TNAG-0172-FCO40-208-United-Kingdom-Productivity-and-Efficiency-Study-effect-on-H-1969 — Page 152

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2.

LESSER EXTENT OTHER EFTA COUNTRIES AND THE IRISH REPUBLIC, REMAIN DUTY FREE. I SHOULD ADD THAT THE POINT IN PARAGRAPH 636

ABOUT COMMONWEALTH TARRIFS ON BRITISH TEXTILE EXPORTS DOES NOT

APPLY TO HONG KONG WHERE (UNDERLINE NEXT WORD) ALL BRITISH

EXPORTS ARE ADMITTED DUTY FREE.

5. IN THE REPORT ITSELF, THERE DOES APPEAR TO BE A HIDDEN WEIGHTING IN THE COST COMPARISON WHICH, IF THE EXPECTATIONS FOR THE BRITISH INDUSTRY'S COSTS ARE FULFILLED, WOULD EXAGGERATE HONG KONG'S REMAINING COST ADVANTAGESG. FOR INSTANCE, PARA. 631(A) RIGHTLY INDICATES THAT 15 PER CENT IS THE BEST, NOT THE AVERAGE, COST

ADVANTAGE ANY HONG KONG PRODUCER CAN HOPE TO ACHIEVE ON THE BASIS

OF RECENT HONG KONG COSTS. IT SEEMS LIKELY THAT IN THE COMING YEARS THESE WILL INCREASE WITH RISING LABOUR COSTS AS HONG KONG

ALREADY HAS FULL THREE SHIFTS WORKING AND HIGH UTILISATION OF CAPACITY. THE USE OF QUOTE BETTER UNQUOTE MILLS AS A BASIS OF COMPARISON IS ALSO WRONG IN A HONG KONG CONTEXT AS NEARLY ALL

HONG KONG PRODUCTION IS EXPORTED.

6. THE ANALYSIS IN THE REPORT IS ALSO BASED ON A STUDY OF ONLY

THREE COUNTS OF YARN AND THREE CONSTRUCTIONS OF CLOTH REGARDED AS

TYPICAL. THERE HAS APPARENTLY BEEN NO STUDY OF THE MADE-UPS AND GARMENTS, OR OF THE KNITTING SECTORS (AND IT SHOULD BE NOTED THAT THERE ARE NO QUOTAS ON THE LATTER). I WONDER THEREFORE WHETHER THE REPORTS CASE (GP UNDEC) BE MADE TO STAND UP ON THE BASIS OF THIS

LIMITED EVIDENCE,

V

7. AS REQUESTED IN YOUR PARA. 4, 1 NOW ATTEMPT TO GIVE A VERY

TENTATIVE ASSESSMENT OF THE LIKELY EFFECT ON HONG KONG'S COTTON

TEXTILE EXPORTS TO BRITAIN IF A 15 PERSENT TARIFF WERE IMPOSED

AND QUOTAS WERE REMOVED. THIS IS SUBJECT TO THE RESERVATIONS IN

PARA, 1 ABOVE AND THE FACT THAT OUR KNOWLEDGE OF THE COST STRUCTURE

OF THE HONG KONG INDUSTRY IS INCOMPLETE.

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18.

حمود الجميع