TNAG-0630-FCO40-778-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1988 — Page 105

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CONFIDENTIAL

JKK 121/616/1

MR QUAY TRILL

See minute below 8228/4

Mr JAB Stewart

377

Flag A

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HONG KONG AND THE MULTI-FIBRE AGREEMENT

1.

MANHATTAN WEAr with the

You asked for further thoughts on the question of the effect on the growth of Hong Kong's GDF if the Commission's proposals as envisaged were to be approved.

2. The memorandum attached to the Governor's letter of 3 September suggested that the effect would be a cut in the growth rate of the order of 1.5 percentage points. It explained that, in the Hong Kong Government's view, the prop- osals, if accepted, would reduce the growth in exports by 1.5 percentage points and that since Hong Kong's GDP is roughly equal to its exports, they would have the same effect on the growth of GDP.

3.

This view was disputed by this department (paragraph 6 of the attachment to Mr Milton's submission of 8 September). Our argument was that based on 1976 figures, Hong Kong's domestic exports are only 70% of GDP. As a result we stated that the effect on the growth of GDP would be a reduction of 0.77 percentage points rather than 1.5 percentage points. However, I would suggest that if one accepts the 1976 proportion as 70% (or more accurately 69%) then the true effect would be a reduction in the growth of GDP of 69% of 1.5 percentage points, ie 1.04 percentage points.

4.

a

However, the truer picture can be gained by considering the average proportion of exports to GDP over the ten years 1967 to 1976. This gives a figure of 63.8%. and this a

reduction 10.96

d 0.96 perce

percentage

uts

5. I have discussed this minute with Mr Hull of the Economists Department who is in agreement with it.

J Thompson

upr

27 September 1977

Hong Kong & General Dept

* This assessment is based on

am figures

Siguse attached.

Ha

Hong Kong

Summary of duct is

CONFIDENTIAL

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