XN000022-1978-01-27 — Page 17

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Friday, January 27, 1978'

Trade prospects have of course been complicated and restricted by

the new bilateral textiles agreement, particularly that with the EEC.

Although the restraint limits in 1978 are generally higher than the level of

shipments in 1977, the flexibility with which exporters will be able to

respond to a revival in demand has been reduced; more products have been

brought under restraint; the rate of growth of the restraint levels has

been reduced; and flexibility to move between products is much less.

In addition, the EEC agreement has set a dangerous precedent. The

Norwegians and Swedes have already followed it and proposed substantial cuts.

Although trade with these countries represents only a small proportion

of our domestic exports, the implications are depressing and could be

serious if Sweden and Norway were joined by other countries.

As I have already said there is the further danger, and at present

it is no more than that so far as Hong Kong products are concerned,

of the extension of protectionism to other products.

Against this background, it is obviously difficult to assess

our export prospects with any accuracy. Nevertheless, at present the

balance of opinion suggests that growth in our domestic exports in 1978

is likely to be no less than in 1977. In other words, though the

problems will be different, and the balance between different markets

or lines of export may change, the overall growth rate for exports is

likely to be similar to 1977..

'I think that the sort of steady rather than frenetic growth in

exports and in the economy which we experienced last year was what suits

Hong Kong best, and the prospect of much the same overall picture next

year is heartening. As I said in speaking to the Legislative Council last

October, the picture could be greatly improved, at least in the short-term,

were measures taken to stimulate the economies of any of our major markets

and this is still not impossible.

We have