UNPRECEDENTED TO DEMAND A ROLL-BACK OF QUOTA AT ALL, AND THIS DISCRIMINATION AGAINST HONG KONG AND THE PRINCIPAL SUPPLIERS FOR THE EIGHT ITEMS WOULD BE AS DAMAGING AS THE PRECEDENT IS DANGEROUS,+ SIR MURRAY SAID.

+THE LOSS OF TRADE BELOW THE 1976 LEVEL ENVISAGED BY THE COMMISSION WOULD BE ABOUT $480 MILLION, BUT THE LOSS IN TRADE POSSIBILITIES IN THE EEC COULD BE OVER $1,000 MILLION,+ SIR MURRAY ADDED.

ASSESSING EEC'S PROBLEMS IN DEALING WITH HONG KONG, SIR MURRAY OBSERVED: *WHILE I UNDERSTAND THE PRESSURES GENERATED BY A HIGH LEVEL OF IMPORTS, BY UNEMPLOYMENT AND POLITICS, UNDER WHICH THE EEC HAVE EVOLVED THESE IDEAS, THE IR APPLICATION TO HONG KONG IS AS LACKING IN EQUITY AS IN LOGICAL STATISTICAL BASIS.+

/+ HONG KONG

+