ENG-1998 — Page 151

TRADE AND INDUSTRY

quantitative restrictions against textiles products from the HKSAR on December 31, 1998. The HKSAR continues to monitor closely the implementation of the ATC and the functioning of the Textiles Monitoring Body, the ATC's supervisory body. Through the co-ordination of the International Textiles and Clothing Bureau (of which Hong Kong is a member), the HKSAR and a group of developing country exporters of textiles work together to ensure that the liberalisation process under the ATC is on course, and to explore possibilities for further-liberalisation.

The HKSAR continued to co-operate with relevant trading partners with a view to enhancing the effectiveness of efforts against illegal textile transhipment. In September 1998, the HKSAR and the USA signed a Memorandum of Understanding to further enhance co-operation in combating illegal transhipment. At the same time, the USA agreed to remove the additional documentation requirements imposed in June 1996 on garment imports from Hong Kong.

Non-Textiles Issues

With the coming into effect of the General Agreement on Trade in Services (GATS) when the WTO was established in January 1995, global trade in services is now governed by a legally enforceable multilateral agreement. The HKSAR plays an active role in the WTO to ensure the proper functioning of the GATS and progressive liberalisation of trade in services. During the year, the HKSAR continued to monitor closely the implementation of the multilateral agreements on basic

telecommunications and financial services.

The agreement on basic telecommunications, which came into effect on February 5, 1998, opens up a huge telecommunications market globally, estimated at US$760 billion per annum. The commitments made pursuant to the financial services negotiations concluded on December 13, 1997, are scheduled to come into effect on March 1, 1999, subject to ratification by members by January 29, 1999. These commitments will open up financial markets which account for over 95 per cent of the world trade in financial services.

The HKSAR Government continued to be concerned with the adverse effects on Hong Kong's economy if the USA were to withdraw China's Most Favoured Nation (MFN) trading status, or to impose conditions on the renewal of the status. On June 3, President Bill Clinton announced his decision to renew China's MFN trading status unconditionally for another year. A resolution disapproving his decision was introduced but was voted down in the House of Representatives on July 22. The outcome removed for the time being uncertainty over Sino-US trade relations, and allowed Hong Kong business people to plan and conduct their operations accordingly. Also on July 22, Mr Clinton signed into law the replacement of the term 'MFN' by 'NTR' (Normal Trade Relations). The Mainland and the USA are Hong Kong's two largest trading partners and good relations between them are of vital importance to the HKSAR maintaining its status as a trading, financial and investment centre.

Hong Kong graduated from the Generalised System of Preferences (GSP) Scheme offered by Switzerland and the EU in March 1998 and May 1998 respectively. These schemes provided preferential access to Hong Kong products to these markets but their importance had declined over time as the tariff differentials between the MFN rates and the GSP rates were reduced following multilateral trade liberalisation efforts.

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