TNAG-0629-FCO40-777-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1988 — Page 71

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5. Mention is also made of the difficulties of moving labour from textiles into other industries. This would appear to be a new argument on Hong Kong's part since mobility of labour has often been high when circumstances have rendered this desirable.

Paragraph 6

6. It is stated that the Commission's proposed cut-back would reduce the growth in GDP by about 12 percentage points. This is based on the premise that the volume of Hong Kong's domestic exports is roughly equal to the size of the GDP (see paragraph 5 of the detailed memorandum). In fact, it is understood that the volume of Hong Kong's domestic exports is 70% of GDP (GDP 1976 = HK$47,114 millions; exports = HK$32,629 millions). This would mean that the growth in GDP would be reduced by 0.77% and not by about 1.5%.

DETAILED MEMORANDUM

Paragraph 4.4

7. The point about the difficulties of moving labour into other manufacturing industries is developed but reference is also made to the increased demand for labour in the building and construction industries and in the consumer services sector. This increased demand would cushion some of the employment effects of the decline in textile exports. It is admittedly stated that this increased demand in other sectors would probably not be sustained but this point remains unproven.

Paragraph 5.3

8.

It is argued that a slowing down in the growth rate of exports is likely to co-incide with a falling off in private demand in building and construction activity. It is understood, in fact, that the present demand from the private sector for building and construction resources is restricted by the Hong Kong Government's own demand for labour etc. If the Government's demand should be reduced, private demand could, it would seem, fill the vacuum.

Paragraph 6.2

9. It is undeniable that textiles and clothing dominate Hong Kong's export industry constituting, as they do, more than 50% of the total. This has been in part attributed to the Chinese industrialist's habit of exploiting an already successful business avenue. More and more resources have been devoted to textiles because that is a successful field. As Hong Kong admit, it would be in their own interest to diversify and the Commission's ideas could have a salutary effect by obliging Hong Kong businessmen to invest in other fields.

Paragraph 6.3

10. The Hong Kong Trade Development Council have presumably explored the possibility of opening up new markets, eg in the Arab countries, but this point is not mentioned.