TNAG-0630-FCO40-778-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1988 — Page 103

GPS 250

PRIORITY

CONFIDENTIAL

CYPHER CAT A

HKK 12

7616/

R.

Y NO./51

36

FM FCO 281751Z

RY

Taken

INDET

CONFIDENTIAL

TO PRIORITY HONG KONG TELNO 744 OF 28 SEPTEMBER,

FROM STEWART FOR DORWARD, ACTING DIRECTOR OF CUSTOMS,

TRADE AND INDUSTRIES

HONG KONG AND THE MFA

LEFT

201

1. I PROMISED TO LET YOU HAVE OUR FURTHER THOUGHTS ON THE

QUESTION, RAISED IN THE GOVERNOR'S MEETING WITH FCO MINISTERS ON 26 SEPTEMBER, OF THE LIKELY EFFECT ON HONG KONG'S PROJECTED

GDP GROWTH RATE IF THE COMMISSION'S PROPOSALS WERE ACCEPTED.

2. THE GOVERNOR'S CLAIM THAT THE GROWTH IN GDP WOULD BE REDUCED

BY 1 1/2 PERCENTAGE POINTS AS A RESULT OF THE COMMISSION'S

PROPOSALS WAS DERIVED FROM THE ESTIMATE THAT THOSE PROPOSALS WOULD

PRODUCE A 1 1/2 PERCENT DROP IN DOMESTIC EXPORTS, AND FROM THE

CLAIMS THAT DOMESTIC EXPORTS FROM HONG KONG ARE ROUGHLY EQUAL TO GROSS DOMESTIC PRODUCT (PARAGRAPH 5.1 OF THE HONG KONG GOVERN- MENT'S MEMORANDUM OF 2 SEPTEMBER) BUT IN FACT DOMESTIC EXPORTS

IN 1976, AT HK DOLLARS 32,629M, WERE ONLY 69.3 PERCENT OF GDP.

OVER THE TEN YEARS 1967-76, DOMESTIC EXPORTS WERE EQUIVALENT TO

63.8 PERCENT OF GDP. THIS LATTER FIGURE APPLIED TO THE EXPORT

FIGURES GIVEN IN THE MEMORANDUM WOULD GIVE A DROP IN GDP IN

1978 OF 0.96 PERCENTAGE POINTS. THIS IS ADMITTEDLY SOMEWHAT HIGHER

THAN THE FIGURE OF 0.8 PERCENT WHICH WAS QUOTED. AT THE MEETING (AND WHICH WAS BASED PARTLY ON A MISCALCULATION). BUT IT IS

STILL WELL BELOW THE FIGURE OF 1.5 PERCENT CLAIMED BY THE

GOVERNOR,

OWEN

FILES:

HKGD

ETD

ECON D

PS/MR JUDD

FS/LORD GORONWY ROBERTS

MR CORTAZZI

COFIES TO:

HONG KONG GOVT OFFICE

CONFIDENTIAL