70-71
C73
DIRECTOR OF
COMMERCE AND INDUSTRY
KONG
13 DEC 1971
ERSITY
UNIV
OF
HONG
KONG
Annual Departmental Report
HONG KONG
ANNUAL DEPARTMENTAL REPORT
BY THE
DIRECTOR OF COMMERCE AND INDUSTRY
J. CATER, M.B.E., J.P.
FOR THE
FINANCIAL YEAR 1970-71*
PRINTED AND PUBLISHED BY J. R. Lee, GovernmENT PRINTER AT THE GOVERNMENT PRESS, JAVA ROAD, HONG KONG
1st April 1970 - 31st March 1971
EXCHANGE RATES
When dollars are quoted in this Report, they are, unless otherwise stated, Hong Kong dollars. The official rate for conversion to pound sterling is HK$14.55=£1 (HK$1=approx. 7p). The official rate for conversion to U.S. dollars is HK$6.06= US$1 (based on £1=US$2.40).
87454-15K-10/71
Chapter
1.
2.
CONTENTS
REVIEW OF THE YEAR 1970-71.
COMMERCIAL RELATIONS 'E' DIVISION (EUROPE)
GENERAL
INDIVIDUAL COUNTRIES
Paragraphs
45
1 - 44
Austria
46 - 49
The Benelux Countries
50 - 52
Federal Republic of Germany
53 - 56
France
57 - 58
Italy
59 - 61
•
Greece
62 - 63
Norway
Republic of Ireland .
Sweden
United Kingdom
64 - 65
66
67 - 68
69 - 76
3. COMMERCIAL RELATIONS 'R' DIVISION-REST OF
WORLD (OUTSIDE EUROPE)
INTERNATIONAL TRADE ORGANIZATIONS
General Agreement of Tariffs and Trade
(G.A.T.T.)
United Nations Conference on Trade and
Development (U.N.C.T.A.D.)
77 - 82
83
84 - 85
Committee
86
United Nations Economic Commission for Asia
and the Far East (E.C.A.F.E.)
International Cotton Advisory
(I.C.A.C.)
iii
Chapter
Paragraphs
INDIVIDUAL COUNTRIES
Australia
Canada
Indonesia
•
+
•
United States of America .
•
87 - 90
91 - 92
93
94 - 101
4.
OVERSEAS OFFICES
LONDON OFFICE
102 - 106
BRUSSELS OFFICE .
107 - 110
GENEVA OFFICE
111 - 122
WASHINGTON OFFICE
123 - 128
5.
INDUSTRY DIVISION
CERTIFICATION BRANCH
Policy
129
130 - 133
134
General
Fees for Certificates of Origin .
Standard Certificates of Origin .
Commonwealth Preference Certificates
Comprehensive Certificates of Origin
Agricultural Products
Hair Wigs .
Revision of C.C.O. Procedures.
Certificates of Processing.
Miscellaneous Certificates .
•
135 - 138
139 - 140
141
142
143
144
+
145
146
Co-ordination of Certification Procedures with
Approved Non-Government Organizations. 147 - 148
iv
Chapter
INDUSTRY INSPECTION BRANCH
General
Inspections
Static Inspection Control .
Container 'Call' Service
Kai Tak Import Control
·
Industrial Surveys
·
Paragraphs
149
150
151
•
152 153
154
155
-
Investigations
Anti-Corruption Measures.
Branch Accommodation
INDUSTRIAL DEVELOPMENT BRANCH
REVIEW OF INDUSTRY
General Expansion
Textile Spinning and Weaving Industries
Textile Finishing Industry
156
申
•
157
158
. 159 - 165
166 - 169
170
Cotton Knitting Industry
171
Woollen Knitting Industry
172
Wearing Apparel Industry
173 - 174
Wig Industry.
175 - 176
Steel Industry
177
178
INDUSTRIAL PROMOTION
. 179
179 - 182
Loans for Small Industry Committee
183
Water Supply to Industry
184 - 185
Land and Industrial Buildings
186 - 188
HEALTH AND SAFETY STANDARDS OF HONG KONG
PRODUCTS
Health Standards
•
Safety Standards
189 - 190
191 - 192
•
193 - 200
Minor Complaints Regarding Safety Standards 201
V
Chapter
6.
Paragraphs
COPYRIGHT AND DESIGNS
Designs Registry and Copyright Legislation. 202 - 203 ECONOMIC COMMISSION FOR ASIA AND THE FAR
EAST
•
204 - 206
PREVENTIVE SERVICE AND DUTIABLE COMMODITIES
DIVISION
PREVENTIVE SERVICE
GENERAL
·
EXCISE
Hydrocarbon Oils Adulterated Liquor Illicit Distilling
PREVENTIVE OPERATIONS
Searches
Narcotics
.
Bullion
Marine
TRAINING AND ADMINISTRATION
Investigation
Training
Staff and Discipline
FOOD SUPPLIES .
DUTIABLE COMMODITIES BRANCH
Revenue from Excise Duties
(a) Tobacco .
(b) Hydrocarbon Oils
(c) Liquor
·
(d) Table Waters
Revenue from Licences
vi
. 207 - 209
210
211 - 213 214
•
215 - 218
219 - 220
221
222 - 224
225 - 230
231 - 242
·
•
243 - 248
249 - 250
251 - 254
•
255
·
256 - 257
258
·
259
•
260 261
Chapter
7.
GENERAL DUTIES BRANCH
TRADE LICENSING AND RESERVED COMMODITIES
Trade Licensing
Reserved Commodities
(a) Rice
(b) Frozen Meat
•
Paragraphs
262
263 - 267
268
269 - 275
8.
(c) Frozen Poultry
(d) Coal and Firewood
TRADE COMPLAINTS SECTION.
DEPARTMENTAL ADMINISTRATION
Senior Staff Changes
General
Organization
Establishment
Recruitment .
Promotions
TRAINING
WELFARE
Welfare Fund
•
Preventive Service Senior Officers' Mess.
Clerical Canteen
DEPARTMENTAL ACCOMMODATION
9. FINANCE AND STORES
REVENUE
EXPENDITURE
STORES
WELFARE FUNDS
vii
•
276 - 278
279
280
281 - 283
284 - 287
288
289
290
291
292
•
293 - 301
•
302
303 - 306
307
308
309 - 313
·
314
316
317 - 318
319 - 320
321
Table
TABLES
1. Certification of Origin Statistics
2.
Major Confiscations under other Legislation
3.
Confiscations under the Dutiable Commodities Ordinance, Chapter 109, and Dangerous Drugs Ordinance, Chapter 134
Page
75
76
77
4.
Duty from Dutiable Commodities (Gross)
78
5.
Revenue from Dutiable Commodities Licences, 1970-71.
80
6.
Trade Complaints from Overseas Companies or Indivi- duals Handled by the Department from 1.4.70 to 31.3.71
81
7.
Commerce and Industry Department, Hong Kong,
Organization Chart
82
8.
Net Revenue Collected from all Sources.
83
Vili
CHAPTER 1
REVIEW OF THE YEAR 1970-71
INTRODUCTION
HONG Kong's overseas trade continued to expand steadily in the calendar year 1970, although inflation and balance of payments prob- lems in the economies of our principal trading partners, and the recessions produced by policies designed to correct them, inevitably affected our trading results for the year. The value of domestic exports reached a new record level at $12,347 million, an increase of 17.4% over 1969 and more than doubling the figure for 1966:-much of the increase was, however, recorded in the first half of the year, the second half being less buoyant. Re-exports, which represented 19.0% of total exports, increased by 7.9% over 1969 and were valued at $2,892 million. Further advances were made in the U.S. market and exports to the Federal Republic of Germany, Japan, Australia, Taiwan, Singapore and Netherlands also increased. Decreases were recorded in exports to the Republic of Vietnam, Indonesia and the Philippines. Considerable gains were recorded in exports of clothing, textile fabrics, wigs, plastic toys and dolls, transistor radios and metal manufactures, whilst improvements were also achieved in the exports of metal scrap, artificial flowers, textile yarn, watches and clocks and plastic footwear.
2. Imports continued on an upward trend in 1970, reaching a new record of $17,607 million and increasing by 18.2% over the previous year. Japan continued to be Hong Kong's principal supplier, followed by China, U.S.A., Britain, the Federal Republic of Germany, Switzer- land and Australia.
EXTERNAL COMMERCIAL POLICY
3. The year was dominated by four issues, each of which in one way or another had major implications for the economic future of Hong Kong. They were the continued surge of protectionism in the United States, culminating in the so-called Mills Bill; the U.N.C.T.A.D. (United Nations Conference on Trade & Development) Generalized Preferences Scheme; the negotiations for British entry into the
1
European Economic Community, and the confirmation by the British Government of the raising of a tariff on cotton woven textiles and yarns entering the United Kingdom from Commonwealth countries as
from 1st January, 1972.
4. Not surprisingly, the possibility of widespread U.S. import restrictions, notably on textiles, caused grave concern in a community dependent on the U.S. market for over 40% of its export earnings. Whilst no one was naive enough to believe the problem was over. there was widespread relief when the draft legislation which would have brought such controls about was finally time barred and expired with the 91st Congress in January 1971.
5. The relief was, however, short lived, as Congressman Mills re-introduced his Bill in the 92nd Congress in the latter part of January 1971; but he announced that he would delay calling hearings to give a chance for bilateral negotiations to solve the textile problem which had been exercising many minds in most countries since Presi dent Nixon made an election campaign pledge in 1968 to assist the U.S. textile industry.
6. The U.S./Japanese negotiations, which had gone on through most of 1970, seemed to peter out with the old year. They were not formally terminated, however, until early March 1971 when the Japanese Government came out promptly with support for a unilateral declaration of self restraint made by the Japanese Textile Federation.
7. This demarche further complicated Hong Kong's position, since the Japanese declaration was conditional upon the other three major Asian suppliers of man-made fibre and wool textiles-Taiwan, Republic of Korea and Hong Kong in that order of magnitude- following suit. As the year under review ended, the subject was under active debate in trade, industrial and government circles; and especially in the Textiles Advisory Board.
8. The all out efforts by the United States to secure comprehensive wool and man-made fibre textile restraints by Japan (to be followed by the other three main Asian suppliers) also caused Hong Kong significantly to modify its policy in situations where selective restraints on its exports of cotton and similar man-made fibre textile products. to a particular market were agreed. Previously, Hong Kong had de- liberately forsaken commercial advantage in refusing to link cotton and non-cotton restraints in any way, even though such restraints were only conceded on evidence of injury to the industry of the importing
2
country, for fear of spreading textile restraints outside the field of cotton. Technological advances however have made certain man-made fibre and cotton textiles indistinguishable; this, coupled with the fact that comprehensive restraints were being sought by the U.S. without evidence of injury caused by imports, meant that the safe-guarding of the injury criterion was the only principle of over-riding importance. Therefore, it was concluded that where a case had been established of injury to domestic producers of particular textile products by exports from Hong Kong, our negotiators should seek the adding together of the export restraint limits for the cotton and the counter- part man-made fibre items, where both needed to be restrained. This modified policy was successfully applied in negotiations concluded with Sweden and Canada respectively in June and July 1970.
were
9. During the latter half of 1970 there was a gathering of momentum in regard to the creation of a new and widespread system of pre- ferential tariff treatment for developing countries-the U.N.C.T.A.D. Generalized Preferences Scheme. It became clear that instead of a uniform scheme, as previously envisaged, the so-called donor countries evolving systems tailored to their own individual situations. It also became apparent that, despite the agreement in principle reached in the O.E.C.D. in 1969, there was only going to be limited adherence to the 'self election' principle; that is to say, the principle whereby any would-be beneficiaries which claimed to be developing would be accepted as such, unless there were compelling reasons' (which, in theory, would not include competitiveness).
10. Although a typical developing country, Hong Kong's position as a beneficiary was soon subject to some doubt. We had always made it clear that we sought no additional benefits from the scheme; but we, and the many representatives of H.M. Government around the world who have served our interests so well in this context, have consistently argued that to exclude Hong Kong on the grounds of its successful trading record would be to give an uncovenanted advantage to our close competitors and seriously threaten our ability to sustain economic growth. It would mean, in effect, that by diverting trade away from Hong Kong, 'donor' countries would be giving preferences at our
expense.
11. This threat was particularly worrying in the context of Britain's E.E.C. negotiations. It was obvious that if these were successful the Commonwealth Preference system, which had for nearly 40 years
3
given Hong Kong a quasi-domestic market in Britain, would come to an end. And since it was fairly predictable, on the experience of the 1961-63 negotiations, that the Six would resist the British request that Hong Kong be accorded associated status, inclusion in the E.E.C. preference scheme became a critical matter. Fortunately this was agreed by the Community in March 1971. There was a qualifica tion that neither Hong Kong nor any other dependency would enjoy preferences on textiles or footwear; but as preferences on these items are strictly limited by tariff quotas and certain other conditions which will limit the extent to which others will benefit, this exclusion. while unfortunate, is of relatively small significance.
+
12. By the early part of 1971 it appeared virtually certain that Japan, a rapidly growing market for Hong Kong exports, would also grant preferences to us; although the conditions were still to be de-
termined.
13. The United States position on their preference scheme generally was still uncertain at the end of the year under review. The administra- tion had indicated its intention to submit its proposals to Congress at some date to be determined, but implementation before the end of 1971 seemed improbable. Naturally Hong Kong's place in this scheme, as and when it materializes, is a matter of very considerable concern. It is to be hoped that the U.S. will follow the lead of the E.E.C.
14. The foregoing developments were made no easier by the British Government's confirmation of its predecessor's proposal of July 1969 to proceed with plans to abandon the cotton textile quota arrangements which have been in force, in one form or another, since 1958, and to raise a tariff with effect from 1st January, 1972 on imports from the Commonwealth of cotton yarns, cotton woven fabrics and cotton woven made-ups and garments. An attempt was made to assess the effects of this British tariff proposal on the Hong Kong textile industry and representations were made to the British Government in an effort to delay its implementation until the position with regard to the United Kingdom's entry into the European Economic Community had become clearer. These representations were not successful, but with regard to the position of shipments of cotton textiles under quota in 1971 which could not clear United. Kingdom Customs until 1972, H.M. Government indicated in the latter part of March that it understood the problems of the Hong
4
Kong exporter, and that it was looking into the matter urgently and ympathetically.
CERTIFICATION OF ORIGIN
15. In the free port environment of Hong Kong, an efficient and eliable origin certification system is of considerable importance. Such system performs several functions. It helps to maintain un- nterrupted access to our foreign markets, it reassures the foreign buyer and his Government and protects their interests; and, by so doing, it promotes exports of domestic manufactures. The Hong Kong certification of origin system is unique in that Government accepts central role in its administration. The entire system is backed by legislation and Government takes its responsibilities in this field very seriously.
16. During the year under review, the department carried out 303 investigations of possible certification offences. As a result 186 cases were prosecuted through the courts which awarded fines totalling $307,037. Only in a very few of these cases, however, was there any attempt to describe foreign origin goods as being of Hong Kong origin. 17. Developments in Hong Kong's major markets and in the international commercial relations field which could have significance for the certification system have been kept under review. These included the U.N.C.T.A.D. Generalized Preferences Scheme (para- graphs 9-13), Britain's entry into the European Economic Com- munity (paragraphs 73-75), and the replacement in Britain of cotton quota controls by an import tariff with effect from 1st January, 1972 (paragraph 14). These developments are likely to require substantial changes in the certification system in Hong Kong. The changing policy of the United States towards trade with China will also affect the comprehensive certificate of origin system which during the year under review applied to 24.4% of our exports of domestic products to the United States.
18. It is of interest to note the extent of the Hong Kong origin certification system. In 1970-71, the department had over 220 officers employed in the Certification Branch and the related Industry Inspection Branch which jointly administer the certification system. The number of firms and factories registered with the department for certification purposes rose to 10,780 in March 1971, representing an increase of 4.2% over the previous year. 337,858 Standard, Commonwealth Preference and Comprehensive Certificates of Origin were issued
5
by the department during the year for goods valued at $5,764 million, representing 45.7% of Hong Kong's total exports of domestic products
during the period.
Expansion of Industry
INDUSTRIAL DEVELOPMENT
19. There was a sustained growth in Hong Kong's industry during 1970-71, although, compared with previous years, the overall rate of expansion was relatively modest. Exports of domestic products increased in value by 14.7% over the previous year and employment in industry was 593,494 in March 1971 compared with 568,787 a year before, an increase of 24,707 people employed or 4% of the
March 1970 work force.
20. Significant progress was made by manufacturing industry in diversification of products and in achieving greater productivity. The textile (including garments) industry, which maintains its traditional role as the largest employer and export earner, has recorded sub- stantial expansion in the use of man-made fibre materials. Remarkable progress has also been made in the electronics industry whose annual exports increased from $907 million in 1969-70 to $1,116 million in 1970-71 despite a smaller labour force and difficulties resulting from the economic downturn in the U.S.A., its major market. The toy industry also made substantial gains in exports by means of a wider range of higher quality products. Hong Kong is now, as a result, the world's second largest exporter of toys and may well overtake Japan during the next two or three years.
Productivity, Design and Packaging
21. During the year, the Hong Kong Productivity Centre continued to provide a comprehensive training programme on various subjects related to productivity and to provide consultancy and other services to industry.
22. The Design Centre of the Federation of Hong Kong Industries initiated a design competition and exhibition to stimulate design con- sciousness in the industrial sector, and also offered design education in the form of lectures and seminars, during the year. These develop- ments and other work in this field by the Industrial Design Council will promote further improvements in the quality and saleability of Hong Kong products.
6
23. The Hong Kong Packaging Council was established by the Federation of Hong Kong Industries in January 1970 to promote the development of packaging education and technology. In its first year of operation, the Council organized seminars and training courses and bi-monthly news-sheet, 'Packaging Today'. Other activities issued a ncluded a mini-survey on consumer packaging, carried out with the assistance of the Department, a competition in packaging design, an Air-freight Packaging Exhibition and the display of Hong Kong prize- winning packagings at an exhibition in Sydney. The Council also represented Hong Kong at various international functions, such as the Board of Administration meeting of the Asian Packaging Federation, the World Packaging Congress and the TOKYOPAK' 70.
Industrial Training Advisory Committee
24. The Industrial Training Advisory Committee presented its final report to His Excellency the Governor on 31st March, 1971. The report embodies the results of over five years' continuous work by the Committee and the recommendations contained therein, in partic- ular the recommendation to establish permanent advisory and co- ordinating machinery in this field, will provide a broad basis for consideration of the future development of industrial training in Hong Kong. It will be carefully studied by various interested organizations and government departments.
25. Arrangements have been made to publish the report in both Chinese and English to give it the widest possible circulation.
Loans for Small Industry Committee
26. Following the receipt of comments from Government, the univer- sities, and commercial and industrial institutions on the report of the Loans for Small Industry Committee, the Trade and Industry Advisory Board reconvened the Committee in order to consider amend- ments to the original proposals to take account of the various comments. The Committee was expected to submit a further report shortly after the end of the year under review.
Industrial Investment Promotion
27. The promotion of foreign participation in Hong Kong industry, with a view to augmenting its technological, managerial, and marketing expertise, is an important function of the Industrial Development
7
vision of detailed information on all aspects of the economy likely Branch, and potential investors continued to be assisted by the pro- to be of interest to them. Many were directly assisted in finding suit. able sites or premises and were helped wherever possible once they commenced operation. A 1970 survey conducted by the branch showed that 161 manufacturing companies in Hong Kong were either fully or partly owned by foreign interests. They employed over 9% of all workers in manufacturing industry and were responsible for about 12% of all exports of domestic products. Total investment in these undertakings amounted to about $808 million.
28. During the year, the department and the Trade Development Council formulated a joint overseas industrial promotion policy under which the Trade Development Council will actively publicize Hong Kong overseas (in the first instance in the United States), as an attractive site for industrial investment. The department will provide back-up services to the Council. A new edition of the publication 'Industrial Investment Hong Kong' as well as a new publicity pamphlet were under preparation by the branch at the end of the year.
Health and Safety Standards
29. Although a number of complaints were received by the depart- ment regarding the health and safety standards of some Hong Kong products, the Colony has in fact a very good record in this field, if the fact that Hong Kong exports thousands of categories of con- sumer goods every month is taken into account. The more serious complaints the department received last year are enumerated in paragraphs 195, 198 and 201 of Chapter 5. The department's work in this regard has been greatly facilitated by the co-operation received from the Federation of Hong Kong Industries, the Hong Kong Productivity Centre, and the Public Works, Medical and Health, and Urban Services Departments.
PREVENTIVE SERVICE AND REVENUE
Preventive Measures
30. Illicit distilling and the illegal removal of markers from industrial diesel oil have both been brought under control and are no longer the cause of large scale losses of revenue, but the operations of those still engaged in these activities are becoming increasingly
8
ophisticated and difficult to detect. Action against adulterated liquor manufactures has been only partially successful and the manufacturers ave temporarily disappeared from their usual haunts whilst still maintaining contact with customers.
Narcotics
31. Action taken against the importation of dangerous drugs ncluded the examination of cargo aboard 1,606 vessels and more than wo million checks on luggage.
Jutiable Commodities Revenue
was
32. Net revenue collected from dutiable commodities and licences $417,231,000, an overall increase of 10.1% compared with the previous financial year. The main contributions to the increase came from hydrocarbon oils and liquor which rose by $20.3 million and $18.2 million respectively. Revenue from tobacco reached the revised estimate of $125 million and that from table waters increased slightly by 2% to $10.1 million.
MISCELLANEOUS
Rice
33. The world rice supply situation was generally one of surplus as a result of improved harvests in most producing countries and as efforts towards self-sufficiency in most importing countries were increasingly successful. Export availabilities in 1970 substantially exceeded import requirements and competition for export outlets became more intense.
34. World rice prices generally continued to decline. As a result local import prices for Thai rice were lower than the previous year's levels. China rice prices also reacted downwards. Local wholesale prices followed this trend and the improvement was reflected in the better quality of rice sold by retailers. Retail prices also showed some signs of decline during the first quarter of 1971.
35. Per capita rice consumption, which appeared to have reached a platform in 1969-70, increased slightly during the year. For the greater part of the year rice stocks were held at about 76,000 tons.
9
ADMINISTRATION
36. The Honourable T. D. SORBY, J.P., who had been Director of Commerce and Industry since November 1966, retired from the service of the Hong Kong Government during the year on his appointment as Executive Director of the Trade Development Council. I succeeded Mr. SORBY in September 1970.
Advisory Boards
37. The terms of reference of the Trade and Industry Advisory
Board are---
'To advise the Director of Commerce and Industry on matters other than labour affecting the Colony's trade and industry.'
38. During the year, the Board met on 10 occasions and discussed a range of important subjects, the major ones being the draft regula- tions to be made under the Import and Export Bill, 1970, Hong Kong's position in relation to Britain's negotiations to enter the European Economic Community (E.E.C.), Generalized Preferences, and the Report of the Loans for Small Industry Committee. Membership of the Board at the end of the year comprised the Hon. T. K. ANN, O.B.E., J.P., the Hon. K. S. Lo, J.P., Mr. H. M. G. FORSGATE, J.P.. Mr. Daniel S. H. LAM, J.P., Mr. M. C. LEE, Mr. Andrew S. F. LIN, Mr. H. T. LIU, Mr. R. E. MOORE, J.P., Mr. T. D. SORBY, J.P., Mr. P. G. WILLIAMS, J.P., Mr. James M. H. Wu, J.P. and the Deputy Economic Secretary. Mr. M. CURRAN, J.P., resigned from the Board on 31st January, 1971, after having served on it since 1969.
39. The Director of Commerce and Industry is also the Chairman of the Textiles Advisory Board whose terms of reference are-
"To advise the Director of Commerce and Industry on any matter other than labour matters, which affects the textile and garment industries.'
40. Members during the year were-Dr. the Hon. Sir Sik-nin CHAU, C.B.E., J.P., the Hon. S. S. GORDON, C.B.E., J.P., Mr. R. P. PARCell. M.B.E., Mr. LAM Kun-shing, J.P., Mr. Francis Y. H. TIEN, M.B.E., J.P., Mr. Y. L. YANG, J.P., Mr. CHEONG Ying-chan, Mr. C. K. CHOW, Mr. Frank H. LIN, Mr. Y. T. Loo, Mr. H. J. SHEN, Mr. Y. C. WANG, Mr. David Z. D. Woo, Mr. Woo Ping and Mr. William T. L. YAO.
10
41. The Board met 26 times during the year, concerning itself particularly with advising on the conduct of negotiations and the im- plementation of international agreements. A number of members Accompanied official delegations overseas on several occasions.
Acknowledgements
42. I am pleased to record the continuing co-operation which the department has received from trade and industrial associations, particularly the Hong Kong General Chamber of Commerce, the Federation of Hong Kong Industries, the Chinese Manufacturers' Association of Hong Kong and several associations connected with the textile industry. The department has continued to work closely with the Trade Development Council whose staff, both overseas and in Hong Kong, have helped to strengthen this fruitful association. The staff of the department once again assisted the Chinese Manufacturers' Association of Hong Kong to plan and arrange their annual exhibition of Hong Kong products which was held in December and January.
43. I also wish to thank the permanent missions of overseas countries for the continued assistance rendered to the department and particularly those which facilitated consultations and negotiations with their governments during the year.
44. The period under review saw a continued expansion of industrial capacity and of trade, albeit at a somewhat slower pace than in the preceding two or three years; it also saw the advent of a number of new problems in the field of commercial relations with our principal trading partners. These increased activities and respon- sibilities involved the department in a heavier workload which was willingly accepted by the staff, both civilian and uniformed, and I wish to thank them all for their co-operation and hard work. The succeeding chapters of this report and its appendices provide an account of their efforts.
11
CHAPTER 2
COMMERCIAL RELATIONS ‘E' DIVISION (EUROPE) (see also, Chapter 1, paragraphs 9-14)
45. While mainly concerned with Hong Kong's external commercial relations with European countries, the Division also has overall responsibility for the procedural and legal aspects of the licensing of textiles exports. During the period under review, steps were taken to strengthen the auditing of textiles licensing records and the prepara- tion of new Import and Export (General) Regulations had reached an advanced stage. These will incorporate the previous draft Export (Quotas and Export Authorizations) Regulations and the draft Export Licences (Textiles) Regulations to be made under the new Import and Export Ordinance.
INDIVIDUAL COUNTRIES
Austria
46. The anti-dumping legislation applicable to Austrian imports of woollen knitted outerwear from Hong Kong and certain other suppliers, remained in force but is due to expire on 31st December, 1971. The Austrian Government has still to ratify the G.A.T.T. Anti-Dumping Code of July 1968.
The European Economic Community (E.E.C.)
(a) Textiles
47. Before 1971, trade in cotton textiles between Hong Kong and the European Economic Community (E.E.C.) was administered on the basis of bilateral Agreements concluded between Hong Kong and certain of the Member States. Following the conclusion of the G.A.T.T. Cotton Textiles Committee's meeting in December 1969, a series of discussions were held between Hong Kong and the Commis- sion of the European Communities with a view to drawing up a common agreement applicable to all Member States. The outline of an Agree- ment which would last for three years commencing on the 1st January. 1971 was eventually concluded in Brussels with the E.E.C. Commis sion in October 1970, and was initialled in December 1970. In the
12
event it was not possible to ratify the Agreement before 1st January, 1971 and consequently the Hong Kong Government decided to imple- ment the export arrangements on a unilateral basis until such time
agreement could be formally signed.
the
48. Under the Agreement, as initialled, exports of cotton finished abrics, clothing and made-up articles (referred to as Group II prod- acts) to the E.E.C. were restricted to specific ceilings in respect of ndividual E.E.C. Member States. As regards grey and bleached abrics (referred to as Group I products), whether for internal con- umption within the European Economic Community or for re-export after further processing to other countries, it was agreed that there should be no specific ceilings, but Hong Kong would institute an Export Authorization system which would provide the Commission with advance information on the development of trade in these products.
49. On the advice of the Textiles Advisory Board, quota for the items which were already restrained in 1970 was allocated to com- panies
on the basis of their 1970 shipment performance. Quota was allocated in respect of newly restrained items on the basis of shipment performance in the 12 months ending 30th September, 1970. In order to avoid a hiatus in the trade during the early part of 1971, pro- visional quota allocations were issued in December 1970. Final quota allocations in respect of all the E.E.C. Member States were completed by mid-February 1971.
The Benelux Countries
50. In the restraint period extending from 1st January, 1970 to 31st December, 1970, utilization of the cotton quota covering all cotton textiles (excluding yarn) amounted to approximately 70% of the effective restraint limit.
51. As regards the treatment outside the quota arrangements of exports of grey fabrics to the Benelux countries for processing and subsequent re-export to countries other than the E.E.C. and its asso- ciated territories, the 1970 shipment performance amounted to about 614 metric tons.
52. During the first quarter of 1971 and under the terms of the initialled Agreement between Hong Kong and the E.E.C., total Group II exports to the Benelux countries amounted to approximately 409
13
metric tons and exports in Group I to the Benelux countries for 're-export' after further processing amounted to about 56 metric tons. No export in Group I for 'internal consumption' was registered.
The Federal Republic of Germany
53. In September 1970, pending the outcome of the discussions between Hong Kong and the E.E.C. Commission, the Hong Kong Government, on the advice of the Textiles Advisory Board, gave unilateral undertaking to the Federal Republic of Germany to extend the nine months' agreement ending 30th September, 1970 for a further period of 3 months to 31st December, 1970. An additional allocation of quota was offered to existing quota holders.
54. In late December 1970, the Federal Republic of Germany and the Hong Kong Government agreed that the unilateral undertaking by Hong Kong should be replaced by a formal bilateral agreement. Consequently the agreement which expired on 30th September, 1970 was renewed retro-actively for the three month-period ending 31st December, 1970.
55. For the year ending 31st December, 1970, utilization of the cotton quota covering the five groups of cotton textiles amounted to approximately 60% of the effective restraint limit.
56. During the first quarter of 1971 and under the initialled Agreement between Hong Kong and the E.E.C., total Group II exports to the Federal Republic of Germany amounted to approximately 1,877 metric tons and exports of Group I products for 'internal consumption' reached 110 metric tons. No export in Group I for 're-export' was registered.
France
57. Export performance of the restrained cotton textile to France in 1970 against the Hong Kong half of the 1969-70 import quota was poor and amounted to only 18% of the Hong Kong quota. This under- utilization of quota available was probably attributable to the complica- tions of the French licensing system.
58. During the first quarter of 1971 and under the initialled Agreement between Hong Kong and the E.E.C., total Group II exports to France amounted to approximately 9 metric tons and exports of Group I products for 'internal consumption' reached 17 metric tons. No export in Group I for 're-export' was registered.
14
italy
59. There were no restrictions in 1970 governing trade in cotton extiles between Hong Kong and Italy. Restrictions were introduced 1971 under the initialled Agreement between Hong Kong and the E.E.C. During the first quarter of 1971, total exports in Group II to Italy amounted to approximately 61 metric tons and exports of Group ¡ products for 'internal consumption' reached 343 metric tons. No
in Group I for 're-export' were registered.
exports
b) Common Commercial Policy
60. The Treaty of Rome establishing the European Economic Community provides that a Common Commercial Policy regarding the external trade of Member States should be achieved by the end of the transitional period, i.e. 31st December, 1969. Although, for a variety of reasons, a Common Commercial Policy covering all aspects of the external trade of Member States has not yet been implemented, considerable progress has been made and further progress achieved during the year.
was
61. The Department continued to watch these developments closely and to examine the implications for Hong Kong of all new Regulations issued regarding the implementation of the Common Commercial Policy.
Greece
62. The Greek Government maintains a ban on imports of most textiles from Hong Kong. In the view of the Hong Kong Government this is contrary to Greece's most-favoured-nation obligations to Hong Kong under the G.A.T.T. Despite a number of formal exchanges the matter is still unresolved.
63. In September 1970, the Greek Government also introduced restrictions on imports of certain dry batteries from all suppliers except the E.E.C. and Japan. These restrictions were introduced in accordance with the provisions of Article XVIII of the G.A.T.T. and are still being applied.
Norway
64. In September 1969, an Agreement was concluded between the Norwegian and Hong Kong Government whereby the Hong Kong
15
Government agreed to restrain the export of certain textile garments to Norway for another twelve months to 30th September, 1970. These arrangements were later, at the request of the Norwegian Government. extended for an additional month to 31st October, 1970. In this 13. month restraint period quota utilization in the cotton sector amounted to 62.09% of the restraint limits and that of the non-cotton sector came to 93.57% of the restraint limits.
65. In September 1970, consultations took place in Hong Kong between representatives of the Norwegian Government and the Hong Kong Government. As a result, Hong Kong agreed to restrain the export of 6 groups of textile garments to Norway for a period of 20 months running 1st November, 1970 to 30th June, 1972. At the same time, Hong Kong also agreed to institute a system of export authorizations in respect of a further 10 groups of certain textile garments.
Republic of Ireland
66. The Irish Government has continued to maintain discriminatory quota restrictions on imports of certain textile items from several countries including Hong Kong. Despite a number of formal exchanges between the Irish and Hong Kong Governments, the issue remains unresolved.
Sweden
67. Following consultations in April and June 1969, an Agreement was concluded between the Swedish and Hong Kong Governments whereby the Hong Kong Government agreed to restrain the export of certain textiles to Sweden for a period of fourteen months to 30th June, 1970. In this 14 month restraint period, quota utilization in the cotton sector for garments came to 87.78% of the restraint limits and that of cotton towels to 89.48% of the limit established for this item. In the non-cotton sector, the quota utilization amounted to 91.09% of the restraint limits.
68. Consultations again took place in Hong Kong and in Stockholm in April and May 1970 respectively between representatives of the Swedish Government and the Hong Kong Government. As a result Hong Kong agreed to restrain the export of 5 groups of textile garments to Sweden for a period of twelve months running from 1st July, 1970
16
10 30th June, 1971. At the same time Hong Kong also agreed to institute a system of export authorizations in respect of a further 9 groups of textile garments. These consultations marked a significant change in policy by the Hong Kong Government in that the new restrictions were drawn up without any distinction being made between cotton and other fibres used in the items subject to restraint.
United Kingdom
(a) Cotton Textiles
69. 1970 export performance in the piecegoods and made-ups and garments groups
was only moderate and substantial unshipped balances of quota remained at the end of the year. Allocations in the cotton yarns and miscellaneous cotton manufactures groups were, on the other hand, fully utilized. Use was also made of the anticipa- tion provision in the agreement and, by 31st December, 1970, about 123 thousand square yards of the 1971 quota had been shipped in this manner.
70. In 1970 and the first quarter of 1971, the High Hong Kong Cost Content Schemes for finished piecegoods and made-ups and garments were operated as previously. However, demand for the yardage available was much lower than in previous years and a sub- stantial amount of yardage remained unallocated under both schemes in 1970. On the advice of the Textiles Advisory Board, the unutilized yardage was made available to the trade first under a special ship- ment scheme of the High Hong Kong Cost Content Schemes in October and then under an Export Authorization Scheme in early November. The balances remaining were subsumed in early December in the year-end special shipment scheme.
71. The internal quota control arrangements for 1971, virtually the same as those in operation in 1970, were announced in December and final allocations of quota were made in early February 1971.
72. The special Committee of the Textiles Advisory Board, which was established in 1969 to assess the likely effects on Hong Kong's exports of cotton textiles to the United Kingdom following the latter's proposed introduction with effect from 1st January, 1972 of a new tariff on imports of cotton textiles from the Commonwealth and
17
the termination of existing quota control arrangements, reported its conclusions and recommendations to the Board in October 1970. On the Board's advice, formal representations were made to Her Majesty's Government in London. An official delegation led by His Excellency the Governor re-iterated the concern of Hong Kong's textile industry at discussions in Whitehall in November 1970, as did the Director of Commerce and Industry at subsequent talks in London in February 1971. In a formal reply dated 18th March, 1971. the Secretary of State regretted that the British Government could see no reason to change the policy announced in 1969, and he intimated that the proposed tariff, coupled with the abolition of quota controls. would come into effect on 1st January, 1972. The British Government, however, undertook to examine urgently and sympathetically the possibility of excluding from the tariff cotton textiles shipped against quota in 1971 but arriving in Britain in 1972.
(b) United Kingdom and the European Communities
73. In June 1970, negotiations recommenced on the United Kingdom's application to join the European Communities (European Economic Community, European Atomic Energy Community and the European Coal and Steel Community).
74. The Department maintained a close watch on developments and also conducted a statistical exercise to determine the degree to which Hong Kong exports to the United Kingdom might be affected by the loss of Commonwealth Preference. The results of the exercise were considered by the Trade and Industry Advisory Board and the Textiles Advisory Board and were passed to local trade and industrial associations.
75. A senior official of the United Kingdom's negotiating delega- tion in Brussels visited Hong Kong for discussions in August 1970 and this was followed by a visit in September 1970, by the Rt. Hon. Geoffrey RIPPON, P.C., Q.C., M.P., the Minister responsible for the negotiations. In November 1970 His Excellency the Governor led a delegation to London. The delegation, which included the Financial Secretary, the Director of Commerce and Industry and three senior officers of the Department, held discussions with Mr. RIPPON and with British officials on matters of interest to Hong Kong arising from the United Kingdom's application to join the European Communities.
18
:) Import Deposit Scheme
16. In December 1970, Her Majesty's Customs and Excise an- ounced the ending of the import deposit scheme which was introduced 27th November, 1968. Import deposits ceased to be charged on pods entered with the Customs as from 5th December, 1970.
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CHAPTER 3
COMMERCIAL RELATIONS 'R' DIVISION-REST OF WORLD
(OUTSIDE EUROPE)
INTERNATIONAL TRADE ORGANIZATIONS
General Agreement on Tariffs and Trade (G.A.T.T.)
(a) Cotton Textiles Arrangement (C.T.A.)
77. The Cotton Textiles Committee (C.T.C.) met in May 1970 in Geneva to resume discussions on the future of the C.T.A. Hong Kong was represented by the Assistant Director, Geneva, and a Trade Officer as members of the United Kingdom Delegation. The C.T.C adopted a protocol which extended the C.T.A. for a further period of three years, i.e. until 30th September, 1973. The Protocol was opened for signature in June 1970, and entered into force on 1st October. 1970 for the countries which had accepted it. H.M.G. signed the protocol on behalf of Hong Kong.
(b) Other Work of the G.A.T.T.
78. The Committee on Trade in Industrial Products completed the first examination of a consolidated inventory of non-tariff and para- tariff barriers previously submitted by governments, and established five working groups to explore the possibilities of reducing or removing trade barriers and to develop possible rules of conduct. The Committee's work during the year was mainly on standards, customs valuation and licensing regimes.
79. In February 1971, a Working Party on the Tariff Study was formed by the Committee on Trade in Industrial Products to undertake an objective analysis of the tariff situation as it will be when all Kennedy Round concessions have been fully implemented on 1st January, 1972.
80. The Joint Working Group on Import Restrictions, established in January 1970, conducted consultations with eighteen countries main- taining quantitative restrictions.
20
81. Hong Kong's interests in the G.A.T.T. were looked after by
• Assistant Director, Geneva, a report on the activities of his office at paragraphs 112 to 114.
Training
82. During the year an Assistant Trade Officer attended a 4 month service training course on commercial policy in Geneva, run by the GAT.T. Secretariat in collaboration with the United Nations Technical Assistance Bureau. He was the seventh officer to be sent
the department on this course.
United Nations Conference on Trade and Development (U.N.C.T.A.D.) 83. The subject of paramount importance to Hong Kong continued be the U.N.C.T.A.D. Generalized Scheme of Preferences for exports from developing countries. The Special Committee on Preferences met April and September/October, 1970 and finalized a set of ‘Agreed Conclusions' which urged donor countries to introduce preferential arrangements as early as possible in 1971 for an initial period of ten ars. Hong Kong's interests in U.N.C.T.A.D. are also looked after by the Assistant Director, Geneva.
United Nations Economic Commission for Asia and the Far East
(E.C.A.F.E.)
84. A delegation from Hong Kong, led by the Hon. P. Y. TANG, C.B.E., J.P., attended the 26th Plenary Session of the E.C.A.F.E. which was held in Bangkok in April 1970. Other members of the delegation were the Deputy Economic Secretary, an Assistant Trade Officer and an Administrative Officer.
85. A Principal Trade Officer and an Assistant Trade Officer attended the 14th Session of the E.C.A.F.E. Committee on Trade held in Bangkok in February 1971.
International Cotton Advisory Committee (I.C.A.C.)
86. Hong Kong was represented by Mr. David Z. D. Woo, a member of the Textiles Advisory Board, at the 29th Plenary Meeting of the I.C.A.C. held in Washington D.C., in October 1970. Mr. Woo attended the conference in the capacity of adviser attached to the U.K. Delegation.
21
INDIVIDUAL COUNTRIES
Australia
87. In May 1970, the Australian Government requested consulta. tions to renew the export restraint by Hong Kong of cotton drills. other than grey, weighing between 6 and 15 oz. per sq. yd. Following consultations Hong Kong agreed to continue the restraint on exports of this item to Australia for the period 1st July, 1970 to 30th June, 1971. Improved flexibility in the form of 10% carryover and a growth of 5% over the previous limit were agreed.
88. In August 1970, the Australian Government accepted a report of the Tariff Board and discontinued the temporary additional duties on sand boots and shoes. Other recommendations of the Tariff Board regarding the phasing out of alterative rates on footwear with non- leather uppers were still awaiting Parliamentary approval at the end of the year under review.
89. In December 1970, an Australian Government delegation, led by the Honourable Ian McMahon SINCLAIR, Minister for Shipping and Transport and Minister assisting the Minister for Trade and Industry, visited Hong Kong. During their stay, members of the delegation had discussions with officers of the department and with the Trade Development Council.
90. The Australian Tariff Preference Scheme for developing countries was further extended. During the period 1st July, 1969 to 30th June, 1970, Hong Kong was the third largest beneficiary after India and Spain.
Canada
91. The Hong Kong/Canada Agreements on cotton woven fabrics, apparel, and towels, and Hong Kong's unilateral undertaking to restrain exports to Canada of polyester and polyester/cotton blend shirts, blouses and trousers, all expired on 30th September, 1970.
92. Following consultations in Ottawa with Canadian officials in July, new arrangements were agreed upon. The overall yardage for cotton woven fabrics was slightly increased and the one remaining specific limit was narrowed down to cover only cotton cabinet towelling. The arrangements covering exports of cotton towels also provided for increased limits. The new apparel arrangements provided for
22
combined limits for cotton and non-cotton items, except in the case of nightwear where only the cotton item was restrained. The arrange- ment on shirts was extended to cover woven shirts of all fibres under
specific limit.
one
Indonesia
93. In August 1970, the Indonesian Government lifted the cargo survey requirement previously imposed on imports from Singapore and Hong Kong.
United States of America
94. Hong Kong's exports of cotton textiles to the United States in the fifth year of the bilateral agreement, which ended on 30th September, 1970, amounted to 375.5 million equivalent square yards, or 91.7% of the yardage available. This amount included 97,031 equivalent square yards carried over from the previous textile year in which the total quantity shipped was 391.3 million equivalent square yards.
95. In May 1970, the United States and Hong Kong Governments held consultations in Geneva on the terms of a new Bilateral Agree- ment. The new agreement reached was for three years, valid from 1st October, 1970 and coterminous with the extended Cotton Textiles Arrangement on 30th September, 1971. It was formally concluded by an exchange of notes between the United States Consul-General in Hong Kong and the Director of Commerce and Industry on 17th December, 1970. The terms of the Agreement remained largely un- changed but there were certain improvements by way of increased flexibility in implementation.
96. In December 1969, the United States Tariff Commission released a report on its investigation, instituted in October 1969, into the domestic stainless steel flatware industry. In the report, the Commission concluded that imports of stainless steel flatware had increased substantially since the previous tariff quota was abolished in October 1967, and that the injurious effects of imports on the domestic industry had been sufficient to warrant serious consideration of some form of relief.
97. In January 1971, the United States Government proposed an annual global tariff quota for stainless steel flatware to be allocated among a number of supplying countries, including Hong Kong.
23
Consultations between the United States and the supplying countries were still continuing at the end of March 1971.
98. In October 1970, the United States Tariff Commission released a report on an investigation into the economic factors affecting the use of tariff items 807.00 and 806.30 of the United States Tariff Schedules. Under the two items, the tariffs on certain goods of United States origin which had undergone processing abroad, were assessed on re-importation into the United States on the value of the foreign materials or labour added abroad. The Commission recommended against any changes to the existing system.
99. Following a petition by the United States umbrella frame industry, the United States Tariff Commission instituted investigations in June 1970 to determine whether the domestic industry had suffered serious injury as a result of increased imports of umbrellas and parts thereof, and whether such increase in imports was related to tariff concessions granted in 1950. The United States Tariff Commission issued a report in August 1970 in which it concluded that, while the domestic umbrella industry had been seriously injured, and the injury had occurred during a period of increasing imports, the increased imports were not, in major part, attributable to tariff concessions. The petition was therefore turned down.
100. In July 1970, the United States President requested the Tariff Commission to conduct an investigation under the Trade Expansion Act of 1962 to determine whether non-rubber footwear was, as a result in major part of concessions granted under trade agreements, being imported into the United States in such increased quantities as to cause, or threaten to cause serious injury to domestic industry producing like or directly competitive products. In January, 1971, the Commission released its report in which the four Tariff Commis- sioners were equally divided on the issue. Two of them concluded that there was not sufficient evidence to suggest that increased imports had been a result of trade-agreement concessions. They made no finding regarding injury per se. The other two made an affirmative determination, i.e. they found there had been injury caused by in- creased imports as a result of trade-agreement concessions, and recommended tariff increases for four non-rubber footwear items. In accordance with the provisions of G.A.T.T. Article XIX:2, the U.S. Government, in February, 1971, informed the G.A.T.T. Contracting Parties of the Commission's findings and gave notification to the
24
effect that they had initiated bilateral consultations with Contracting Parties having a substantial interest as exporters of the products concerned. Hong Kong is a relatively minor supplier of these items to the United States.
101. In August 1970, the United States Trade Bill (known as the Mills Bill) was reported out of the Ways and Means Committee of the House of Representatives. The Bill, if passed, would have imposed mandatory quotas on imports of textiles and footwear; and would have given the U.S. President wide-ranging powers to restrict other imports. The Bill was passed by the House of Representatives but became time-barred when it did not clear the Senate before the 91st Congress expired in early January 1971.
25
CHAPTER 4
OVERSEAS OFFICES
LONDON OFFICE
102. The principal task of the Commercial Section of the Hong Kong Government London Office is to maintain close liaison with British Government departments responsible for commercial policy, in order to advise the Director of developments of concern to the Colony's traders and manufacturers. The Assistant Commissioner (Commercial) makes arrangements for, and attends as a member of the Hong Kong team, all formal discussions on trade matters held in London between Her Majesty's Governments in Britain and Hong Kong: those held during the year are described in the following paragraph.
103. In view of the endeavours of the United States Administration to secure limitations on imports into that country of non-cotton textiles, there were lengthy discussions on this move and its repercus- sions between British and Hong Kong officials in July and November. The second series of discussions formed part of a wider exchange of views centering on the prospects for Hong Kong if the British bid for entry into the European Communities was successful. The Hong Kong team at these talks was led by His Excellency the Governor and included the Financial Secretary and the Director of Commerce and Industry, while the opening session was presided over by the Chancellor of the Duchy of Lancaster. (The Rt. Hon. Geoffrey RIPPON). The talks produced an assurance that the British Government would continue to take account of Hong Kong's views in its negotiations with the Com- munity. A Community proposal to settle the problems connected with Hong Kong's position after British entry by offering Hong Kong beneficiary status under the Community's offer of generalized prefer- ences for developing countries was discussed between British and Hong Kong officials in February and, as a result, acceptance of the proposal by H.M.G. was conveyed to the Community's negotiators. The concern felt in Hong Kong over the effects of the British Government's decision to impose a tariff on imports of cotton textiles from the Common- wealth, as part of its policy for ending quotas, was also discussed
26
in two series of talks in November and in February between the British and the Hong Kong Governments.
104. These formal discussions in London were held against a background of informal exchanges of view between the Assistant Commissioner and the various departments of the Foreign and Commonwealth Office and the Department of Trade and Industry responsible for commercial policy. These exchanges covered not only the major issues referred to in the previous paragraph, but also a very wide range of other less important subjects covering 36 trading partners of Hong Kong.
105. The staff of the Commercial Section took part in other negotia- tions during the year. The Assistant Commissioner attended discus- sions between the Deputy Financial Secretary and representatives of the British Overseas Airways Corporation on its fare structure to and from Hong Kong in March 1971. The Trade Officer represented the Hong Kong Government at the 14th Session of the United Nations Food and Agriculture Organization Study Group on Rice, which was held in Rome in May 1970. He was also a member of the Hong Kong Delegation which held consultations with representatives of the European Economic Community in Geneva in July 1970, on Hong Kong cotton textile exports to the Community.
106. The Commercial Section continued to refer complaints regard- ing health and safety aspects of Hong Kong products to the Industrial Development Branch in Hong Kong. It also referred inquiries from firms interested in participating in Hong Kong's industrial develop- ment. The Section continued to offer routine services to businessmen, such as answering inquiries and issuing various certificates in connection with Hong Kong's textile arrangements with the United Kingdom.
BRUSSELS OFFICE
107. The Brussels Office of the Commerce and Industry Depart- ment is located in Britannia House, 30 rue Joseph II, Brussels 4. This office block houses the British Embassy and the Brussels Office of the Trade Development Council.
108. During the year the Brussels Office which is headed by an Assistant Director of Commerce and Industry, continued to fulfil its main function of observing economic and political developments of interest to Hong Kong within the European Economic Community,
27
in the making and maintaining of contact with European Commission officials and representatives of the various Member States and other national governments both in their capitals and in Brussels, and in reporting relevant developments regularly to the Department. These functions involved several visits by the Assistant Director to Community capitals and to London.
109. The pattern of the year's activities for the Brussels Office was very largely determined by two major events: the opening of the negotiations for British entry to the European Communities and the negotiations between Hong Kong and the European Economic Com- munity for the conclusion of a new agreement concerning trade in cotton textiles in place of the previous individual agreements between Hong Kong and several of the member states.
110. Visitors to Brussels during the year included the new Director of Commerce and Industry, the Deputy Director, Commercial Relations and the Assistant Director, Geneva, on several occasions, the Executive Director of the Trade Development Council, and Messrs. Francis TIEN and C. K. CHOW of the Textiles Advisory Board.
GENEVA OFFICE
Introduction
111. As in the previous year discussions on a system of generalized preferences for developing countries in the markets of developed countries (and Hong Kong's position in relation to this) and pressures from the United States for restrictions on imports of non-cotton textiles from its major Asian suppliers (including Hong Kong) con- tinued to be important subjects affecting the Geneva Office. They were joined during the year by the opening of renewed negotiations for the accession of Britain and other applicant countries (Denmark, Norway, and Ireland) to the European Communities and by the negotiation of a comprehensive bilateral agreement, under Article 4 of the Cotton Textiles Arrangement, between Hong Kong and the E.E.C. to replace separate arrangements with individual Member States.
G.A.T.T. (General Agreement on Tariffs & Trade)
112.
In the G.A.T.T. work continued in all five groups of the Committee on Trade in Industrial Products examining non-tariff barriers. By the turn of the year each group had held two sets of
28
meetings and had presented reports to the main Committee, which in turn submitted a Report to the G.A.T.T. Council of Representatives. The Council then decided to authorize work in depth on certain specific subjects (initially valuation for duty, standards and import licensing, all of which are of interest to Hong Kong) with a view to elaborating possible solutions. The Assistant Director participated in all these developments as a member of the U.K. delegation and ensured that Hong Kong's point of view was vigorously presented on the right occasions. He also reported fully to the Department on all develop-
ments.
113. Another development in the G.A.T.T. during the year was final agreement in the Cotton Textiles Committee in May that a protocol should be opened to extend the Cotton Textiles Arrangement for a further three years from 1st October, 1970 to 30th September, 1973. This protocol was later signed by virtually all participating member countries. Parallel with the meeting of the C.T.C. in May a renewal of the bilateral arrangement on cotton textiles between Hong Kong and the United States, on somewhat improved terms, for a further three years to 30th September, 1973 (i.e. co-terminus with the period of the extended C.T.A.) was negotiated in Geneva by the former Deputy Director, Commercial Relations (Mr. JORDAN).
114. A further G.A.T.T. meeting of interest to Hong Kong was the Joint Working Group on Import Restrictions, which was attended by the then Assistant Director, Commercial Relations 'R' Division (Mr. MILLS) in the absence of the Assistant Director (Geneva) on leave.
U.N.C.T.A.D. (United Nations Conference on Trade & Development)
115. The most important activity of U.N.C.T.A.D. during the year was undoubtedly the agreement to go ahead with the system of generalized preferences. This involved two major meetings of the Special Committee on Preferences, the first in April (attended by the then Assistant Director, Commercial Relations 'R' Division) and the second in September/October (attended by the Assistant Director (Geneva)). The Assistant Director (Geneva) also attended O.E.C.D. (Organization for Economic Co-operation & Development) meetings in Paris to prepare for the U.N.C.T.A.D. meetings. He used these oppor- tunities to continue his efforts with the representatives of the major donor countries to press for Hong Kong's inclusion in their schemes.
29
116. Other developments in U.N.C.T.A.D. included discussion of U.N.C.T.A.D.'s contribution to the United Nations' Second Develop- ment Decade, as well as preparation for the Third Conference of U.N.C.T.A.D., due to be held in 1972. It was decided at the Trade and Development Board meeting in March that this Conference should be held in Santiago de Chile.
Other Activities
117. Other activities during the year involved the Assistant Director visiting London three times, Brussels three times and Paris on several occasions to attend O.E.C.D. meetings. In London he first joined a Hong Kong team, led by the then Director of Commerce and Industry. to discuss textiles generally and in particular the threat of the pro- tectionist Trade Bill then before the U.S. Congress. In November, he joined a team, led by H.E. the Governor, to discuss with UK. Ministers and officials problems affecting Hong Kong arising from the negotiations for U.K. entry to the European Communities, generalized preferences and textiles. In January he assisted the Director of Commerce and Industry in consultations with H.M.G. on the E.E.C.'s offer, in the context of the enlargement negotiations, to include Hong Kong in their scheme for generalized preferences under certain conditions.
118. The visits to Brussels were mainly concerned with consulta- tions and negotiations of a comprehensive bilateral agreement on cotton textiles between Hong Kong and the E.E.C. as a whole under Article 4 of the C.T.A. In this connection one round of consultations between the two sides was held in Geneva in July.
119. Another meeting in Geneva in July/August was the informal consultations between high level representatives of the United States, United Kingdom, the E.E.C. and Japan on problems affecting world trade, including textiles. The Assistant Director followed these dis- cussions and reported their outcome.
120. The Assistant Director also negotiated with a South African delegation in the summer and autumn compensation due to Hong Kong, under Article XXVIII of the G.A.T.T. arising from South Africa's desire to raise certain customs duties bound in her G.A.T.T. tariff schedule. The opportunity was taken, in the course of these negotia-
30
in
tions, to raise again with the South Africans certain of their practices regard to valuation for duty and anti-dumping duties which operate to the detriment of Hong Kong trade.
Staff Movements
121. The Assistant Director was on leave from late April until early July. For a certain part of this time, the work of the Office was taken over by other officers from Hong Kong. Mrs. M. GARLEY Secretary/Clerk) resigned in November and she was replaced on a substantive basis in January by Mrs. A. RHODES.
Visitors to the Office
122. Visitors to the Office during the year included the Director of Commerce and Industry, Mr. J. CATER, as well as Messrs. D. H. JORDAN, W. DORWARD, L. W. R. MILLS and L. SOUZA of the Commerce and Industry Department and Mr. F. YEUNG (London Office). In addition,
a number of visitors to Geneva from Government depart- ments in London called in to the office for discussions.
WASHINGTON OFFICE
123. Developments in commercial relations between Hong Kong and the United States, some of which are described elsewhere in this Report, called for a variety of diplomatic activities on the part of the Washington Office-more correctly described as the Hong Kong Commercial Section of the British Embassy. Regular contacts were maintained with U.S. Government Departments and other official bodies, with American business organizations, firms and individuals active in the commercial relations field, and with the Embassies of countries with similar or competing interests.
124. The Assistant Director joined a Hong Kong team in Geneva in May for the negotiation of a new Hong Kong-U.S. Cotton Textile Agreement. In later months formal consultations were held in Washington on Hong Kong exports of a variety of cotton textile prod- ucts, including tablecloths, gloves, culottes and ladies' trouserings.
125. Talks also took place on other specific Hong Kong exports, including stainless steel cutlery, footwear and umbrellas.
31
126. The threat of U.S. legislation which would have restricted imports of non-cotton textiles and footwear in the first place, and many other commodities later, gave rise to anxious discussions up to the very end of 1970, but did not call for official action by the Washington Office.
127. The Deputy Director (Commercial Relations) paid a brief visit to Washington in July 1970.
128. The Hong Kong Commercial Section was included in an Inspection of the British Embassy by H.M. Diplomatic Inspectors in September 1970. No changes in establishment or procedures were found necessary.
32
CHAPTER 5
INDUSTRY DIVISION
CERTIFICATION BRANCH
Policy
129. Certificates of origin and preference play an important role in the industrial and economic growth of Hong Kong. In a free market environment, it is essential that domestically manufactured goods are accepted by world markets without question as to their origin. To this end, the Hong Kong Government has for many years accepted responsibility for ensuring that the Hong Kong certification system remains efficient and that certificates are issued under origin criteria and rules which take an internationally acceptable form. The Commerce and Industry Department discharges Government's overall responsi- bility in this field. The Certification Branch of the department is responsible for administering the complicated certification system which supports exports of Hong Kong products.
General
130. The Certification Branch issued 337,858 Standard, Common- wealth Preference and Comprehensive Certificates of Origin for local products, valued at $5,764 million, representing 45.7% of total domestic exports during the year. Compared with $5,237 million for the previous year the certified value increased by approximately 10%. In addition, it was estimated that the value of local products certified by the four government approved certificate of origin issuing bodies, i.e. the Hong Kong General Chamber of Commerce, the Indian Chamber of Commerce, Hong Kong, the Chinese Manufacturers' Association of Hong Kong and the Federation of Hong Kong Industries, was approximately $3,576 million. Taking this into account, the total value of local products certified by Government and the approved non-government organizations represented 74% of total domestic exports.
33
131. Domestic exports to Hong Kong's three principal markets, the United States of America, the United Kingdom and the Federal Republic of Germany were valued at $7,858 million. Of this amount, 54.3% was supported by certificates issued by the branch.
132. As agreed in 1968 by the Certification Co-ordination Com- mittee (comprising representatives of the department, the Hong Kong General Chamber of Commerce, the Indian Chamber of Commerce, Hong Kong, the Chinese Manufacturers' Association of Hong Kong and the Federation of Hong Kong Industries), certificates of origin are only issued for products manufactured by factories registered with the department. On 31st March, 1971, the number of manufacturing establishments registered with the department for the issue of certificates was 10,780, a net increase of 436 or approximately 4% over the previous year.
133. Table 1 records the number of certificates issued and the declared value of the certified goods, together with the corresponding figures for the two preceding years.
134. Fees for applications for certificates, collected by means of postage stamps, are $10 for Standard Certificates of Origin, $35 for Commercial Comprehensive Certificates and $5 for all other certificates. Revenue from certificates amounted to $4,750,010 during the year, a decrease of 7.8% from the previous year, due to the elimination of the need for tourist, gift plan and mail order comprehensive certificates of origin as from January 1970.
Standard Certificates of Origin
135. 180,242 Standard Certificates of Origin were issued during the year, an increase of 3% over the preceding year. The declared value of goods certified was $3,120 million. The approved non- government certificate issuing bodies collectively issued 206,573 cer- tificates with an estimated value of goods of about $3,573 million.
136. With effect from 20th July, 1970, the origin criteria for the issue of Certificates of Origin for cotton thread was changed. As a result, the department issues Certificates of Origin in respect of cotton thread manufactured from locally spun yarn. Where cotton thread is manufactured from yarn of foreign origin, Certificates of Processing only are issued.
34
137. In October 1970, the department was advised that with effect
from 1st January, 1971, the European Economic Community would require all imports of Hong Kong cotton textiles manufactures, other than yarn, to be covered by Certificates of Origin issued by the Commerce and Industry Department.
138. Confirmation was received in December 1970 that Certificates of Origin endorsed to show a 50% Commonwealth content were no longer required to support entry of Hong Kong products into the French Overseas Departments and Territories of Martinique, French Guyana, Comore Islands, Guadeloupe, Reunion, New Caledonia and Dependencies, and French Polynesia.
Commonwealth Preference Certificates
139. A total of 77,958 forms were issued in support of exports to the United Kingdom, a decrease of 4.9% compared with the previous year. The declared value of goods certified was $1,230 million. Exports consigned to Commonwealth countries and covered by 16,734 Commonwealth Preference Certificates were valued at $131 million.
140. In March 1971, an agreement was reached with the New Zealand Customs authorities whereby Certificates of Hong Kong Origin suitably endorsed by the department will be accepted in support of claims to preferential entry in respect of certain Hong Kong manu- factured blended (cotton/polyester) piecegoods involving the use of Commonwealth origin raw cotton. This represents a relaxation of certification requirements in that, previously, exports of all blended piecegoods under claim to preference were required to be supported by 50% Commonwealth-content certificates.
Comprehensive Certificates of Origin (C.C.O.)
141. The total number of Comprehensive Certificates of Origin (required for the export of certain goods to the United States issued was 62,924, representing a decrease of 56.7% over the preceding year. This can be attributed mainly to the fact that, due to certain relaxations in the United States Foreign Assets Control (F.A.C.) Regulations, the need for tourist, mail order and gift purchases to be covered by Comprehensive Certificates of Origin was eliminated with effect from January 1970. The value of goods exported under Comprehensive Certificate of Origin amounted to $1,282 million,
35
representing a very slight decrease of 0.1% compared with the previous
year.
Hair Wigs
142. During the year, there was a continuing swing from human hair wigs to the increasingly popular synthetic substitutes. The total value of hair wigs certified was $44 million, a decrease of 70.1% from the previous year. The total quantity of raw human hair imported for C.C.O. purposes during the year was 484,967 lbs., a decrease of 66% as compared with the previous year. The total number of human hair wig manufactures and raw human hair importers registered with the department at the end of March 1971, were 81 and 72 respectively, compared with 99 and 91 respectively at the end of the previous year.
Agricultural Products
143. Following a detailed survey of the trade, it was decided in August 1970 that there was no longer any economic justification for continuing with the Comprehensive certification of twelve agricultural products, namely, bitter cucumber, lychee, Chinese olive, lemon, mustard, taro, lotus root, radish, turnip, Japanese apricot, vegetable seeds and water chestnuts. However, in order to provide sufficient time for farmers to plan their future cropping programmes and for processors to arrange for alternative business, the actual dates of elimination of individual products were spread over a period from 1st December, 1970 to 1st September, 1971, each date being set three months after the harvesting time of the product concerned.
Revision of C.C.O. Procedures
144. During the year under review, the department, in consultation with the U.S. Foreign Assets Contol (F.A.C.), converted forty-one C.C.O. procedures into twenty-three legally acceptable C.C.O. undertakings. Factories previously registered under the old procedures were re- registered under the new undertakings.
Certificates of Processing
145. A total of 1,408 Certificates of Processing were issued in respect of goods processed or assembled in Hong Kong but which did not qualify under the established origin rules for the recognition of Hong Kong origin.
36
Miscellaneous Certificates
146. The Certification Branch also countersigned certificates of origin issued by the Agriculture and Fisheries Department for vegetable and marine products. During the year 76 certificates were issued.
Co-ordination of Certification Procedures with Approved Non-Govern-
ment Organizations
147. The Certification Co-ordination Committee, through which the department maintains close liaison in certification matters with the four approved non-government certificate of origin issuing bodies, held two formal meetings during the year. A very close degree of co-ordination has already been achieved between the five issuing bodies and the system works smoothly and efficiently.
148. During the year, agreement was reached on standardization of the format of certificates used by members and on standard origin criteria to be applied to cotton sewing thread and electronic products. Application forms were also aligned to accord with proposals made by the Working Party for Simpler Export Documents.
General
INDUSTRY INSPECTION BRANCH
149. The Industry Inspection Branch provides an essential inspec- tion and investigation service within the system under which the department and four approved non-Government trade and industrial organizations issue various types of certificates of origin. It is responsible for the physical policing of some 11,000 commercial and industrial concerns registered for origin certification purposes. In addition, the branch undertakes systematic consignment checks arising from the issue of textile export licences which regulate the shipment of various categories of textiles under export restraint. Many of these inspections give rise to detailed and protracted investigations, when a contravention of prescribed conditions is discovered. In some cases, investigations result in prosecution of the firms concerned, suspen- sion or cancellation of their certificate facilities, or the withdrawal of quota. In support of the other divisions and branches of the department, the branch is responsible for all field aspects of industrial surveys and for the selective sample checks of such products
37
as hand decorated toys, electrical appliances, and foodstuffs, before export, to ensure they conform to the health and safety standards of importing countries.
Inspections
150. During the year, 36,387 factory and consignment inspections were made, excluding those at the Kowloon Inspection Control. representing an increase of almost 100% as compared with 1969-70. This significant increase can be attributed to increases in the field staff resulting from a recruiting exercise to fill vacancies in the authorized establishment. Arising from these inspections, 2,217 factories were reported to have breached one or more of the conditions governing their registration. The more serious of these, totalling 294. required further investigation to establish the extent of the mal- practice. A breakdown of the inspection figures for the year with comparative figures for 1969-70 is as follows:
(a) Inspections
(i) Initial inspections for various types of cer-
tificates of origin
(ii) Re-inspections
(iii) Preference undertaking checks
...
...
...
1970-71
1969-70
...
4,906
4,567
12,839
3,288
1,500
256
728
•
...
1,564
1,941
632
14,473
8,128
36,387
18,435
(iv) Comprehensive Certificates of Origin pro-
cedural checks
(v) Textile quota checks
(vi) Origin certification consignment checks
Total
(b) Miscellaneous
1970-71
1969-70
(vii) Industrial surveys (Number of premises
visited)
...
1,138
3,694
(viii) Number of paint samples drawn for deter-
mination of lead content
1,511
640
(ix) Number of transistor radio samples drawn for determination of no. of functional tran- sistors
...
4
6
...
2
176
451
314
(x) Number of electrical appliance samples drawn
for determination of safety standard... (xi) Number of miscellaneous enquiries including
trade complaints
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Static Inspection Control
151. In addition to the field inspections reported in the preceding paragraphs, branch staff deployed on duties at the department's Static Inspection Control Point situated inside the premises of the Hong Kong & Kowloon Wharf & Godown Company Limited, Tsim Sha Tsui, completed the physical examination of 17,845 consignments. A breakdown of the categories and number of consignments inspected during 1970-71 with comparative figures for the preceding year, is as follows:
(i) Selected items supported by Comprehensive
Certificates of Origin (Commercial)
(ii) Cotton Garments, Made-ups, and Finished Piecegoods exported to the United Kingdom under the High Hong Kong Cost Content Scheme
...
...
(iii) Embroidered handkerchiefs and naperies sup- ported by Standard Certificates of Origin and/ or Commonwealth Preference Certificates (iv) Antiques exported to the United Kingdom
supported by Statutory Declarations (v) Consignments of raw human hair imported into Hong Kong in accord with agreed com- prehensive certificates of origin procedure...
Aggregate
Container 'Call' Service
1970-71
1969-70
16,013
21,046
1,598
3,078
27
25
23
41
184
919
17,845
25,109
152. In addition to the established facilities provided by the depart- ment at its centralized Static Control Point, a container 'call' service was introduced in June 1970 to take account of the significant swing to containerization as a means of exporting goods.
153. The additional service provides exporters with an inspection service at Container Freight Stations in respect of goods which other- wise would require routing via the centralized Control Point. Since the inception of the service in June 1970, a total of 954 consignments have been examined and 'cleared' during the ten-month period ending 31st March, 1971.
Kai Tak Import Control
154. Staff continued to be deployed at Hong Kong International Airport to meet arriving aircraft, escort consignments of raw human
39
hair to a security store for safe custody and, subsequently to escort the hair to the department's Static Control Point at Tsim Sha Tsui, where detailed examinations were carried out. Details of raw human hair consignments escorted from the importing aircraft and held at the security store pending transfer to the central examination centre are
as follows:
(a) Consignments of imported raw human hair escorted
from arrival aircraft
...
(b) Gross weight of raw human hair imported and escorted from arrival aircraft for storage in the department's security store
...
(c) Consignments of raw human hair imported for
comprehensive certification purposes
(d) Gross weight of raw human hair imported for
comprehensive certification purposes
...
(e) Consignments of raw human hair imported by air-
freight for non-C.C.O. purposes ((a)–(c)) ...
299
658,139 lbs.
184
530,386 lbs.
115
...
(f) Gross weight of raw human hair imported by air-
freight for non-C.C.O. purposes ((b)–(d)) ...
Industrial Surveys
127,753 lbs.
155. During the year, Branch officers in conjunction with other branches of the department, the Hong Kong Productivity Centre, and the Federation of Hong Kong Industries, conducted field surveys encompassing a number of light manufacturing industries. The more important of these included surveys designed to obtain aggregate information on the state and viability of the electronics and hair prod- ucts manufacturing industries; the degree of attention paid to good packaging design by industrial managements; the extent, area, and source, of foreign investment in the Colony's manufacturing in- dustries; and the effect of rental increases on industrial premises. In total, these surveys entailed visits to some 1,138 firms or industrial undertakings.
Investigations
156. In addition to investigating cases referred to them by the inspection units, the investigation section also investigates appropriate matters referred to the department by the four approved non- Government certificate-issuing authorities, queries raised by overseas customs authorities and complaints received from members of the general public, where these fell within the branch's areas of responsi-
40
bility. During the period, 303 investigations were concluded resulting in the prosecution of 192 persons or firms, the suspension of two manufacturing entities from certification privileges, and in more marginal cases, in the issue of warning letters to 71 firms or companies.
Anti-corruption Measures
157. Since the establishment of the Industry Inspection Branch in 1965, officers of the branch have acted under instructions to reject but report any offer of money or other form of improper approach made to them by members of industrial and commercial concerns. Where there was insufficient evidence to warrant police intervention because the offers were incomplete, the proprietors or officers of the firm concerned were interviewed by senior branch officers and asked to co-operate to eradicating this unnecessary practice. With the enact- ment of the Prevention of Bribery Ordinance in November 1970, an effort was made to standardize the procedures of all Government departments in dealing with this problem. Subsequently, two reports made by branch officers resulted in the imprisonment of a factory proprietor for 4 months and in a factory employee being fined $500.
Branch Accommodation
158. The branch continued to be housed on the 5th floor, Tung Ying Building, 100, Nathan Road, Kowloon as the accommodation originally reserved for it at the new Government Camber Building, Canton Road, Kowloon was re-allocated to other government depart- ments. In order to accommodate additional staff, approval was given to take over an area of approximately 3,000 sq. ft. at present occupied by the Labour Department on the same floor when this becomes available.
General Expansion
INDUSTRIAL DEVELOPMENT BRANCH
REVIEW OF INDUSTRY
159. The overall growth of industry, measured in terms of industrial employment and exports of domestic products, continued at a satis- factory rate. Total domestic exports in the financial year 1970-71 were valued at $12,620 million, an increase of 14.7% over exports in 1969-70. The Labour Department recorded a total of 17,865 industrial undertakings, employing 593,494 workers, in March 1971 compared with 15,285 undertakings with 568,787 workers in March 1970.
41
160. The importance of the garment industry remained paramount: exports were valued at $4,571 million in 1970-71. Exports of other textile products during the period were valued at $1,292 million. Thus exports of all textile products, including garments, amounted to 46.4% of domestic exports in 1970-71.
161. The plastics industry also retained its important place as an employer of labour and an export earner. Exports of plastic goods increased from $1,282 million in 1969-70 to $1,417 million in 1970-71. The main products of this industry were toys and dolls. artificial flowers and foliage, and miscellaneous household articles. There was a trend away from the simpler products, such as plastic flowers, towards more sophisticated products, particularly toys. The production of all types of toys continued to expand, exports in the year ending 31st March, 1971 reaching $1,069 million, compared with $926 million the previous year. The number of employees in the industry remained static, although the number of factories increased from 1,004 to 1,165 during the period. The largest growth rate in the toys sector was in soft toys, exports of which increased from $58.9 million in 1969-70 to $96.1 million in 1970-71.
162. The electronics and wig industries both again registered sustained growth during the year. The electronics industry continued to diversify, despite difficulties caused by the economic depression in the U.S.A., its main market. Exports of electronic products increased by 23% from $907 million in 1969-70 to $1,116 million in 1970-71 and the industry retained its position as the third largest export earner. In March 1971, there were 15 factories producing silicon transistors and 11 factories engaged in the production of computer components and sub-assemblies, 9 of which were making sub- assemblies for integrated circuits. Exports of wigs were valued at $922 million in 1970-71 compared with $708 million in 1969-70, an increase of 30.2%. By the end of the period under review, the industry's growth rate had declined considerably but, on the whole year's figures, it was the fourth largest export industry.
163. All sections of the watch and clock industry continued to grow and to improve the quality of their products. The greatest growth rate was in the clocks sector (exports increased from $4.55 million in 1969-70 to $11.3 million in 1970-71). An exceptionally large growth rate was also achieved in the watch case sector (exports increased from $16.7 million in 1969-70 to $29 million in 1970-71). An associated
42
industry, that producing metal watch-bands, also showed good results, with exports increasing from $61.2 million in 1969-70 to $78 million in 1970-71.
164. Other industries recording substantial growth were umbrellas from $52 million to $64 million) and travel goods (from $147 million to $186 million). These industries appear to have good potential for further growth.
165. Further details of some of the more important industries are given below.
Textile Spinning and Weaving Industries
166. At the end of the period under review, there were 32 (31)* cotton spinning factories registered with the department for certifica- tion purposes, employing 22,178 (21,747) workers and operating 893,552 (825,916) spindles, an increase of 67,633 spindles over the total at the end of the previous year. Production of cotton yarn was approximately 356 (321) million lb., ranging mainly from 10s. to 60s. counts, carded and combed in single or multiple threads.
167. While the number of spindles increased, the weight of yarns produced showed a slight decline. This reflected the expansion of prod- uction of yarns of finer counts and blended cotton/synthetic yarns, production of which increased from 30 million pounds in 1969 to 46 million pounds in 1970.
168. Production of woollen and worsted yarns amounted to 28 (24) million pounds. Most of this yarn was utilized by the knitting sector, a small quantity being woven into cloth. In addition, over 4 million pounds of wool type synthetic yarns were produced.
169. Production of pure cotton piecegoods decreased during the year although the production capacity remained almost the same. This was due to the expanding use of looms for the weaving of blended synthetic/cotton fabrics. Total production of cotton piecegoods, in- cluding blends predominantly of cotton, was approximately 789 (768) million square yards and consisted chiefly of drill shirting, poplin and
* Previous year's figures are shown in brackets. In some instances they differ from those given in the previous year's report, due to certain reclassifications of industrial operations.
43.
gingham canvas. At the end of March 1971, there were 178 (186) cotton weaving factories registered with the department for certification purposes, with a total of 23,711 (23,189) looms installed.
Textile Finishing Industry
170. The dyeing, printing and finishing industry again concentrated on such developments as multi-colour screen and roller printing, pre- shrinking processes, polymerizing for the production of drip-dry fabrics and finishing of synthetic materials. At the end of March 1971. there were 409 (259) textile finishing mills employing 11,704 (10,059)
workers.
Cotton Knitting Industry
171. The cotton knitting industry_remained fairly static. According to records compiled by the Labour Department, at the end of March 1971 there were 262 (243) cotton knitting mills employing 8,924 (8,418) workers. Products were mainly shirts, gloves and undergarments. Cotton interlock materials and warp-knitted cotton fabrics were also produced.
Woollen Knitting Industry
172. The woollen knitwear industry continued to expand. At the end of March 1971, there were 1,119 (855) factories in operation employing 40,086 (37,266) workers. Exports of woollen knitwear (including blends predominantly of wool) were valued at $856.6 million, an increase of 4.9% over the previous year.
Wearing Apparel Industry
173. Hong Kong manufactures a wide range of garments both knitted and woven, including shirts, underwear, outerwear, gloves, hats, socks and stockings. This industry continued to thrive. By the end of March 1971, it employed a labour force of 165,077 (149,951) in 3,737 (3,062) industrial undertakings. The value of exports of clothing (including that made of non-textile materials, such as leather) in 1970-71 reached $4,571 ($3,900) million, an increase of 17.2% over the value for the previous year.
174. The production of permanent-press garments continued to increase. As this finishing process is most successfully applied to mixed cotton/synthetic fabrics, its popularity is encouraging the use of these fabrics.
44
Wig Industry
175. Since its establishment in the early 1960's, the wig industry has developed very quickly. Exports of hair products increased from $647 million in 1969 to $937 million in 1970. According to records compiled by the Labour Department, at the end of March 1971 there were 435 factories in this industry with a total employment of 30,375. This compares with 372 factories employing 29,000 a year earlier. The main market continued to be the U.S.A., which accepted 59% of exports in 1970, followed by the Federal Republic of Germany, the United King- dom and Canada. Whereas up to 1968 wigs were almost wholly made from human hair, there has been a substantial swing during 1969 and 1970 towards the use of synthetic fibres. In 1970 and early 1971, 85% of all exports of wigs were made from synthetic fibres. The shortage of suitable raw materials, viz. modacrylic fibres, which was apparent by the end of 1969, was alleviated only slightly by the end of the period under review.
176. By the second half of 1970, the industry had experienced a sharp decline, in particular in the human hair wigs sector. In conjunc- tion with the Trade Development Council, the department therefore conducted a survey of the industry and its main markets, to establish the reasons for the decline and to assess the prospects for the industry. It was found that a shift of preference to synthetic wigs had taken place in the three major markets, upsetting the demand and supply balance. The rapid rise in demand for synthetic wigs had led some opportunists to sell large quantities of wigs manufactured from poor quality synthetic fibres. Aggravated by the balance of payment prob- lems of some importing countries, the trade declined. Nevertheless, the demand for quality synthetic wigs at acceptable prices was maintained.
Steel Industry
177. The predictions made last year on the basis of a survey carried out by the Department have so far proved accurate: the industry enjoyed another year of satisfactory performance. Demand by the local construction industry continued to be strong, but keen competition from overseas suppliers resulted in exports dropping from 64,000 tons in 1969-70 to 57,000 in 1970-71.
45
178. The shipbreaking industry, which supplies much of the steel scrap used by the steel mills, continued to decline. 34 vessels were broken up in 1970-71, totalling 170,800 gross tons, compared with 56 vessels and 312,718 gross tons in 1969-70. The bulk of the scrap steel from these ships was converted by the steel rolling industry into bars and rods for the construction industry. Some scrap steel and non-ferrous scrap was exported, mainly to Japan.
INDUSTRIAL PROMOTION
179. In order to encourage overseas investment in local industry, the Industrial Development Branch provides a comprehensive service to potential investors. This has assisted many foreign companies to set up industrial undertakings in Hong Kong. To improve this service further, the department has been in discussion with the Trade Development Council about arrangements to expand industrial invest- ment promotion in Hong Kong and overseas. It is envisaged that the Trade Development Council will accept responsibility for external promotion and that the department will assist the Council by pro- viding back-up services and by dealing with potential investors attracted to Hong Kong through the efforts of T.D.C. officers overseas.
180. In September, a Hong Kong delegation comprising the Assist- ant Director, Industry Division, and representatives from the Hong Kong General Chamber of Commerce and the Chinese Manufacturers Association, attended a meeting in Manila to promote industrial projects in Asian countries, which was sponsored by the Economic Commission for Asia and the Far East (E.C.A.F.E.) and the United Nations Industrial Development Organization (U.N.I.D.O.). As a result of the meeting, the department has established useful contacts with several commercial and industrial institutions overseas in publicizing the interest of Hong Kong in foreign investment in its industry and the opportunities available in Hong Kong to overseas investors.
181. During the year, a number of foreign companies established industrial undertakings in Hong Kong and more were considering doing so. The department now has records of over 210 factories which are either fully or partly owned by foreign interests. These factories employ 101% of the industrial workforce and produced approximately 12% of total exports of domestic manufactures in 1970. It is estimated that the total investment involved is of the order of $890 million. coming mainly from the United States, Japan and the United Kingdom.
46
182. By the end of the period, compilation of the 1971 edition of the industrial promotion publication Industrial Investment Hong Kong' was nearing completion. This brochure was first prepared by the department and published by the Trade Development Council in 1968. It contains a great deal of the information which is normally sought by potential investors considering Hong Kong as a base for industrial operation. At the same time, the department was co- operating with the Council in preparing a short publicity pamphlet for wider distribution, which would serve as an effective introduction
'Industrial Investment Hong Kong'.
an
to
Loans for Small Industry Committee
183. The Industrial Development Branch continued to service the Loans for Small Industry Committee which was established by the Trade and Industry Advisory Board in May 1968 to consider whether improved loan services to small scale industrialists for the purpose of buying new machinery and plant should be established. The Government, after a preliminary consideration of the Committee's report, endorsed by the T.I.A.B. in March 1970, referred it back to the Board for further examination. The Committee was reactivated at the end if 1970 to investigate the appropriate form a loans scheme should take in the light of comments and suggestions on the report made by Government and various industrial and commercial associa- tions and the Universities.
Water Supply to Industry
184. An adequate supply of water to industry appears to be assured for the foreseeable future; plans to meet future increases in water demand include raising the height of the Plover Cove Dam to increase storage capacity, construction of the High Island water project and the installation of an experimental desalination water plant.
185. During the period under review, Government announced its plan to increase water charges for industrial use from $2 to $4 per thousand gallons as from 1st April, 1971. This led to numerous representations from various industrial associations and particularly from bleaching and dyeing factories in the textile industry. The proposal was later modified to provide for a charge of $3 per thousand gallons, with effect from 1st April, 1971, and an increase to $4 per thousand gallons in 1972.
47
Land and Industrial Buildings
186. During the year, fifteen industrial sites were sold in urban areas and forty-five in the New Territories. This compares with sixty-two industrial sites in the urban area and forty-nine industrial sites in the New Territories sold during the previous year. The reduction in the number of transactions in respect of sites in the urban areas is under- standable, as available sites in these areas are becoming scarce. As Kwun Tong and San Po Kong become fully developed, future expansion is anticipated to take place largely in the New Territories, particularly
Castle Peak and Sha Tin.
187. Several industrial organizations suggested to Government the establishment of fair rent tribunals, to which manufacturers faced with unreasonable demands for rent increases could apply for arbitra- tion. However, results of a survey on rental for industrial premises, carried out by the Federation of Hong Kong Industries with the assistance of the department, did not indicate that rents demanded were generally unreasonable.
188. Furthermore, more factory premises had recently become available with the result that industrial rents had begun to show a slight decrease by the end of the period.
HEALTH AND SAFETY STANDARDS OF HONG KONG PRODUCTS
189. The Industrial Development Branch continued to investigate overseas complaints concerning alleged health and safety hazards in Hong Kong products. Most of these complaints originated in Britain, where consumer protection agencies are very active. In dealing with this subject, the branch maintains a close liaison with the British Home Office, working through the London Office of the Hong Kong Government. Depending on the nature of the complaint, it is also necessary from time to time to work closely with the Labour Depart- ment, the Electrical & Mechanical Engineering Division of the Public Works Department, the Urban Services Department and the Medical and Health Department, as well as non-Government organizations such as the Federation of Hong Kong Industries and the Hong Kong Productivity Centre.
190. During the year a total of nineteen circular letters on health and safety standards were sent to manufacturers to bring to their
48
attention the results of complaints investigated by the department and to help them improve the standards of specific products.
Health Standards
Toys-Lead Content
191. In view of the stringent requirements laid down by the United Kingdom Toys (Safety) Regulations 1967 with regard to the paints used on toys, the department continued testing samples of paints being used by toy manufacturers, to ensure that the lead content did not exceed the British statutory limit of 5,000 parts per million. During the year, 1,511 samples were drawn from toy factories and submitted to the Government Chemist for testing. 81 samples were found to have a lead content in excess of 5,000 parts per million and measures were taken to prevent the sale of toys coated with these paints.
192. Largely, it is believed, as a result of the testing service, the branch received during the year no overseas complaint alleging that Hong Kong toys were coated with paint containing excessive lead.
Safety Standards
(a) Electrical Products
193. In recent years the Industrial Development Branch has had to deal with a number of overseas complaints about the safety standard of Hong Kong made electrical products, such as Christmas tree decoration lights, plugs, table lamps and battery chargers. All com- plaints were thoroughly investigated and, where necessary, the branch was able to secure the co-operation of the manufacturers concerned to improve products which had been found under test to be faulty.
194. In order to evaluate the nature and extent of the problems faced by manufacturers in working to internationally accepted safety standards, the department, with the assistance of the Federation of Hong Kong Industries and the Government Electrical and Mechanical Engineer, commenced in January 1970, a comprehensive system of testing samples of electrical products drawn from factories registered with the department. Where the test reports showed faults in the products, the manufacturers concerned were interviewed and recom- mendations for improvements were conveyed to them.
49
195. The success of the testing programme can be gauged from the fact that department received fewer overseas complaints this year in respect of Hong Kong made electrical products. Only two complaints (7 in 1969) about electrical appliances and one (3 in 1969) about Christ- mas tree decoration lights were received from overseas countries and these were successfully dealt with by the branch. The manufacturers concerned undertook either to stop production of the products or
eradicate the faults.
(b) Toys—United States Ban on Hazardous Toys
196. A circular was issued to toy manufacturers on recent amend. ments to the U.S. Child Protection and Toy Safety Act 1969 which prohibited the import into the United States of rattles, dolls or stuffed animals, noisemaker toys, dart-type toys and caps or toy guns which did not reach the prescribed safety standards.
(c) Carpets and Rugs-U.S.A. Flammable Fabrics Act on Inflam-
mability of Carpets and Rugs
197. The branch issued two circulars to local manufacturers of carpets and rugs drawing their attention to the contents of the United States revised Flammable Fabrics Act which set out the flammability standards for all carpets and rugs.
(d) Food Products
198. Complaints were received from Britain that unpermitted colour- ing matters and preservatives had been found in oyster juice, preserved fruits and confectionaries exported from Hong Kong.
199. In order to prevent a recurrence of similar incidents, the branch issued a health and safety standard circular to the trade, bringing to their attention the provisions of the 'Colouring Matters in Food and Drug Regulations' and the 'Preservatives in Food and Drug Regulations' in force in Britain.
200. In addition, the branch discussed with the Government Chemist and the Urban Services Department ways and means of ensuring that Hong Kong's exports of foodstuffs to the U.K. are free from un- permitted additives.
50Minor Complaints Regarding Safety Standards
201. During the year the branch received fourteen other complaints from overseas_regarding the safety standard of Hong Kong products, mainly toys. Investigations were made into the individual cases and the manufacturers concerned were interviewed. All agreed to eliminate the defects in their products.
COPYRIGHT AND DESIGNS
Designs Registry and Copyright Legislation
202. The department continued to consult the Registrar General's Department and the Legal Department concerning legislation in Hong Kong on designs registration and protection. The matter is still under consideration.
203. The branch dealt with several complaints concerning the infringement of registered designs and alleged false trade descriptions of Hong Kong products; and amicable settlement was reached in each
case.
ECONOMIC COMMISSION FOR ASIA AND THE FAR EAST
204. The Industrial Development Branch was responsible for briefing a two-member delegation to the Second Asian Conference on Industrialization held in Tokyo from 8th to 21st September, 1970. The delegation was led by the Deputy Director, Administration and Industry.
205. The branch briefed the Assistant Director, Industry Division, who attended the Meeting to Promote Specific Industrial Projects held in Manila from 23rd to 30th September, 1970. He was assisted by Mr. J. B. KITE, Chief Executive of the Hong Kong General Chamber of Commerce, and Mr. J. P. LEE, Secretary General of the Chinese Manufacturers' Association.
206. The branch also briefed a two-member delegation to the Sixth Session of the Asian Industrial Development Council held in Bangkok from 22nd to 28th January, 1971. The leader of this delegation was the Assistant Director, Industry Division.
51
CHAPTER 6
PREVENTIVE SERVICE AND DUTIABLE
COMMODITIES DIVISION
PREVENTIVE SERVICE
General
207. In June 1970, the headquarters of the Preventive Service and the Dutiable Commodities Office moved to new accommodation on the 9th and 10th floors of the Rumsey Street Multi-storey Car Park. Provision was made for a senior officers' mess, a canteen for junior members, a control centre, a conference room, and a barracks.
208. Determined and accelerated action against illicit distillers proved extremely effective during the year and it appears that losses sustained by these distillers, together with the financial inducements of industrial employment in a period of labour shortage, is driving many away from this normally lucrative activity. Those still engaged in illicit distilling have grown more sophisticated in their methods and patrols are experiencing greater difficulty in detecting them. Seizures of Chinese type spirits amounted to 1,079 gallons whilst 100,803 gallons of fermenting material were destroyed.
209. The practice of removing markers from diesel oil intended for industrial use continued to be a problem that required patrols to be constantly vigilant. 9,780 gallons of oil were seized from vehicles and detreating centres. During the year sales of diesel oil for road vehicles rose from 512,000 to 620,000 gallons per week. This represented an increase of 200% over the sales figures for June 1969 when detreating activity reached its peak.
Hydrocarbon Oils
EXCISE
210. Colony wide checks on vehicles, illegal sales depots and known or suspected detreating centres continued throughout the year and there are encouraging signs that the illegal removal of markers
52
from, and misuse of, diesel oil intended for industrial use, has been virtually eliminated as a commercially viable proposition. However, some oil is still detreated for private use and as the capital outlay required to organize a detreating operation is relatively small in view of the potential profits of such illegal business, the danger of a re- surgence of commercial activity in this commodity is too great to permit any relaxation in patrols and other preventive action.
Adulterated Liquor
211. The adulterated liquor trade continues to thrive, although the manner of delivery and methods of manufacture vary and have in part been conditioned by the success of investigative action. 149 bottles of liquor were seized and proved to be adulterated whilst some 'watered down' liquor still met official standards and could not be classified as adulterated.
212. Operators in this business now place their orders for materials such as empty bottles, foil caps, labels, colouring matter and some genuine liquor by telephone. They manufacture' only on demand in unoccupied areas and never deliver the finished product to the customer until they have surveyed the route to the customer's premises for signs of preventive action. The operators' evasive tactics include changing vehicles, jumping into moving taxis and using decoys. Thirteen operators were arrested but these represented only half of those suspected of engaging in this illegal trade.
213. Outlets for adulterated liquor, which usually consists of whisky or brandy, include liquor dealers, private parties, and restaurants catering for large scale functions such as wedding celebra- tions. It is believed that food flavouring, and the colourful excitement of local celebrations, tends to reduce taste sensitivity and thus the chance of detecting fake or adulterated liquor.
Illicit Distilling
214. Patrols continued their drive against the illicit distilling of Chinese type spirit. Although the pressure maintained by patrols and the high rate of detection have forced many operators out of business, high profits continue to make this an attractive business and operators are learning to adopt increasingly sophisticated methods.
53
PREVENTIVE OPERATIONS
Searches
215. Preventive Service officers searched 638 ocean-going vessels, guarded 605 vessels and boarded 1,606 vessels for cargo examination as a preventive measure against the illegal importation of narcotics. dutiable commodities, unmanifested cargo and illegal immigrants. Marine patrols searched 19,095 fishing and trading vessels and the patrol launches steamed 19,847 hours.
216. Macau ferries were checked and searched regularly and passenger traffic increased from 1,210,266 for 1969-70 to 1,523,418 for this year. The increase of approximately 25.88% was mainly due to the further development of the organized tour service offered to over- seas visitors by local entrepreneurs.
217. 317,953 persons passed through the Lowu Sub-Station against 421,198 during the preceding year. Cargo imported through Lowu and Sheung Shui Sub-Stations totalled 520,723 tons and 48,483 tons respectively against 561,309 tons and 54,467 tons for the previous year.
218. The number of incoming passengers at the Airport continued to increase. A total of 1,197,921 passengers were processed through Preventive Service facilities compared with 970,409 for last year. Aircraft arrivals totalled 23,978 against 20,158 for 1969-70. Included in the increased numbers were many travellers who had visited to or from the Osaka Trade Fair.
Narcotics
219. Preventive Service action in the Harbour included the searching and/or guarding of 1,243 ocean-going vessels and the examination of incoming cargoes on 1,606 vessels. Sixty-six narcotics seizures were made and 42 persons were arrested.
220. No large seizures of morphine or opium were made but seizures of canabis and canabis resin totalled 2,042 gm. and 34,828 gm. respectively.
Bullion
221. Five seizures of gold, weighing a total of 310.529 kilogrammes, were made under the provisions of the Importation and Exportation
54
Ordinance. The largest seizure was made on 23rd April, 1970 in a cabin on board the m.v. 'Star Betelguese' where Preventive Service officers discovered 200 bars of gold, each weighing 1 kilogramme, concealed beneath the drawers of a bunk. The gold was unclaimed and the owner could not be traced.
Marine
222. Launch patrols, which have a deterrent effect on would-be smugglers of dutiable commodities, narcotics and other prohibited articles, continued regularly throughout the year.
223. A Preventive Service water jet boat was damaged beyond repair when another government vessel moored alongside exploded and caught fire. Fortunately, the Preventive Service vessel, which was undergoing repairs, was not manned at the time of the incident.
224. One hundred and ten officers of the Marine unit attended training courses in navigation and engineering.
TRAINING AND ADMINISTRATION
Investigation
225. Investigations were conducted into 51 cases involving dis- ciplinary offences and infringement of the Merchandize Marks Ordin- ance, the Importation and Exportation Ordinance, the Dutiable Com- modities Ordinance and the Dangerous Drugs Ordinance. Requests for information from overseas Customs Authorities were also processed.
226. Verification checks were made at the premises of 343 suspected offenders against the Importation and Exportation (Reg- istration of Imports and Exports) Regulations. Thirteen warrants were executed under the Merchandize Marks Ordinance, four of which resulted in private prosecutions.
227. On 14th December, 1970, observation teams previously posted to field units were redeployed to the Investigation Division. This redeployment assisted in the detection of several adulterated liquor and rectifying of alcohol offences.
228. Court actions totalled 2,416 as compared with 4,115 for the previous year. There was a considerable decline in the number of summonses issued for failing to lodge declarations under the Importa-
55
tion and Exportation (Registration of Imports and Exports) Regula- tions. Only 34 summonses were issued during the period against 1,162 for the previous year. The reduction was due to the strengthen- ing of the legislation which now provides for administrative penalties to be imposed under certain conditions.
229. The following table illustrates the trend of prosecutions over the last three years:
Actions
Arrests
Summonses Fines
...
1970-71 2,416 362
1969-70
1968-69
4,115
5,017
421
611
992
2,210
2,747
$251,075
$203,894 $302,194
230. Details of some major confiscations ordered by the Courts are at Table 2. Confiscations of dutiable commodities and dangerous drugs are at Table 3.
Training
231. The Preventive Service Training School continues to function in temporary accommodation at the Kwun Tong Government office building, which houses the classrooms, a museum and administrative sections. Quarters are provided for the trainees in private property leased by Government in the vicinity of the Training School.
232. A new training establishment, which will be built at Tai Lam Chung in the New Territories, has now reached an advanced planning stage and it is expected that construction will begin during 1972. The new establishment will provide full time residential training for over 100 members of the Preventive Service and will be sited near the sea in an ideal position for both land and marine training.
233. Ninety-nine persons were offered and accepted appointments to fill vacancies in the Assistant Revenue Officer and Woman Assistant Revenue Officer establishments.
234. Induction training courses, which cover laws under which the Preventive Service operates, Government Regulations, Departmental and Service instructions, excise and preventive operational activities, dis- cipline, judo, life-saving, first aid, fire arms and basic fire fighting, were conducted for small groups of trainees throughout the year. Opportunities were provided for the trainees to gain practical experience through attachments to operational units.
56
235. Six refresher courses were held for members of the in- spectorate and these proved of considerable value to those aspiring to promotion from the Revenue Sub-Inspector grade.
236. Eight officers attended C.I.D. courses, conducted by the Royal Hong Kong Police Force, to study modern methods of detection and surveillance procedures.
237. Sixteen of the younger members of the Preventive Service attended courses held at the Outward Bound Training School at Tai Mong Tsai in the New Territories.
238. Four members of the inspectorate visited various countries including the United Kingdom, Australia, Singapore, Thailand, Malaysia and Japan.
239. One Chief Revenue Inspector and three Senior Revenue Inspectors were seconded to the Colonial Secretariat and three Revenue Inspectors were seconded to the New Territories Administra- tion to gain administrative experience.
240. Two officers attended a Methods of Instruction Course at the Government Training Division.
241. 353 visitors from schools, the press and airlines' security staff were received at the Preventive Service Training School.
242. Six Woman Revenue Sub-Inspectors and 110 junior officers completed induction training courses and four passing out parades were held.
Staff and Discipline
243. The award of the British Empire Medal to Mr. YEUNG Leung, a Senior Revenue Officer, was announced in the New Year Honours List.
244. During the period, 125 officers were promoted. These were:
From
Revenue Inspector Revenue Sub-Inspector Principal Revenue
Officer Class II
Senior Revenue Officer
Revenue Officer
Assistant Revenue
Officer
To
Senior Revenue Inspector Revenue Inspector
Principal Revenue Officer Class I
Number
5
9
...
1
·
32
34
...
...
44
Principal Revenue Officer Class II
Senior Revenue Officer
Revenue Officer
57
Total
125
245. Commendations were awarded to two Revenue Sub-Inspec- tors, two Woman Revenue Sub-Inspectors, two Revenue Officers, one Woman Revenue Officer, one Assistant Revenue Officer and one Woman Assistant Revenue Officer for outstanding alertness, initiative and zeal displayed in the performance of their duties.
246. Three Revenue Inspectors, two Revenue Sub-Inspectors, one Woman Revenue Sub-Inspector and five Assistant Revenue Officers transferred to other Government Departments.
247. Three Revenue Inspectors, seven_Revenue Sub-Inspectors, two Woman Revenue Sub-Inspectors, one Revenue Officer, fifty-five Assistant Revenue Officers and three Woman Assistant Revenue Officers resigned from the Service.
248. Fifteen breaches of discipline were reported during the period. Punishments were awarded as follows:
Reprimands
Fines
Dismissals...
Extra Duty
...
...
...
:
•
:
1970-71
1969-70
12
1
1
2
2
1
FOOD SUPPLIES
249. The Food Supplies Unit compiles records and statistical returns of the daily imports of essential foodstuffs, such as rice, swine, cattle and vegetables. These returns are analysed and submitted to the Food Supplies Co-ordinating Committee to enable it to deal with any deficiency in essential foodstuffs.
Food Unit (Essential Services Corps)
250. An exercise was held on 28th February, 1971 to simulate the distribution of food supplies throughout the Colony and a total of 470 members of the Preventive Service were deployed in various posts. Experience of road traffic conditions and communication difficulties, which will be of considerable value during an emergency, was gained from both this exercise and a communications operation held at the Preventive Service headquarters on 17th January, 1971.
58
DUTIABLE COMMODITIES BRANCH
Revenue from Excise Duties
251. The total net revenue from duties and licence fees during the financial year 1970-71 was $417, 231,000, an increase of 10.1% over that for the previous financial year ($378,929,000).
252. For comparison, net revenue figures for the year under review and the past two years are summarized below:
Tobacco Hydrocarbon Oils
Liquor
Table Waters
Methyl Alcohol Licences
..
...
...
...
:
in $'000
1970-71 1969-70
1968-69
125,022
125,475
118,785
156,102
135,753 117,337
121,251
103,049
91,357
10,147
9,960
8,190
92
108
81
4,617
4,584
4,436
417,231
378,929
340,186
253. The figures show considerable increases from most categories of dutiable commodities and the total net revenue, which was $38.3 million over the previous year, exceeded the original estimate of $397.3 million by $19.9 million. Net income from hydrocarbon oils and liquor showed a significant increase of $20.3 million and $18.2 million respectively.
254. A full breakdown of gross collections, together with refunds and drawback payments, is shown in Table 4.
(a) Tobacco
255. Net revenue from tobacco reached the revised estimate of $125.0 million and gross revenue from tobacco leaf increased by $7.5 million as compared with $93.8 million for last year. Exports of locally manufactured cigarettes increased by 19.9% to 5.4 million pounds, but drawback outstanding was only $2.1 million on the last day of the financial year as compared with the $7 million outstanding at the end of the previous year. Duties collected from imported cigarettes rose by 15.6% while those from locally manufactured cigarettes decreased by 10%. Collection from Chinese prepared tobacco was only $856,100, the decrease of $62,600 resulting from changing smoking habits.
59
(b) Hydrocarbon Oils
256. Reaching an all time record of $156 million, net revenue from this category exceeded the original estimate by $6.1 million and was $20.3 million over the collection for last year. Consumption of all types of diesel oil rose to 93.7 million gallons providing a net revenue of $56.2 million, an increase of 35.2%. Diesel oil for road vehicles alone contributed $50.8 million, representing an increase of $14.5 million or 39.9%, as a result of the revision in duty on diesel oil for public omnibuses, the growing number of diesel-engined vehicles, and action against the illicit use of industrial diesel oil. Liquefied petroleum gas continued to gain popularity providing $1.4 million in net revenue, a rise of 41.9%.
257. Light oils (petrol, etc.) went up moderately by 6.2% to $50.3 million. Furnace oil yielded $42.7 million, an increase of $2.4 million or 6%.
(c) Liquor
258. Total net revenue from liquor was $121.3 million, an increase of $18.2 million or 17.7%. Imported brandy and whisky were the two main sources and together they provided 51.2% of the revenue from liquor. There was a slight decrease of $1.3 million or 11.1% in revenue from locally distilled Chinese type liquor, but the deficit was made up by its imported counterpart.
(d) Table Waters
259. There was a slight increase of 2% in the revenue collection of $10.1 million from this category which was $1.1 million above the original estimate, but $0.4 million below the revised estimate. A price increase in August 1970 slightly reduced consumption.
Revenue from Licences
260. The revenue obtained from various types of licences is shown in Table 5. Revenue from this category was $46,000 below the estimate of $4.6 million but registered an increase of $33,000 or 0.7% over last year.
60
261. Net revenue from licences in respect of various commodities is shown hereunder together with comparative figures for the previous two years:
Liquor
Tobacco
...
Hydrocarbon Oils ...
Table Waters
Ship and Harbour Vessel
Methyl Alcohol
..
...
:
...
...
in $'000
1970-71
1969-70
1968-69
3,537
3,487
3,322
843
861
884
201
198
195
...
31
32
29
3
4
4
2
2
2
4,617
4,584
4,436
61
CHAPTER 7
GENERAL DUTIES BRANCH
262. The General Duties Branch is responsible for administering trade licensing, strategic and reserved commodities controls, and food supplies. It also deals with trade complaints, co-ordinates depart- mental legislation, prepares reports and handles other subjects which do not fall readily into any existing division or branch.
TRADE LICENSING AND RESERVED COMMODITIES
Trade Licensing
263. The Importation and Exportation (Southern Rhodesia) Regula- tions, Cap. 50 continued in force throughout the year. These Regula- tions, which subject all imports from and exports to Southern Rhodesia to licensing control, were introduced in May 1966 in conformity with the policy of the United Kingdom Government in respect of sanctions against Southern Rhodesia.
264. During the year, Hong Kong continued to be a member of the International Coffee Agreement. Under this Agreement, Hong Kong is obliged to subject all imports of coffee from non-member countries of the Agreement to quota control, which was set at 1.6 million Ib. for the 'coffee year' 1st October, 1970 to 30th September, 1971.
265. As a participant in the International Wheat Agreement, Hong Kong undertook to import 90% of its wheat and wheat flour require- ments from member countries. However, no licensing or quota control has been necessary as Hong Kong has traditionally imported about 90% from participating countries. To ensure that Hong Kong's obligation is fulfilled in these international undertakings, a surveillance on the pattern of Hong Kong's imports is maintained.
266. The number of import licences issued for all purposes, including the control of strategic goods and reserved commodities,
62
totalled 46,389 (42,793*). To confirm the arrival in Hong Kong of strategic goods 262 (200*) delivery verification certificates were issued. 267. The majority of export licences are issued for the purpose of exchange control. The number of licences issued (excluding textile licences processed in the Textiles Branch) amounted to 605,324 (582,170*). 1,259 (1,072*) delivery verifications or landing certificates issued by the proper authority in the country of import were produced by exporters as required following the export of strategic items.
Reserved Commodities
268. Certain essential food and fuel supplies are subject to licensing control. The department kept a close watch on commercial stocks of these commodities to ensure that they were adequate to cover possible supply shortages.
(a) Rice
269. The Rice Control Scheme continued to be administered under the Importation and Exportation (Reserved Commodities) Regulations. The basic quarterly import quota remained at 88,000 metric tons with 44,000 metric tons as the stipulated minimum reserve stock.
270. The international supply of rice continued to remain favour- able with supply generally exceeding demand. World output for 1970-71 exceeded the previous record production achieved in 1969-70. Increased production in 1970 was due mainly to higher average yields per acre. A number of importing countries were successful in their efforts to attain self-sufficiency. Export availabilities substantially in- creased as a result, and brought about a reduction in prices on the world rice market.
271. In the early part of 1970-71, as a result of the favourable world supply situation and the Thai Government's decision to reduce the export premium on rice, import prices of Thai rice declined to their 1965 level. Between April 1970 and March 1971, c.i.f. prices for Thai rice 100% whole 3rd grade and 100% broken Al super decreased by $6.30 and $0.4 per picul or 11.2% and 1.1% respectively. Import prices for China rice also declined during the year, though not to the extent of prices for Thai rice.
* Previous year's figures shown in brackets.
63
272. With the decline in import prices, wholesale rice prices in Hong Kong dropped correspondingly during the year. The benefit of these reductions was passed on to the public, at least in part, by improvements in the quality of the various grades of rice in the shops. Towards the end of the year, retail prices of the improved grades showed a slight fall.
273. The level of per capita rice consumption, which had been declining for some years, reached a platform in 1969-70. During 1970-71, the level of rice consumption in fact increased slightly. Off- takes of good quality rice remained at a high level. In view of the favourable world supply situation, it was not considered necessary to keep a high stock. As a result rice stocks were kept at a level of 76,000 metric tons for the greater part of the year, sufficient for three months' consumption.
274. Total rice imports during the year were 336,716 metric tons (326,317) as follows:
Source
Thailand
***
China
U.S.A.
...
...
...
Cambodia
...
...
...
Australia
N. Vietnam
Philippines
Uruguay
Taiwan
Venezuela
++
Burma
N. Korea Singapore
•
•••
...
...
...
...
...
1970-71 M/Tons % 188,388
1969-70 M/Tons %
56.0
163,030
50.0
...
88,511
26.3
79,835
24.5
11,613
3.4
19,004
5.8
18,170
5.4
20,546
6.3
10,682
3.2
8,603
2.6
628
0.2
3,067
0.9
...
...
...
136
...
...
221
18,231
120
11188
31
952
0.3
120
0.1
5.4
30,823
9.5
295
0.1
...
...
11
336,716 100.0 326,317 100.0
Offtakes from stocks were as follows:
Type
Whole Rice-
Thai Origin
Chinese Origin Other Origin
1970-71 M/Tons %
1969-70 M/Tons
%
154,097 44.7
124,381 36.8
...
86,551 25.1
79,906 23.6
60,802 17.7
80,136 23.7
301,450 87.5
284,423 84.1
64
1
Type
Broken Rice-
Thai Origin
Glutinous Rice-
Thai Origin
Chinese Origin
Other Origin
Sub-Total
:
1970-71 M/Tons %
1969-70 M/Tons %
27,141 7.9
40,182 11.9
...
...
10,738
3.1
9,466
2.8
128
0.1
282
0.1
16
11
...
10,882
3.2
9,759
2.9
339,473
98.6
334,364
98.9
Low Grade and Other Rice for
Industrial use/Poultry Feeds-
Thai Origin
...
Cambodian Origin
Other Origin
Total Offtakes
474
1,703
2,722
8828
0.1
1,745
0.5
160 0.1
0.8
1,853
2283
0.5
0.5
4,899 1.4
3,758
1.1
344,372 100.0 338,122
100.0
275. In May 1970 the department was represented at the Fourteenth Session of the Study Group on Rice of the United Nations Food and Agriculture Organization (F.A.O.) held in Rome. Estimates of world production and demand for rice given at the meeting indicated a sub- stantial surplus of rice entering world trade in 1970. Serious concern about the situation was expressed by a number of traditional rice exporting countries, and an ad hoc working group was appointed to study the matter and to report to the next Session of the Study Group.
(b) Frozen Meat
276. During the year, importers of frozen meat continued to be registered as stockholders with an undertaking to maintain a certain quantity as reserve stock.
277. Imports of frozen meat amounted to 36,540 (32,255) long tons in 1970-71. Of this amount 78% (81%) came from China.
278. Consumption of frozen meat and fresh meat during the past three years was as follows:
65
Fresh Meat Frozen Meat
:
...
1970-71
1969-70 1968-69
L/Tons
L/Tons L/Tons
116,174 36,006
116,952
112,020
32,290
37,207
152,180 149,242
149,227
(c) Frozen Poultry
279. Imports of frozen poultry under licence amounted to 59.5 (49.2) million lbs. The major source of supply was the U.S.A., followed by China and Denmark. These countries supplied 33% (34%), 31% (33%) and 11% (16%) of total imports respectively.
(d) Coal and Firewood
280. Imports of coal and firewood amounted to 28,520 (38,323) long tons and 178 (666) long tons respectively.
TRADE COMPLAINTS SECTION
281. The Trade Complaints Section undertakes to assist, wherever possible, towards an amicable settlement of commercial disputes between Hong Kong business concerns and overseas customers. This service is voluntarily undertaken in a desire to help both parties and, in particular, overseas complainants who may have been unable to obtain a satisfactory response from the Hong Kong company con- cerned.
282. In handling trade complaints, however, the powers of the department are restricted as there is no legislation to enforce decisions in commercial disputes. The department's ability to assist as a mediator is therefore dependent to a large extent on the co-operation and goodwill of the parties involved. Nevertheless, the department has been reasonably successful in bringing about settlements. In the event that the department is not able to effect an amicable settlement, it normally suggests to the complainant that he should seek legal advice.
283. During the year the number of trade complaints in which the department was asked to mediate continued to increase. 1,960 (1,629) complaints were received from overseas firms or individuals. About 82% of the complaints were amicably settled. In the same period, 68 (45) local firms/individuals sought assistance in obtaining settlement of disputes with overseas firms. A detailed breakdown is given in Table 6.
66
CHAPTER 8
DEPARTMENTAL ADMINISTRATION
Senior Staff Changes
284. During the year a number of changes were made at a senior level. Mr. T. D. SORBY, Administrative Officer Staff Grade A, ceased to be Director of Commerce and Industry when proceeding on leave prior to retirement in July 1970 and was succeeded by Mr. J. CATER, Administrative Officer Staff Grade A, in late September 1970. Mr. D. H. JORDAN, M.B.E., Administrative Office Staff Grade B2, was appointed to act as Director during the interim period.
285. Mr. E. I. LEE, Administrative Officer Staff Grade B2, rejoined the department in July 1970, as Deputy Director (Administration and Industry) in place of Mr. F. K. LI.
286. Mr. W. Dorward, Assistant Director, took over the post of Deputy Director (Commercial Relations) from Mr. E. P. Ho, Adminis- trative Officer Staff Grade C, who went on vacation leave in August 1970, and Mr. E. B. WIGGHAM, Senior Administrative Officer, was appointed as Assistant Director vice Mr. DORWARD. Shortly after Mr. Ho returned to the department at the beginning of February 1971, Mr. WIGGHAM was transferred to the Colonial Secretariat and Mr. DORWARD resumed his former duties as Assistant Director.
287. Mr. H. WILLIAMS, Administrative Officer Staff Grade C, was appointed in March 1971 as Assistant Director and Assistant Com- missioner of the Preventive Service vice Mr. A. L. TOKLEY on sick leave.
General
288. The Administration Branch is under the control of a Senior Executive Officer designated as Departmental Secretary. He is respon- sible for staff and establishment as well as general administration matters, and is assisted by three Executive Officers.
Organization
289. An organization chart of the department as at 31st March, 1971 is in Table 7 with the divisional staff establishment given in brackets.
67
Establishment
290. At the beginning of the year the department's authorized establishment stood at 1,599 posts, of which 988 were in the Preventive Service. Vacancies in the civilian and uniformed staff establishment were 40 and 116 respectively. On 31st March, 1971 the overall establish- ment reached 1,609. However, the number of posts in the Preventive Service was reduced to 973 with a number of supernumerary posts lapsing on that date. At the end of the year there were 120 vacancies, including 103 in the Preventive Service.
Recruitment
291. Because of the continual wastage arising from resignations and transfers of officers to other government posts, the Administration Branch was heavily taxed in bringing the departmental establishment up to strength. Five major recruitment exercises were undertaken to fill vacancies in the grades of Assistant Trade Officer, Industry Assist- ant Class II and Assistant Revenue Officer. A total of 103 newly appointed officers assumed duty during the period. A few other recruit- ment exercises resulted in the appointment of 10 officers in the minor grades.
Promotions (excluding Preventive Service)
292. Altogether 34 promotions in various grades were approved during the year:
From
Administrative Officer Staff
Grade B1
Senior Trade Officer
Industry Assistant Class I Industry Assistant Class II Assistant Supplies Officer
Personal Secretary Class I
Personal Secretary Class II
Confidential Assistant Class II
G.C.S. II
G.C.S. III
To
Number
Administrative Officer Staff
Grade A
1
3
1
10
1
1
3
Principal Trade Officer Senior Industry Assistant Industry Assistant Class I Supplies Officer
Senior Personal Secretary
Personal Secretary Class I
Confidential Assistant Class I
G.C.S. I
G.C.S. II
Clerical Assistant
G.C.S. III
68
5
~ 24 5 3
TRAINING
(see also paragraphs 231 to 236)
293. Mr. Ho Pui-yiu, Senior Revenue Inspector, undertook a five- month training course and attachment in Australia from July 1970 to December 1970.
294. Mr. Douglas CHAN Sik-hong, Assistant Trade Officer, departed in July 1970 for Holland to attend the 8th International Summer Course in Industrialization. After his attachment to the London Office in September, he attended a Middle Management Course at the Hendon College of Technology. He returned to the Colony at the end of October 1970.
295. Mr. Li Pui-lam, Revenue Inspector, left for the United Kingdom to attend the 3rd Customs and Excise Procedure Course in February 1971, which included six weeks training at the Customs and Excise Training Centre, Southend-on-Sea, Essex, and attachments at various customs stations throughout the United Kingdom.
296. During the course of a merit trip, Mr. Ko Cheuk-yee, Acting Chief Revenue Inspector, was attached to customs authorities in Frankfurt, Hamburg, Amsterdam, Rotterdam, the United Kingdom and the United States.
297. Mr. Paul WONG Kam-chiu, Principal Trade Officer, attended a course on trade promotion in Tokyo from 6th April to 12th June, 1970. This course was organized by the United Nations Asian Institute for Economic Development and Planning in association with the Trade Promotion Centre of the Economic Commission for Asia and the Far East (E.C.A.F.E.) and the Overseas Technical Co-operation Agency (O.T.C.A.) of the Government of Japan.
298. An Introductory Training Course was organized for 16 proba- tionary Assistant Trade Officers during the period from 6th January to 7th April, 1971. The course consisted of lectures given by senior Government Officers as well as guest speakers from both commercial and industrial sectors and a number of visits to industrial and com- mercial organizations.
299. Mr. LEE Hok-pui, Assistant Trade Officer, was awarded a U.N. fellowship to attend the five-month G.A.T.T. In-Service Training Course in Geneva, which commenced in February 1971.
69
300. The Industry Inspection Branch conducted one induction course between 12th October, 1970 and 19th November, 1970 which was attended by fifteen newly appointed Industry Assistants Class II and one Inspector of the Hong Kong General Chamber of Commerce.
301. Provision was made in the 1971-72 Estimates to enable one Assistant Trade Officer, two Revenue Inspectors and one Senior Industry Assistant to undertake training overseas.
WELFARE
302. Staff welfare is the responsibility of the Deputy Director, Administration and Industry, assisted by the Departmental Secretary. Welfare Fund
303. During the year the Commerce and Industry Department (Civilian Staff) Welfare, Social and Sports Fund Committee organized various activities such as an inter-branch soccer league competition, picnics and visits, and they were well supported by members of the civilian staff.
304. Approval was given in principle in Establishment Circular No. 18/71 dated 26th March, 1971 for the establishment of statutory welfare funds for the non-disciplined staff in all departments employing 200 or more staff on salaries of $1,722 per month or below. The purpose of these funds is to provide financial relief in cases of illness or domestic distress and to improve departmental welfare in the form of grants towards recreational activities.
305. On the basis of $5 per head per annum for 486 eligible non- disciplined officers in the department as at 1st January, 1971, the amount allocated to the department for the quarter ending 31st March, 1971 was $608.
306. A Departmental Gala Day was held on Sunday, 10th January, 1971 at the Indian Recreation Club sports ground, So Kon Po. The success of the occasion was shown in attendance by over 2,000 members of the staff and their families.
Preventive Service Senior Officers' Mess
307. In September 1970, the Preventive Service Senior Officers' Mess moved from Fire Brigade Building to its new accommodation on the 9th floor of the Rumsey Street Multi-Storey Car Park Building, and was officially opened by Mr. A. L. TOKLEY, Assistant Commissioner,
70
on 29th October, 1970. It continued to give dining facilities to its members. Several mess dinners, social functions and retirement ceremonies were held in the Mess during the year.
Clerical Canteen
308. The Canteen which is used primarily by junior officers con- tinued to be well supported.
DEPARTMENTAL ACCOMMODATION
309. An investigation into the renovation of Fire Brigade Building was finally completed by the Public Works Department in November 1970. It was estimated that the renovation would cost more than $3.2 million compared with an initial estimated cost of $2.0 million in 1968. In view of the high estimated cost, other possibilities for improving the department's accommodation were being considered at the end of the year.
310. In March 1971, an additional Kowloon Sub-Office was opened on a trial basis at Tung Ying Building, Nathan Road to assist manu- facturers and industrialists in the Tsim Sha Tsui area. This office receives applications for, and issues certificates of origin and preference, as well as import and export licences.
311. The Rumsey Street Multi-Storey Car Park Building was com- pleted in early May 1970. The move of the Dutiable Commodities Branch, the Investigation Division and the Headquarters of the Preventive Service to the 9th and 10th floors of the new building took place in May and June 1970.
312. In order to relieve the crowded conditions in the Industry Inspection Branch at Tung Ying Building, Nathan Road, approval was given in October 1970 for the Branch to acquire an additional office area of 3,000 sq. ft. on the 5th floor of the building upon the removal of the Labour Department branch office, to the Canton Road Government Offices in June or July 1971.
313. Projects nearing completion at the end of the year included the Kai Tak Bond and Inspection Area for use by the Industry Inspection Branch and the Canton Road Government Offices, which will accommodate part of the Excise Division of the Preventive Service. Those in the planning or tendering stage comprised the new Preven- tive Service Training School, an extension to the Fanling Excise Station and the Colony Transit Mail & Sorting Office.
71
CHAPTER 9
FINANCE AND STORES
REVENUE
314. Net revenue collected by the department amounted to $442.2 million, an increase of 12.0% over the previous year (Table 8). This represents 14.4% of all revenue collected by Government. Details of revenue for dutiable commodities are given in Tables 4 and 5.
315. It was estimated originally that some $15.0 million would be collected from ad valorem charges on import and export declarations. In fact the yield was more than $17.3 million, due to the continued growth in the value of Hong Kong's trade, and the enforcement of the Importation and Exportation (Registration of Imports and Exports) (Amendment) Regulations, as a result of which, importers and exporters have been clearing their backlog and are more inclined to lodge their declarations within the prescribed period so that no penalty will be imposed.
316. In view of the large amount of revenue collected from dutiable commodities, the Audit Department conducts a running audit of the department's accounts with particular regard to the calculation of duty payable on dutiable commodities.
EXPENDITURE
317. The total departmental expenditure amounted to $20.4 million, an increase of 3.9% over the previous year. The cost of operating the three overseas offices (Washington, Geneva and Brussels) for the year was $695,800.
318. During the year, a total of 8 delegations participated in con- sultations and another 9 delegations attended overseas conferences, in connection with trade and related matters, outside Hong Kong. The cost of these amounted to $326,500.
72
STORES
319. Confiscated liquor, tobacco and cigarettes continue to be sold at an authorized rate equivalent to the retail price less 20%, but without any warranty as to condition. Free issues were confined to certain approved charitable organizations. Compared with last year, the quantities sold or issued free and their respective values were as follows:
Sold:
Liquor Cigarettes Cigars
...
1970-71
1969-70
Quantity Value
Quantity
Value
$
$
...
3,923 bots.
19,161
3,704 bots.
13,232
8,400 pcs.
424
1,942 pcs.
381
2,030 pcs.
491
...
$19,966
Total
. $13,723
..
Distributed free:
Total
...
1970-71
1969-70
Quantity
Value
Quantity
Value
$
$
Liquor Cigarettes Cigars Tobacco
1,843 bots.
5,059
3,380 bots.
12,446
...
...
299,124 pcs.
11,012
326,500 pcs.
7,836
1,193 pcs. 149 lbs.
159
4,648 pcs.
707
742
398 lbs.
1,990
Total
... $16,972
Total
...
...
$22,979
320. Proceeds of cash sales are apportioned between the appropriate revenue subheads, viz. Duties and Revenue Reward Fund, while credits resulting from issues to other departments go entirely to the Fund, which is used for the payment of rewards for information leading to the seizure of contraband. The Fund ceiling is fixed at $200,000; sums in excess of this amount being transferred to general revenue. Total credits during the year resulting from cash sales as well as issues to other departments were:
Revenue Head 1 Duties: Subhead 2-Liquor Revenue Head 1 Duties: Subhead 4-Tobacco Revenue Reward Fund
...
...
Total
...
:
:
$
13,587 444
6,239
$20,270
73
WELFARE FUNDS
321. The department operates two Welfare Funds, one for members of the Preventive Service and the other for the civilian staff. The latter is described in paragraphs 303 and 304. The Preventive Service Welfare Fund is established by Ordinance to-
(a) procure for members who are serving, or for former members who have been retired on pension, gratuity or other allowance, comforts, convenience or other advantages not chargeable to public revenue; and
(b) grant loans to members who are serving or to former members who have been retired on pension, gratuity or other allowance.
The revenue of the fund consists of voluntary donations and a sum voted annually by the Legislative Council. Loans amounting to $3,750 were made during the year to help meet various costs, such as medical treatment, maternity fees, education and funeral expenses for serving and retired officers and their dependants. In addition, expenditure of $12,143 was authorized for the general welfare of the Preventive Service. To generate additional income, sums considered to be surplus to the normal requirements of the Fund were put into investment. In addition to the two deposit-at-calls of $8,000 and $6,000 previously invested, $10,000 was placed on fixed deposit during the year. The $6,000 deposit was later realized so as to maintain the liquidity of the cash balance of the Fund.
19th July, 1971.
J. CATER,
Director of Commerce and Industry.
74
75
Year
Certificates
TABLE 1
CERTIFICATION OF ORIGIN STATISTICS
1968-69
No. Issued (Percentage Change Compared with 67-68)
Value of Goods Certified $Mn. (Percentage Change
1969-70
No. Issued (Percentage Change
Value of Goods Certified $Mn. (Percentage Change
1970-71
No. Issued (Percentage Change
Value of Goods Certified $Mn. (Percentage Change
Compared with
Compared with 68-69)
Compared with
Compared with 69-70)
Compared with
67-68)
68-69)
69-70)
Standard Certificates of
Origin
151,903
2,058.50
175,169
2,547.29
180,242
3,120.05
(+11.8)
(+29.1) (+15.3)
(+23.7)
(+2,9)
(+22.5)
Commonwealth
Preference Certs.:
(a) Britain
87,024
1,256.63
82,046
1,255.08
77,958
1,230.38
(-5.6)
(+9.3)
(-5.7)
(-0.1)
(-5.0)
(-2.0)
(b) Other Countries
22,632
175.67
22,094
150.48
331,239
344,870
16,734
131.50
337,858
(+2.0)
(+7.1)
(+16.3)
(-2.4)
(+4.12)
(-14.3)
(-24.3)
(−2.0)
(-12.6)
Comprehensive Certificates
of Origin:
(a) Commercial...
54,192
53,593
55,394
(+14.6)
(−1.1)
(+3.36)
1,282.48 (-0.1)
(b) Sample
15,488
11,968
7.530
(+28.8)
(-22.7)
(-37.08)
*(c) Mail Order
23,192
1,379.80
16,523
(-7.2)
(+32.2)
(-28.8)
1,284,19 (-6.9)
*(d) Tourist
73,212 102,677
59,469
(-1.3)
(-3.0)
(-18.8)
79,794 (-22.3)
*(e) Gift Plan
6,273
3.802
(-6.6)
(-39.4)
Total:
433,916
(+4.5)
4,870.60 (+23.7)
424,664
(-2.1)
5,237.04 (+7.5)
337,858 (-20.4)
5,764.41 (+10.1)
Domestic Exports
($Mn.)
8,908
11,004
12,620
54.7
47.6
45.7
Percentage
Certified
Value of Stamp Fees Paid
(Including Miscellaneous
Certificates, not recorded
above)
$5,128,000
$5,151,295
$4,750,010
* The issue of this type of C.C.O. was discontinued w.e.f. 23rd January, 1970 as a result of relaxations in the U.S. Treasury Department F.A.C.
Regulations.
TABLE 2
MAJOR CONFISCATIONS UNDER OTHER LEGISLATION
Legislation
Importation and
Exportation
Ordinance, Cap. 50 and Regulations made thereunder
Post Office Ordinance
Cap. 98
Pharmacy and Poisons
Ordinance Cap. 138
Gold
Commodity
Philippine silver coins Australian silver coins Acetic anhydride
Wrist watch
Transceivers...
Walkie Talkie
Cigarette lighters
Rice
X-Ray parts... Transistor radio
Quantity
Unit
1960-70
1970-71
lb.
22.00
622.60
lb.
490.80
lb.
22,214.78
gals.
8.00
nos.
7
270
sets
3
1
...
sets
8
...
nos.
564
lb.
2,400.00
9.90
nos.
63
sets
170
1
1
...
Movie camera 16 mm. Electronic capacitors
Toy percussion caps Explosive caps
Sulphanilamide Hydrocortisone sodium
succinate ...
set
pkg.
pkt.
box
...
caps
bottles
bottles
caps
caps
1 11
60
218
24,590
5
Oxytetracycline
Methapyrilene
hydrochloride
Chloromphenicol
O-ethyl O-p-nitrophenyl
phenylphosphonothiate... tin
Diphenoxylate
hydrochloride
Succinylsulphathiazole
Methylamphetamine
hydrochloride
Methyl parathion
...
vial
tablet
tablet
││ ││ │ | |
5
8
1,000
4
1
27
Dexamphetamine tartrate ...
Choral betain
bot.
am-
...
Quinalbarbitone
Amylobarbitone
poules bottles bottles tablet
12M -20
15
3
1
16
1 1 1
Antibiotics Ordinance
Cap. 137
Crystalline
Dihydrostreptomycin
vial
Ampililin
bottles
Oleandomycin
caps
88
Penicillin Potassium
tablet
Tetracyline hydrochloride ...
898+
60
10
56
caps
76
TABLE 3
CONFISCATIONS UNDER THE DUTIABLE COMMODITIES ORDINANCE CHAPTER 109 AND DANGEROUS DRUGS ORDINANCE CHAPTER 134
Tobacco
Commodity
Chinese prepared tobacco
Foreign cigarettes
Macau and Chinese cigarettes
Cigars
Tobacco stems
Tobacco leaf
Tobacco plant Pipe tobacco
Liquor
...
European type liquor Chinese type liquor
Beer
...
Chinese medicinal wine
Alcohol
Mash
Stills
Vehicle
Hydrocarbon Oils
Treated diesel oil
Dangerous Drugs
Opium, raw
Opium, prepared
Opium, dross ... Opium, water Opium, residue
...
Morphine hydrochloride
Salt of esters of morphine
Barbitone
Cannabis
Cannabis resin
...
Opium poppy straw
Opium pipe
...
Opium pipe head
Opium lamps
...
Quantity
Unit
1969-70
1970-71
lb.
303.63
50.23
lb.
518.00
1,512.18
lb.
444.47
327.85
...
lb.
122.50
15.19
...
lb.
8.16
18.00
lb.
22.05
471.71
1.
nos.
370
lb.
39.34
7.80
...
gals.
366.42
342.25
gals.
1,729.99
913.49
**
gals.
216.83
236.64
•
gals.
106.98
49.51
...
gals.
174.00
76.82
...
...
...
gals.
106,171.50
94,385.00
...
...
no.
nos.
104
129
3
gals.
65,075,25
9,801.75
:
lb.
172.52
54.77
lb.
0.86
6.66
lb.
0.16
0.07
...
fl.oz.
7.53
lb.
4.62
lb.
110.30
25.18
...
lb.
0.03
..
...
...
lb.
0.04
...
lb.
0.52
4.50
...
lb.
21.96
23.11
lb.
94.16
...
...
nos.
7
23
nos.
...
nos.
4
44
...
77
Liquor:
Whisky
Brandy
Gin
Wines
Beer...
Other European Type
Chinese Type:
(a) Locally Distilled
(b) Imported
Spirituous Liquor other than
intoxicating liquor
Methyl Alcohol
Tobacco:
Total
TABLE
DUTY FROM DUTIABLE
OMMODITIES (GROSS)
1968-69
1969-70
1970-71
Unit
Quantity
% Change
Duty
% Change
Quantity
% Change
Duty
% Change
Quantity
% Change
Duty
% Change
$
$
Gallons
166,385
"
398,476
53,310
>>
171,369
25
9,231,289
7
24,015
"
""
1,948,646 1,689,861
++
++++++
+ 13.0
+ 29.3
10,903,094 28,841,407
8.8
3,618,097
9.4
3,415,703
5.1
17,820,774
8.3
1,686,931
++++++
+ 13.0
201,295
27.6
9.7
6.8
6.8
7.3
Laa do do ta bo
462,935
58,533
194,265
0,813,984 27,127
++++++
21.0
13,170,502 + 20.8
280,259
16.2
33,568,991
+ 16.4
604,308
9.8
3,941,437
+
8.9
66,519
+ 39.2 + 30.5 + 13.6
18,298,789 43,866,324
+ 38.9
+ 30.7
4,459,673
+ 13.1
13.4
3,880,274
17.1
20,793,053
13.0
1,860,234
+ 13.6 + 16.7 + 10.3
239,888
+ 23.5
4,734,343
+ 22.0
12,555,611
+ 16.1
24,344,931
+ 17.1
31,899
+ 17.6
2,182,635
+ 17.3
8.1
5.6
13,501,726 15,439,941
++
5.9
8.1
1,648,799 J 2,089,411
15.4
+ 23.6
11,432,578 18,683,553
15.3
+ 21.0
1,483,573 2,233,523
+1
10.0 6.9
10,168,801
20,152,545
**
152,514 4,340
+ 14.7
2,058,355
+ 44.1
81,005
+ 16.9
+ 65.9
13,840,205
+
6.4
97,367,033
+ 13.3
170,382 4,840 15,671,571
+ 11.7
+ 11.5
2,276,745 108,100
+ 10.6 +33.4
+ 13.2
109,715,467
+ 12.7
177,476 3,587
17,676,643
+ 4.2
25.9
+ 12.8
2,412,234 92,242
130,712,517
7.9
+ 6.0
-
14.7
+ 19.1
+1
11.1
Cigarettes and Cigars
European Smoking Tobacco (including
Snuff)
Chinese Prepared Tobacco
Tobacco Leaf
Total
Pounds
6,031,780
+ 9.6
64,532,097
+ 9.7
++
59,954
14.6
3)
396,175
6.5
11,351,001
11.9
513,732 990,438 89,945,258
-
14.0 6,5
6,321,119 68,421 367,480
+ 4.8
67,521,178
+ 4.6
7,290,482
11.6
11,774,328
++
+ 14.1
7.2 3.7
586,318 918,698
+1
14.1
70,293
7.2
342,447
93,761,213 + 4.2
17,838,910
5.5
155,981,525
3.8
18,531,348
+
3.9
162,787,407
+ 4.4
12,679,739
20,382,961
+1÷ +
+15.3
78,086,953
++ 2.7
6.8
7.7
+ 10.0
603,574 856,116 101,278,942
+15.6
+1+
2.9
6.8
8.0
180,825,585 +11.1
Hydrocarbon Oils:
Liquefied petroleum gas
Pounds
Light Oils
37,116,754
+ 83.4
742,335
Imp. Gal.
Diesel Oils
32,049,093
4.0
42,500,747
Furnace Oils
33
75,867,050
+ 15.8
33,293,133
Other Type...
25
354,428,113
54,529,728
+
+12.5 9.2
35,442,811
'Total
37,116,754 lb. + 83.4 516,873,984 gal. + 12.0
15,366,461 9.9 12.5 5,362,714 + 8.9
117,341,740 + 8.5
83.4 + 3.7
18,090,011 15,730,994
+ 29.6
+ 11.5
02,829,460 $6,707,013
| 8,090,011 lb.
0,633,928 gal.
+ 12.5 + 13.7 + 4.0
+ 29.6 + 12.3
961,800 47,405,513 41,546,953 40,282,946 5,559,835
135,757,047
+ 29.6 +11.5
68,252,180
37,587,440
3.7
+ 24.8 93,685,370 13.7426,812,784 56,463,425
++++1
41.9
5.2
1,365,044 50,346,823
9.7
56,189,859
6.0
42,681,278
0.4
5,523,514
++++1
+ 41.9
6.2
35.2 6.0 0.7
+ 15.7
68,252,180 lb. 614,549,019 gal.
+ 41.9 + 5.8
156,106,518
+ 15.0
Table Waters ..
Locally Manufactured Liquor
Intoxicating Liquor
Spirituous Liquor other than intoxicating
liquor
Table Waters
Tobacco
Hydrocarbon Oils
Total
Gallons
17,110,322
+ 2.2
8,212,955
+ 2.1
*0,759,959
+ 21.3
9,964,781
+ 21.3
21,140,435
+ 1.8
10,147,410
+ 1.8
97,843 5,789,786
21.0
Refund and Drawback
101,890 + 4.1
+ 115.0
6,398,779
+ 10.5
41,551 22,856
38.5
+ 130.6
57,622 5,084
+ 38.7
77.8
37,196,574
8.5
37,312,640
4,447
4.5
3,586
+ 0.3 19.4
43,153,057
1.0
43,879,601 + 1.7
78
79
133,181 9,140,602
+ 30.7
+ 42.8
+ 65.2
95,178 214
55,804,006
4,413
65,177,594
95.8 + 49.6
+ 23.1
+ 48.5
TABLE 5
REVENUE FROM DUTIABLE COMMODITIES LICENCES, 1970-71
No. of Licences Issued
Revenue
$
Importer's:
Liquor
387
...
193,500.00
Tobacco
+
Hydrocarbon Oils
Table Waters Methyl Alcohol
1. D
...
82
...
...
41,000.00
187
...
97,000.00
61
18,300.00
69
690.00
Exporter's:
Liquor
Tobacco
229
...
+
...
4,740.00
71
...
3,160.00
Hydrocarbon Oils
Table Waters
Methyl Alcohol
Dealer's:
European-type Liquor Chinese-type Liquor Spirituous Liquor Tobacco
Hydrocarbon Oils
Methyl Alcohol Medicated Liquor
Retailer's:
Chinese-type Liquor Spirituous Liquor
Beer
Tobacco
Hydrocarbon Oils
Methyl Alcohol Medicated Liquor
Manufacturer's:
Distillers Brewer
Liquor Still
Tobacco
...
Liquor Manufacturer
Table Waters
Warehouses:
General Bonded
47
...
470.00
...
22 8
2,250.00
...
80.00
692
2,713
1,038,000.00 1,631,470.00
489
48,900.00
174
...
87,000.00
504
...
50,400.00
...
57
570.00
...
1
50.00
...
404
60,100.00
1,847
170,500.00
...
5,263
...
...
307,835.00
...
...
...
11,357
685,774.50
1,253
31,325.00
...
...
34
340.00
...
11
550.00
15
...
1
44
19,900.00
...
27
1
12
...
...
...
Liquor
Tobacco
19
...
...
...
Hydrocarbon Oils
Table Waters
Methyl Alcohol
...
...
...
Ship and Harbour Vessel Licences
Licence fees for persons importing for own
use and miscellaneous
...
IN GE
4
4,000.00 9,300.00
9
90.00
38,000.00
7
11,000.00
17
17,000.00
14
800.00
7
70.00
286
2,860.00
39,790.76
Net Total
•
26,381
4,616,815.26
80
TABLE 6
TRADE COMPLAINTS FROM OVERSEAS COMPANIES OR INDIVIDUALS HANDLED BY THE DEPARTMENT
FROM 1.4.70 TO 31.3.71
Type
Source
Breach of Contract
Inferior Quality
Non-delivery
Outstanding Debt
Short-shipment
Miscellaneous...
American Continent
Rest of the World
Total
Rest of the
U.S.A.
continent
5
1
14
20
...
31
7
108
146
927
17
155
1,099
33
11
106
150
...
:
57
1
21
79
351
6
109
466
Total
1,404
43
513
1,960
81
TABLE 7
COMMERCE AND INDUSTRY DEPARTMENT, HONG KONG
DIRECTOR
Deputy Director, Administration &
Industry
Assistant Director,
Industry
Industry Division
Assistant Director, Preventive Service & Dutiable Commodities
Deputy Director, Commercial Relations
Assistant Director Commercial Relations
(Europe)
Assistant Director, Commercial Relations (Other Regions)
Overseas Offices
Preventive Service
'E' Division
'R' Division
Administration
Branch &
Finance and
Supplies Branch
Senior Executive Officer
Treasury Accountant
Departmental
Establishment.
Internal Administrative
Matters.
Departmental Financial
Control.
Ad Valorem Charges
Collection.
Supplies and Stores.
General Duties Branch
Industrial Development
Branch
Certification Branch
Industry Inspection
Dutiable Commodities
Branch
Administrative Officer
Legislation. Departmental Reports. Departmental Publicity and Public Relations. Import and Export
Licensing.
Exchange Controls
(Licensing Procedure). Strategic Commodities. Reserved Commodities. Trade Complaints.
Principal Trade Officer
Industrial Land. Industrial Promotion. Industrial Infrastructure. Health and Safety
Standards of Hong Kong Products. Liaison with Industrial
Organizations. General Assistance to
Industry.
Principal
Trade Officer
Certification of Origin (including Standard Certificates, Comprehensive Certificates for the American Market and Commonwealth Preference Documentation).
Senior
Industry Officer
Inspection of Factories and Consignments under Certification and Export (Textiles) Licensing Requirements, including Investigations and Prosecutions.
Dutiable Commodities
Control-Tobacco, Hydrocarbon Oils, Table Waters, Methyl Alcohol, Alcoholic Liquors.
Chief
Preventive Officer
Protection of Revenue. Excise Duties.
Anti-Smuggling Operations. Essential Supplies
(Food).
Principal Trade Officer
Commercial Policy
(Europe) Liaison with Trade
Development Council and Export Credit Insurance Corporation. Textiles Advisory Board.
Principal Trade Officer
Commercial Policy (Other Regions). Liaison with Trade
Development Council and Export Credit Insurance Corporation. Trade and Industry
Advisory Board.
Establishment
(excluding
(123)
supernumerary posts)
1st March, 1971.
(37)
(29)
(95)
(114)
(1) Uniformed (36) Civilian
(933) Uniformed
(41) Civilian
(57)
Total Permanent Establishment; 577 civilian officers plus 934 in the uniformed Preventive Service.
Total Cost
: About $234 million (estimate for 1971-72).
Total Revenue Collected
: About $4664 million (estimate for 1971-72).
82
London
Brussels
Washington
Geneva
(39)
(6)
TABLE 8
NET REVENUE COLLECTED FROM ALL SOURCES
Approved
Actual Revenue
Estimate
1970-71
1970-71
1969-70
$
$
$
Duties
Imported hydrocarbon oils
150,000,000
156,102,105
Imported intoxicating liquor
Imported liquor other than
intoxicating liquor
Imported tobacco
85,000,000
100,038,913
135,753,460 81,522,312
2,250,000
2,409,298
2,327,222
128,000,000
125,021,579
125,474,767
Locally manufactured liquor Table waters
18,400,000
18,895,345
19,307,642
9,000,000
10,147,196
9,959,697
Licences
Liquor Tobacco
Miscellaneous (table waters)
Fines, Forfeitures and Penalties
Fines Forfeitures
...
•
Hydrocarbon oils
...
199,000 3,540,000
200,963
198,007
3,538,816
3,488,846
890,000
842,921
...
861,525
34,000
34,115
35,387
100,000
4,501,574
15,180
...
Penalties
10,000
...
2,051,677
3,415
Fees of Court or Office
Denaturing
***
Import and export declarations
Official certificates
Official signatures
Departmental services and
supervision
Overpayments in previous years Bonded warehouse supervision Loss of, or damage to,
Government property
Publications
...
320,000
420,429
383,594
14,980,000
17,394,226
14,362,893
...
...
8,000
10,480
8,520
...
***
1,400
1,360
1,285
100
131
100
222
400,000
447,118
177 6,009 359,565
...
200 30,000
686 44,178
234 30,478
Surplus and condemned stores
...
Miscellaneous
100,200
124 136,831
699 692,209
413,263,000 442,240,287
394,793,123
83
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