TNAG-0042-FCO40-78-Future-Sovereignty-of-Hong-Kong-Defence-Review-Working-Party-1967 — Page 79

and even

(1) about 18 per cent of Hong Kong's imports (1966)

are re-exported and assuming that imports from

the U.K. are re-exported in roughly this proportion, this gives £10-12 million of U.K. exports which it should be relatively easy to

re-direct to their ultimate destinations;

(11) well over 60 per cent of U.K. imports from

Heng Yong are of textiles and clothing;

in general conditions of full employment the U.K.

textile industry can be expected in the

foreseeable future to have some surplus capacity

so that (see (iii) below) increased domestic output could reasonably rapidly be substituted

for some part of our imports from Hong Kong;

(iii) while the loss of imports of Hong Kong clothing

and textiles would generate pressure for

increased access to ou· market from other

controlled low cost suppliers such as India and

Pakistan, there would be countervailing

pressures from domestic producers, and in any case the scale of low ccet imports is (broadly)

a matter within H.M.G's control, so that it is

reasonable to assume that increased supplies

from low cost roducers would be permitted only

in return for countervailing economic advantages.

While on the other hand the balance of payments gain from

ceasing to service Hong Kong's sterling balances (see paragra,h 10 below) would not last

indefinitely, the

most reasonable conclusion would seem to be that as

compared with 1966, the net balance of payments affects

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