TNAG-0103-FCO40-139-Briefs-and-background-notes-for-Lord-Shepherd-1967 — Page 110

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the

expansion. Well over a half of Hong Kong's exports go to three markets

(the United States, the United Kingdon and Western Germany) and sales to

some other countries in Western Europe are also increasing quickly.

4. Despite the export success story it must be emphasised that the

Colony consistently imports nore than she exports (this is, of course,

mechanism through which she imports outside capital). A large part

of this is food (a considerable amount from Mainland China), but Hong Kong

is providing a large and growing market for Western manufactured products.

As explained above, these are for the most part imported duty free and

the market is fiercely competitive.

Restrictions on Hong Kong's Exports

5. The success of Hong Kong's exports has led to counter pressure from

industries in importing countries affected by her competition for import

restrictions and/or voluntary restraint on the part of the Hong Kong

industries concerned. They have alleged that Hong Kong, by the low cost

at which she can supply, is disrupting their markets.

6. The first field in which this pressure developed was in cotton

textiles and, in consequence, exports of such products to the United States,

Canada, Norway, the Federal Republic of Germany and the Benelux countries

are now restricted by agreements negotiated under the provisions of the

G.4.T.T. Long Tera Cotton Textiles arrangement. Voluntary restraint

arrangements on exports of cotton textiles to Britain have been in force

since 1959. These have now been replaced by quota restrictions.

Under

the present arrangements, which will remain in force until 1970, Hong Kong

receives a country quota of 185 million square yards per annum plus a yarn

quota and a small provision for growth (about 1% per annun). This

arrangement gives Hong Kong about 10% of the United Kingdon Market in

cotton textiles and is considered reasonably satisfactory in Hong Kong.

Resistance to Hong Kong's developing exports of other products is

also beginning to grow. This has taken the form of restraints on the

7.

/cxports

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