TNAG-0462-FCO40-527-Entitlement-of-Hong-Kong-to-EEC-Generalised-Scheme-of-Prefer-1974 — Page 68

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IT SEEMS CLEAR, THEREFORE THAT SINCE THE TARIFF QUOTAS REMAINED

UNFILLED IN EVERY CATEGORY WHERE HONG KONG REACHED THE BUTOIR,

IT CANNOT BE SAID THAT HONG KONG HAS PREVENTED OTHER BENEFICIARIES

FROM SECURING BENEFITS.

TWO OTHER COUNTRIES, YUGOSLAVIA AND SOUTH KOREA, HAVE SIGNI- FICANT BUTOIR RECORDS WITH THE FORMER REACHING THE BUTOIR IN 28

CATEGORIES IN 1972 AND IN 29 CATEGORIES IN 1973 AND THE LATTER IN

13 CATEGORIES IN 1972 AND IN 17 CATEGORIES IN 1973. AN EXAMIN-

ATION OF THE COUNTRY-BY-PRODUCT BREAKDOWN OF THE INCIDENCE

OF THE BUTOIR SHOWS THAT HONG KONG, YUGOSLAVIA AND SOUTH KOREA

ARE NOT REACHING THE BUTOIRS FOR THE SAME PRODUCTS.

IT IS PRESUMABLY ONE INTENTION OF THE BUTO IR SYSTEM THAT IT

SOULD DIVERT RADE FROM THE COUNTRY WHICH HAS REACHED THE BUTOIR,

TO THE COUNTRIES THAT HAVE NOT. THE LOWER THE BUTOIR, THE GREATER

THE AMOUNT OF TRADE LIKELY TO BE DIVERTED. IT WOULD THEREFORE

BE REASONABLE TO EXPECT THAT THE TRADE THAT WAS DIVERTED FROM

HONG KONG IN THE ITEMS WHERE HONG KONG HAD REACHED THE BUTOIR

WOULD BE COMPENSATED BY TRADE DIVERTED TO HONG KONG WHERE OTHERS

HAD REACHED THE BUTOIR. IN THE 25 ITEMS WHERE HONG KONG REACHED

THE BUTOIRS IN 1972 AND 1973, HONG KONG'S COMPETITORS HAD SIGNI-

FICANT TRADE IN 21 CATEGORIES BUT ON THE OTHER HAND IN THE 41

ITEMS WHERE HONG KONG'S COMPETITORS REACHED THE BUTOIRS, HONG

KONG HAD SIGNIFICANT TRADE IN ONLY 9 ITEMS. THERE HAS THUS BEEN

NO COMPENSATORY TRADE SWING TO HONG KONG.

THE EXPLANATION FOR THIS IS THAT, WHILE HONG KONG'S COMPETITORS CAN AND DO MANUFACTURE THE SAME RANGE OF ITEMS AS HONG KONG, HONG KONG DOES NOT AND CANNOT MAKE THE SAME RANGE OF PRODUCTS AS

HER COMPETITORS. THIS IS BECAUSE OF THE ECONOMIC AND PHYSICAL LIMITATIONS OF HONG KONG WHICH HAVE DICTATED A CONCENTRATION OF INDUSTRIAL PRODUCTION INTO A RELATIVELY SMALL RANGE OF GOODS.

IT IS THEREFORE THE VIEW OF THE HONG KONG GOVERNMENT THAT THE

BUTOIR SYSTEM AS IT IS ALREADY OPERATING IS ACHIEVING ITS PURPOSE OF ENSURING THAT NO ONE BENEFICIARY SHOULD GET A DIS PROPORTIONATE SHARE OF THE BENEFITS AVAILABLE UNDER THE SCHEME.

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