ENG-1974 — Page 43

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INDUSTRY AND TRADE

light manufactured products such as fabricated metal goods, travel goods, watches and clocks and footwear were also important exports. However, as the world price level of primary products rose relative to that of manufactures, Hong Kong's terms of trade became less favourable.

The direction and level of Hong Kong's export trade is influenced principally by economic conditions and commercial policies in its main markets. During the year, 61 per cent of all domestic exports by value went to the United States and the enlarged European Economic Community. The United States alone absorbed 32 per cent (35 per cent in 1973), while Britain took 12 per cent (14 per cent in 1973) and West Germany 11 per cent (10 per cent in 1973). Other important markets were Australia, Japan, Singapore, Canada, the Netherlands, Sweden and Taiwan.

Hong Kong's traditional entrepôt trade continued to be about 24 per cent by value of total exports in 1974. Japan was still the largest re-export market, followed by Singapore, Taiwan, Indonesia and the United States. The principal commodities re-exported were textiles and clothing, diamonds, watches and clocks, electrical ma- chinery, apparatus and appliances, crude vegetable materials, medicinal and pharma- ceutical products, dyeing, tanning and colouring materials and plastic moulding materials. The principal sources of re-exports were China, Japan and the United States.

International Economic Relations

Hong Kong's external commercial relations are conducted by the Commerce and Industry Department within the framework of a basically free trade policy. Hong Kong practises 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 obligations. Most prominent among these are restraints on textile ex- ports to most major trading partners. These arrangements come under the umbrella of the Arrangement Regarding International Trade in Textiles (MTA) which replaced the Cotton Textiles Arrangement (CTA). Britain acceded to the MTA on behalf of Hong Kong on February 25, 1974. One of the new features of the MTA was the establishment of a Textiles Surveillance Body (TSB) to supervise the implementation of the arrangement.

During the year, as a result of negotiations under the MTA, bilateral agreements were concluded with a number of countries whereby exports of certain textiles from Hong Kong to these countries were placed under restraint. These include a Hong Kong-United States textiles agreement which became effective on October 1, for three years and covering all exports of cotton, wool and man-made fibre textiles to the United States. Bilateral agreements with Sweden and Australia became effective on July 1, for one year. These cover exports of certain garment items.

Consultations were held in Oslo in June with the Norwegian Government regarding a new bilateral textiles agreement under the MTA. Pending finalisation of the new agreement, Hong Kong unilaterally introduced export restraints on four garment items for one year from July 1.