ENG-1973 — Page 48

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INDUSTRY AND TRADE

vegetable materials, watches and clocks, textiles and clothing, machinery, dyeing, tanning and colouring materials, and coffee. Re-exports of goods originating from China represented the largest share of re-exports of goods from all sources, accounting for 24 per cent of total re-exports, followed by goods from the United States and Japan.

International Economic Relations

The Commerce and Industry Department is responsible for the conduct of Hong Kong's external commercial relations. These are conducted within the framework of a commercial policy which is basically one of free trade. Hong Kong practices to the full the rules of the General Agreement on Tariffs and Trade (GATT) and virtually the only restrictions maintained on trade are those required by international obliga- tions. Most prominent among these are restraints on textile exports to most major trading partners. The majority of these were negotiated under the terms of the Cotton Textiles Arrangement (CTA) which expired on December 31, 1973. The CTA had been in existence for more than 11 years and at the time of its expiry more than 50 per cent of Hong Kong's textile exports were subject to restraints negotiated under its terms or, in the case of textiles other than cotton, negotiated broadly in conformity with its principles.

During 1973 intensive activity took place in Geneva under the auspices of the GATT to consider what, if anything, should replace the CTA. This culminated in a series of negotiations during the last quarter of the year, in which Hong Kong played an active part, and which resulted in the drawing up of an arrangement regarding international trade in textiles. This new arrangement, to last for four years from January 1, 1974, covers cotton, wool and man-made fibre textiles. Its objectives are broadly the same as the CTA, namely to avoid market disruption and the orderly development and expansion of international trade in textiles. The widening of its coverage represents in part the technological developments of the last decade which resulted in man-made fibres becoming increasingly a substitute for natural fibres. This change had in fact been reflected in a number of the bilateral agreements which Hong Kong had concluded with its major trading partners or in export restraints which Hong Kong had introduced unilaterally. Under the terms of the new arrangement, all of these restraints will require re-negotiation. These negotiations will, as is general practice, be conducted by the Commerce and Industry Department. It is anticipated that, as a result of the improved terms which it was possible to inscribe in the new arrangement, the existing bilateral agreements which Hong Kong has with a number of its trading partners will be substantially improved.

The other major GATT activity in the course of 1973 was the launching of a new round of multilateral trade negotiations with the object of achieving further liberalisa- tion of world trade in regard to both tariffs and non-tariff barriers. Hong Kong was represented by the Director of Commerce and Industry at a ministerial meeting in Tokyo in September 1973. At that meeting he delivered a statement declaring Hong Kong's intention to participate in the negotiations which are expected to last until the end of 1975.

Another issue of considerable importance to Hong Kong concerned the various generalised preference schemes. These schemes, operated by most of the developed