South China Morning Post
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Britain to extend quotas
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HoLgkong's troubles never seem to come singly and the blow dealt by London early this morning will do much to reinforce anxieties about the prospects of our economy, relying as it does to such a heavy extent upon textiles.
It may be argued that the retention of quotas still leaves Hongkong's textile industry with a sizeable chunk of the British market (almost two- fifths) and that Britain's entry into the Common Market in January 1973 would in any case have almost certainly brought with it a reimposition of quotas.
But the most objectionable fact is that not only will both our main markets be limited in a year when we badly need to achieve new growth but that the free trade principles upon which our postwar fortunes have been built have received a severe blow.
Britain has not, of course, acted without reason and the statement by the acting British Trade Commissioner, Mr D. C. Rounthwaite, spells out Lancashire's problem clearly.
It is undoubtedly true that the deteriorating unemployment position in Britain has more than anything else compelled the U.K. Government to make a last-minute change of long-established plans for it is only within the last fortnight that the extension of quotas has been discussed publicly.
It must be asked however why, when Lancashire's plight was well known and when unemployment figures have been serious for months, this new policy could not have been announced earlier.
For those in Hongkong most seriously affected are firms which have contracted for big orders from U.K. in recent months in anticipation of the lifting of quotas 'and will now be faced with the prospect of buying up quotas at high premium rates to export their goods.
It remains to be seen what Britain and the Hongkong Government can do to alleviate their plight.
Apart from these special cases, however, there is the damaging effect upon the industry as a whole for we are today confronted with a situation where our cotton textile manufacturers are bumping their heads against the ceiling in our biggest markets and facing growing competition from Taiwan and South Korea as well.
Restrictions on exports of shirts to Canada, threats from Australia and possibly shrinking demand in other major markets emphasise the importance of industrial and trade diversification though as we know this can only be a long-term solution.
With the economic signs already pointing to a sharp reduction in the rate of export growth Hongkong cannot view the prospects for 1972 with much hope.
It is, of course, true that Hongkong has far less to worry about than Britain with almost a million unemployed or the United States with 4.8 million out of work. But the fortunes of our people are closely linked with trade and industry and particularly textiles - and general standards of living and the level of social welfare can only improve as long as the economy stays buoyant. Unlike Britain Hongkong cannot afford a setback.
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It is in these terms that the British decision must be viewed and it is bound to produce a sense of widespread concern.
9/11/711
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