ENG-1982 — Page 45

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INDUSTRY AND TRADE

The bilateral textiles agreement between Hong Kong and the European Economic Community covering the five years commencing 1978 expired at the end of 1982. Following negotiations under the MFA, a new bilateral agreement was concluded with the EEC which has a duration of four years from January 1983, and covers all Hong Kong's exports of cotton, man-made fibres and wool textiles, to the EEC. Under the new agreement, exports in 46 categories of textile products are subject to quantitative restraint, while exports in the remaining categories are subject to the department's Export Authorisation System.

Negotiations between Hong Kong and Canada were held in February 1982 with a view to concluding a long-term agreement governing most of Hong Kong's exports of cotton, man-made fibre and wool textiles to Canada. As a result of these negotiations, an agreement of five years' duration was reached with effect from January 1, 1982. The agreement provides for specific restraint on 16 textile categories while exports in 10 other categories are subject to the export authorisation surveillance system.

Under the MFA, bilateral agreements were renegotiated during the year with Finland, Switzerland and Austria. The agreement concluded with Sweden in 1981 remains effective until March 1983. Under the terms of the agreements, exports of certain textiles from Hong Kong to these countries were placed under restraint or surveillance.

Norway's action against certain textile imports, which was introduced on January 1, 1979, under Article XIX of the GATT, remained in force during the year. The action was in the form of global import quotas, but it had a discriminatory effect against Hong Kong. Following a complaint made by Hong Kong to the GATT Council in July 1979, a GATT panel, in its report submitted to the GATT Council in March 1980, concluded that Norway had failed to make its action consistent with Article XIII of the GATT by not allocating to Hong Kong an appropriate share of the so-called global quotas; such a measure constituting prima-facie a case of nullification or impairment of Hong Kong's rights under the GATT. Notwithstanding the GATT Council's adoption in principle of the report in June 1980 and recommendation to the Norwegian Government to make its action consistent with the GATT as soon as possible, bilateral consultations subsequently held between the two governments failed to resolve the issue.

France maintains quantitative restrictions against imports from Hong Kong in respect of a number of products, including quartz watches. Hong Kong believes that the French action is discriminatory against Hong Kong and is in contravention of France's obligations under the GATT. Several rounds of consultations on the issue were held with the Commission of the European Communities, representing France, but did not produce a mutually acceptable solution. As a result, in September 1982 Hong Kong requested the GATT to convene a panel to consider its complaints against the French action and to make a ruling on the matter.

A major event in GATT activities during 1982 was the ministerial meeting held in November in which Hong Kong participated fully. The meeting was designed to give impetus to improve the multilateral trading system. At the meeting, ministers discussed the problems affecting the trading system, the position of developing countries in world trade, future prospects for the development of trade, and future priorities for co-operation among GATT contracting parties. The meeting concluded with the adoption of a ministerial declaration whereby the contracting parties of the GATT reaffirmed their commitment to abide by their GATT obligations and to further liberalise international trade. The declaration also covered various specific issues, of which the most significant to Hong Kong concerned world trade in textiles and clothing. It was agreed that an in-depth study on that

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