ENG-1981 — Page 45

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INDUSTRY AND TRADE

Exports to the members of the Organisation of Petroleum Exporting Countries (OPEC) continued to grow in 1981.

Re-exports continued to increase substantially in 1981, accounting for 34 per cent of the combined total of domestic exports and re-exports. The principal commodities re-exported were textiles ($6,981 million), photographic apparatus, equipment and sup- plies, optical goods, watches and clocks ($3,393 million), electrical machinery, apparatus and appliances ($3,069 million), pearls, precious and semi-precious stones ($2,342 million), road vehicles ($2,340 million), and clothing ($2,197 million). The main countries of origin of these re-exports were China, Japan, the United States and Taiwan. The largest re-export markets were China, the United States, Indonesia and Singapore.

International Commercial Relations

Hong Kong's external commercial relations are conducted by the Trade Industry and Customs Department within the framework of a basically free trade policy. Hong Kong practices, to the full, the rules of the General Agreement on Tariffs and Trade (GATT). Virtually the only restrictions maintained on trade are those required by international obligations. Most prominent among these are restraints on textile exports to most major trading partners. All these restraint arrangements were negotiated under the Arrangement Regarding International Trade in Textiles, commonly known as the Multi-Fibre Arrange- ment (MFA). A feature of the MFA is the Textiles Surveillance Body (TSB) which supervises its implementation. A Hong Kong representative sat on the TSB as a member in 1981.

As a result of negotiations under the MFA, bilateral agreements were concluded during the year with Sweden and Switzerland. The agreements concluded with Austria and Finland in 1980 remained effective until January 1982 and July 1982 respectively. Under the terms of these agreements, exports of certain textiles from Hong Kong to these countries were placed under restraint or surveillance.

The current bilateral agreement with the European Economic Community has a duration of five years from January 1978 and covers all of Hong Kong's exports of cotton, man-made fibre and wool textiles to the EEC. Exports in 49 categories of textile products are under specific restraint, while exports in the remaining categories are subject to the Export Authorization Scheme operated by the Trade Industry and Customs Department. On January 1, 1981, Greece acceded to the EEC to become its tenth member. Following three rounds of consultations, agreement was reached with the EEC on the adaptation of the Hong Kong/EEC Textiles Agreement to take into account the accession of Greece.

Following consultations with the United States in March 1981, Hong Kong agreed that in 1981 it would not use the carryover and carryforward provisions of the agreement on certain cotton and man-made fibre apparel product categories and that it would limit utilisation of swing for some of these categories. In return, the 1981 restraint limits of certain cotton product categories were increased.

The Hong Kong/United States administrative arrangements on trade in certain non- rubber footwear which came into effect in October 1978 expired on June 30, 1981. The United States decided not to seek an extension of the arrangement with Hong Kong.

The bilateral textile agreement with Canada, which covers most of Hong Kong's exports of cotton, man-made fibre and wool textiles to Canada, expired on December 31, 1981, Following negotiations between Hong Kong and Canada in July 1981, an ad referendum agreement was reached providing for the extention of the bilateral agreement, with certain modifications, for a further period of one year commencing January 1, 1982.

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