ENG-1961 — Page 107

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INDUSTRY AND TRADE

on 30th June. Four members of the Cotton Advisory Board accom- panied the Financial Secretary to London in August for detailed negotiations on certain of the Secretary of State's proposals and at the end of the month the Board advised acceptance of a new undertaking for the period 1st February to 31st December 1962. Its terms provided that the basic quota for the eleven-month period be increased to an annual rate of 185 million square yards from 164 million square yards annual quota under the original agree- ment. Of this amount a minimum of 100 million square yards is for piecegoods and a minimum 65 million square yards for made- up goods (which are subject to separate limitation for the first time). The remaining 20 million square yards are to be allocated at the discretion of the Hong Kong Government. An additional 10 million square yards were added to the quota under the exist- ing agreement for the remainder of 1961. Besides these amounts supplementary quotas may be available quarterly, based on an entitlement of the three principal Commonwealth producers to a fixed percentage share of the British market for retained imported cloth; the arrangement provides for a progressive abatement of the supplementary quota if order books in Britain are less than twenty weeks.

The development of the European Common Market, and in particular the possible association of Britain with it, is a subject of great importance to Hong Kong and one which was kept con- stantly under review during the year. While the reasons prompting the British approach were understood, there were apprehensions over the effects of any decision by Britain to join an association some of whose members tend towards protectionism. Such a deci- sion could seriously affect not only trade with Britain which takes upward of 20% of Hong Kong's domestic exports, but also the structure of Commonwealth Preference; Hong Kong currently sells over a third of her manufactured goods in preference markets.

The general committees of the Hong Kong General Chamber of Commerce and the Federation of Hong Kong Industries had the opportunity of discussing these problems with the Rt Hon F. J. Erroll, Minister of State, now President of the Board of Trade, when he visited Hong Kong in October. Mr Erroll's programme included discussions with Government, visits to three leading factories, and the formal opening of a new electrical engineering