工商業管理處年報 Commerce and Industry Department Annaul Report 1971-1972

1971-72

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3440

MARINE DEPARTMENT LIBRAŃY

DIRECTOR OF

COMMERCE AND

INDUSTRY

3440

HONG

KONG

ANNUAL

DEPARTMENTAL REPORT

ין

-12

3440

HONG KONG

ANNUAL DEPARTMENTAL REPORT

BY THE

DIRECTOR OF COMMERCE AND INDUSTRY

J. CATER, M.B.E., J.P.

FOR THE

FINANCIAL YEAR 1971 - 72*

PRINTED AND PUBLISHED BY J. R. LEE, GOVERNMENT PRINTER AT THE GOVERNMENT PRESS. JAVA ROAD, HONG KONG

1st April 1971 - 31st March 1972

Ak 574 сом

22.

EXCHANGE RATES

When dollars are quoted in the 1971-72 Reports, they are, unless otherwise stated, Hong Kong dollars. At the 31st March 1972, the official rate for conversion to pounds sterling was HK$14.55 =£1 (HK$1=approx. 7p). The official rate for conversion to U.S. dollars was HK$5.58-US$1.

97485-15K-4/73

CONTENTS

Chapter

1. REVIEW OF THE YEAR 1971-72 .

2. COMMERCIAL RELATIONS ‘E' DIVISION (EUROPE)

GENERAL

The European Economic Community (E.E.C.).

INDIVIDUAL COUNTRIES

Paragraphs

1 - 45

47 - 53

Austria

Denmark

The Benelux Countries

Federal Republic of Germany.

France

Italy

Greece

Republic of Ireland

•

Norway

Sweden

Switzerland

55 - 56

•

62 - 63

65 - 67

United Kingdom

3. COMMERCIAL RELATIONS 'R' Division-Rest of

WORLD (OUTSIDE EUROPE)

INTERNATIONAL TRADE ORGANIZATIONS

General Agreement on Tariffs and Trade

(G.A.T.T.)

69 - 76

77 81

iii

Chapter

Paragraphs

United Nations Conference on Trade and

Development (U.N.C.T.A.D.) .

82 - 83

United Nations Economic Commission for Asia

and the Far East (E.C.A.F.E.)

84 - 85

INDIVIDUAL COUNTRIES

Australia

Canada

86 - 88

89 - 92

Japan

94 - 95

97 - 101

New Zealand

South Africa

United States of America

4. OVERSEAS OFFICES

General

•

Hong Kong Government Office, London

BRUSSELS OFFICE.

GENEVA OFFICE

WASHINGTON OFFICE

5. INDUSERY DIVISION

CERTIFICATION BRANCH

Policy

General

Fees for Certificates of Origin

Standard Certificates of Origin .

Australian Tariff Preferences for Less Devel-

oped Countries

Commonwealth Preference Certificates

Comprehensive Certificates of Origin

102

103 - 109

110 - 117

118 - 121

122 - 124

125

126 - 128

129

130

131

132 - 133

134

U.N.C.T.A.D. Generalized Preferences Schemes 135 139

Certificates of Processing.

140

Chapter

Paragraphs

141

Miscellaneous Certificates .

Co-ordination of Certification Procedures with

Approved Non-Government Organizations. 142

INDUSTRIAL DEVELOPMENT BRANCH

REVIEW OF INDUSTRY

General Expansion

143 - 149

Textile Spinning and Weaving Industries

150 - 153

Textile Finishing Industry

154

Cotton Knitting Industry

155

Woollen Knitting Industry

156

Wearing Apparel Industry

157

Wig Industry.

158

Steel Industry

159 - 160

INDUSTRIAL PROMOTION

161 - 165

Loans for Small Industry Committee

166 - 167

Water Supply to Industry

168 - 171

Industrial Land and Buildings

172 - 173

HEALTH AND SAFETY STANDARDS OF HONG KONG

PRODUCTS

174 - 175

Health Standards

176 - 178

Safety Standards

179 - 189

T.I.A.B. Ad Hoc Committee on Health and

Safety Standards

190 - 192

Minor Complaints Regarding Safety Standards

193

ECONOMIC COMMISSION FOR ASIA AND THE FAR

EAST

194

TRADE INVESTIGATION BRANCH

General

Inspections

195 - 198

199 - 200

Chapter

Trade Declaration Enquiries

Trade Complaints

Prosecutions

PREVENTIVE SERVICE AND DUTIABLE COMMODITIES

DIVISION

Paragraphs

201

202 - 204

205

PREVENTIVE SERVICE

GENERAL

206 - 207

EXCISE

Hydrocarbon Oils.

208

Illicit Distilling

209

Adulterated Liquor

PREVENTIVE OPERATIONS

Searches

•

Kai Tak Airport

Narcotics

TRAINING AND ADMINISTRATION

Investigation

Training

Staff and Discipline

FOOD SUPPLIES

DUTIABLE COMMODITIES BRANCH

Revenue from Excise Duties

(a) Hydrocarbon Oils .

•

(b) Liquor

(d) Table Waters.

Revenue from Licences

210 - 212

213 214

215 217

218 - 219

220 - 226

227 - 240

241 - 246

247

248 - 251

252

253

254

255

256 - 257

Chapter

7. GENERAL DUTIES BRANCH .

TRADE LICENSING AND RESERVED Commodities

Trade Licensing.

Reserved Commodities

(a) Rice

Paragraphs

258

259 - 263

264

(b) Frozen Meat

(d) Coal and Firewood.

DEPARTMENTAL ADMINISTRATION

265 - 272

273 - 275

276

277

•

Senior Staff Changes

Overseas Offices

General

Departmental Organization

Establishment

278 - 280

281

282

283 - 284

285

Recruitment

▸

286

Promotions (excluding Preventive Service)

287

TRAINING

288 - 294

WELFARE

295

Welfare Fund

296

Preventive Service Senior Officers' Mess

297

298

Clerical Canteen

DEPARTMENTAL ACCOMMODATION

9. FINANCE AND STORES

REVENUE

EXPENDITURE

STORES

•

WELFARE FUNDS

vii

■

299 - 303

304 - 306

307 - 308

309 - 310

311

Table

TABLES

Certification of Origin Statistics

Major Confiscations under other Legislation

Page

Confiscations under the Dutiable Commodities Ordinance, Chapter 109, and Dangerous Drugs Ordinance, Chapter 134

Duty from Dutiable Commodities (Gross)

5. Revenue from Dutiable Commodities Licences, 1971-72 .

Trade Complaints from Overseas Companies or Individ- uals Handled by the Department from 1.4.71 to 31.3.72

Commerce and Industry Department, Hong Kong,

Organization Chart

Net Revenue Collected from all Sources .

viii

CHAPTER 1

REVIEW OF THE YEAR 1971-72

INTRODUCTION

HONG KONG'S Overseas trade continued to expand in the calendar year 1971 but less rapidly compared with previous years.

2. The value of domestic exports reached a new record level at $13,750 million, an increase of 11.4% over 1970 and more than doubling the figure for 1967. Re-exports, which represented 19.9% of total exports, increased by 18.1% over 1970 and were valued at $3,414 million. Further advances were made in the U.S. market and exports to Britain, the Federal Republic of Germany, Canada, Taiwan, Singapore, Australia and Netherlands also increased. Decreases were recorded in exports to Sweden, the Republic of Vietnam, Zambia, Burma, Thailand and Japan. Considerable gains were recorded in exports of clothing, transistor radios, plastic toys and dolls and textile fabrics, whilst im- provements were also achieved in the exports of watches and clocks, textile made-up articles and plastic footwear. Exports of wigs, artificial flowers and iron and steel scrap decreased.

3. Imports continued on an upward trend in 1971, reaching a new record of $20,256 million and increasing by 15% over the previous year. Japan continued to be Hong Kong's principal supplier, followed by China, U.S.A., Britain, Taiwan, the Federal Republic of Germany, Australia, Switzerland and Singapore.

EXTERNAL COMMERCIAL POLICY

4. The year saw the resolution, in one way or another, of the main issues which dominated the previous year. These were the introduction of Generalized Preference Schemes by many of the major developed countries, with the notable exceptions of the U.S. and Canada; the conclusion of the man-made fibre and wool textile Agreements between the U.S. and Hong Kong, Japan, Taiwan and South Korea; and the successful negotiation for Britain's entry into the Common Market.

5. Hong Kong was included in most of the Generalized Preference Schemes and in those where it was not, such as the Danish and Norwegian schemes, the door was not closed on the possibility of later inclusion. The E.E.C. took the lead on 1st July 1971. It set the precedent of including Hong Kong, but there was a qualification that neither Hong Kong nor any other dependency could enjoy preferences on textiles or footwear. Preferences on these items are, however, subject to tariff quotas and certain other conditions which limit the number of beneficiaries and the extent to which they may benefit. This exclusion, while unfortunate, is therefore of relatively small significance. For the most part the main Hong Kong criterion of non-discrimination was adequately satisfied in the other schemes. Unfortunately, however, Japan excluded Hong Kong on some 96 items, while according preference in these items to close competitors such as the Republic of Korea and Taiwan. This was puzzling and disappointing treatment from a country to whom Hong Kong is almost alone in offering an open door for trade and investment. The U.S. Generalized Preference Scheme remains no more than an expressed intention, due to the Administration's under- standable reluctance to introduce a Preference Bill into a Congress whose mood was not apparently conducive to trade liberalization.

6. Protectionist pressures within the U.S., largely generated by the textile lobby, continued to mount. The President appointed Mr. David KENNEDY, Ambassador-at-Large, to renew efforts to persuade the four main Asian suppliers, Japan, Hong Kong, South Korea and Taiwan into concluding agreements to restrict their exports of man-made fibre and wool textiles to the U.S. Negotiations were protracted and difficult. Finally, under the direct threat of unilateral import action by the U.S., the four Asian suppliers signed restraint agreements running for 5 years in the case of Hong Kong, South Korea and Taiwan, and 3 years in the case of Japan.

7. The uncertainty regarding British entry into the European Com- munities was largely dispelled with Parliamentary approval for the signing of the Treaty of Accession, which was done on 22nd January 1972. For Hong Kong and others, however, a complicated and delicate period of adjustment to the new situation lies ahead. The enlarged Common Market, looking ahead, will probably take up to a third of Hong Kong exports and so the common policies which must be formulated in the coming months and years will assume considerable significance. This will be one of the major areas of responsibility for the Commerce and Industry Department in the coming years.

8. One of the areas where common E.E.C. policies will be most important to Hong Kong is in the field of textiles. It remains to be seen whether or not the necessary adjustments will have been made any easier by the sudden announcement, on 8th December 1971, that the United Kingdom government had made a last minute change in its previously stated textile policy. This was to the effect that quantita- tive restrictions on imports of cotton yarns and cotton woven textiles would be continued in 1972 in addition to imposition of the new Commonwealth tariff, which was generally 85% of the full rate applicable to these products.

9. The British announcement, particularly as it came so late in the year, caused a number of difficulties for the Hong Kong textile trade and industry. Discussions on how these difficulties might be alleviated were held in London during December 1971 and January 1972, but little progress was made.

10. I am particularly indebted to the Textiles Advisory Board for their assistance and wise counsel in this and the American textile issue. Virtually the full Board joined me, as their Chairman, in Washington D.C. in October 1971 and in London in January 1972. Their quick and informed advice proved invaluable to our negotiators.

CERTIFICATION OF ORIGIN

11. In the free port environment of Hong Kong, an efficient and reliable origin certification system is of considerable importance. Such a system performs several functions. It helps to maintain uninterrupted access to our foreign markets, it reassures foreign buyers and Govern- ments 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 the Government accepts a central role in its adminis- tration. The entire system is backed by legislation and the Government takes its responsibilities in this field seriously.

12. During the year the department investigated 189 cases of possible certification offences. As a result, 123 companies were pro- secuted in the courts, which awarded fines totalling $350,850. Most of these offences were of a technical nature which did not involve an attempt to describe foreign goods as being of Hong Kong origin.

13. The most significant development in the year under review was the implementation of Generalized Systems of Preferences by the E.E.C., Britain, New Zealand and Sweden. The number of Generalized Preference Certificates issued was 41,501 and the value of products certified was $312 million.

14. The abolition of the Comprehensive Certificate of Origin re- quirement by the U.S.A. on 10th June 1971 ended the certification system which had been in operation for 18 years supporting some 25% of our domestic exports to the United States during that time. In order to meet commercial documentary requirements, many exporters subsequently applied for standard certificates of origin to cover exports of formerly 'presumptive' items to the United States. During the nine months after the abolition of Comprehensive Certificates of Origin, the number of standard certificates of origin covering exports to the United States increased by 98% as compared with the same period of the previous year.

15. It was gratifying to note that no complaints were received during the year from any country about the accuracy of Hong Kong certifica- tion. There is no room for complacency, however, and the Department will continue to work with other organizations concerned to maintain a high level of efficiency in certification matters.

16. It is of interest to note the extent of the Hong Kong origin certification system. In 1971-72, the Department employed over 230 officers in the Certification Branch and the related Trade Investigation. Branch, which jointly administer the certification system. The number of firms and factories registered with the Department for certification purposes rose to 11,384 in March 1972, representing an increase of 5.6% over the previous year. 352,114 standard, Commonwealth Pre- ference and Generalized Preference Certificates of Origin were issued by the Department during the year for goods valued at $6,853 million, representing 48.42% of Hong Kong's total exports of domestic products during the period.

Expansion of Industry

INDUSTRIAL DEVELOPMENT

17. The sustained growth which took place in Hong Kong manu- facturing industry in 1971-72 must be considered satisfactory when viewed against the downturn in general world trade which took place

during that period and with the uncertainty that existed in the foreign exchange markets. Exports of domestic products were valued at $14,154 million, an increase of 12.2% over the previous year. This growth was achieved despite a small increase in the industrial labour force: from 593,494 to 598,555. These figures are an indication of improve- ment in industrial productivity.

18. Soft market conditions in the U.S.A., Hong Kong's largest overseas market, created difficulties for Hong Kong's wigs and electronics industries. A number of smaller companies, over extended in relation to their capital, found themselves caught up in the backwash of un- favourable trading conditions and, faced with shortened credit facilities, were forced to close down.

19. During the year, a number of companies in the textile (includ- ing garments) industry were in the process of realising ambitious plans to re-equip (at considerable cost) in order to take advantage of chang- ing fashion trends towards man-made fibre knitted fabrics in the U.S. market. Some of these plans, however, had to be revised following the agreement mentioned in paragraph (6) whereby the Hong Kong Government undertook to restrain exports of non-cotton items to the U.S.A. Despite this setback, the industry continues to be the largest exporter and employer of labour in Hong Kong's manufacturing industry. It also continues to expand and diversify but at a slower rate than would have been possible in the absence of the U.S. non-cotton textiles restraint agreement.

20. The toy industry made substantial gains in exports and im- proved further the quality of its products. Trade statistics reveal that, in the period January-October 1971, Hong Kong's exports of toys exceeded Japan's for the first time. Thus, if subsequent trade figures confirm that this relationship has been maintained, Hong Kong has become the world's largest exporter of toys.

Productivity, Design and Packaging

21. The Hong Kong Productivity Centre continued its efforts to assist the improvement of productivity in industry by providing train- ing programmes, technical assistance and management consultancy serv- ices. In 1971-72, the Centre conducted 143 courses for 2,958 persons as compared with 94 courses for 2,003 participants in the previous year.

22. During the year under review the Centre established a low cost automation unit in its Kwun Tong Branch. The major function of this unit is to disseminate knowledge and to provide practical assistance, in the operation of low cost automated devices, especially to small- scale industrial units.

23. The Design Centre of the Federation of Hong Kong Industries again organized a design competition and exhibition to stimulate design consciousness in the industrial sector, and offered design education in the form of lectures and seminars during the year. The Industrial Design Council was admitted as a Full Member to the International Council of Societies of Industrial Design (I.C.S.I.D.) The Council also repre- sented Hong Kong at a Symposium on Design organized by the Asian Productivity Organization. These developments and other work in this field by the Industrial Design Council will promote further improve- ments in the quality and saleability of Hong Kong products.

24. In this, its second year of operation, the Hong Kong Packaging Council continued organizing seminars and training courses and issuing a bi-monthly news-sheet, 'Packaging Today'. Other activities included a comprehensive survey on Consumer Packaging carried out by the United Nations Industrial Development Organization, arranged by the Council under the auspices of the Hong Kong Government; and the second 'Packstar' competition, organized in conjunction with the Chinese Manufacturers' Association. The Council assisted in the compilation of an 'Asian Packaging Standards Index'. In addition, the Council organized, in association with the Asian Packaging Federation and the Chinese Manufacturers' Association, the first 'HongKongPak' Packag- ing Exhibition during the currency of the 29th Annual CMA Exhibi- tion from 9th- 22nd December 1971. The Council was also host at the 6th Meeting of the Asian Packaging Federation Board of Adminis- tration.

Loans for Small Industry Committee

25. The Committee submitted a Second Report early in the finan- cial year. This was endorsed by the Trade and Industry Advisory Board in May 1971. In March 1972, the Financial Secretary announced that Government had agreed to a pilot loans scheme along the lines pro- posed by the Committee provided that the legislature approved the financial implications involved in its operation. Work was in hand

at the end of the year to draw up administrative arrangements for the implementation of the scheme in anticipation of the legislature's approval.

Health and Safety Standards

26. The principal feature in this area of the department's activities was the formation of an ad hoc Committee of the T.I.A.B. This arose from a suggestion made by Dr. the Hon. S. Y. CHUNG in the Legis- lative Council on 26th May 1971 that consideration be given to the introduction of an awards scheme to improve the safety and health standards of Hong Kong products manufactured for export. The Com- mittee met eleven times during the year. Its Interim Report was adopted by the T.I.A.B. on 11th October 1971 and its Final Report was under consideration by the Department at the end of the year.

Industrial Investment Promotion

27. The promotion of foreign participation in Hong Kong industry, with a view to augmenting its technological, managerial and marketing expertise, continued to be an important function of the Industrial Development Branch. Potential investors were assisted by the provision of detailed information on all aspects of the Hong Kong economy and industry and by the provision of introductions to possible local partners and other people or organizations who might be of assistance to them. Many were directly assisted in finding factory sites or prem- ises. At the end of the year, the Department had records of 230 manufacturing concerns either fully or partly owned by foreign interests. They employed over 10% of all workers in manufacturing industry and involved a total investment of about $1,037 million.

28. During the year, in co-operation with the Trade Development Council, the Department produced a new edition of the publication 'Industrial Investment Hong Kong' as well as a publicity pamphlet. Copies of these two publications were sent to selected companies in Britain, West Germany, Sweden, Australia and the U.S.A.

29. The Trade Development Council conducted a recruitment exercise during he latter part of the year with a view to appointing industrial promotion officers to posts in Europe and the U.S.A. Their task will be to promote Hong Kong as an attractive site for indus- trial investment. The Department will provide back-up facilities for them.

PREVENTIVE SERVICE AND REVENUE

Preventive Measures

30. Vigorous action was maintained throughout the year against illicit distilling operations and the illegal removal of markers from industrial diesel oil. This, and an increase in sugar prices in December 1971 resulted in many traditional illicit distillers going out of business whilst some changed to using molasses as an alternative fermenting material and some others turned to rectifying alcohol. The use of molasses provided a new avenue for investigators to follow towards identifying illicit distillers. The trend towards rectifying alcohol is not expected to reach a significant level as this type of operation requires considerable expertise to avoid injury through fire.

31. The previous widespread illicit use of industrial diesel oil for automotive purposes has been contained. Members of the diesel oil checking teams are continuously on the alert for any resurgence of this activity and periodic large scale checks of road vehicles have been carried out with negligible results. As usual, the Christmas and Lunar New Year periods saw an upsurge in adulterated liquor cases and the units concerned in the suppression of this trade had notable success. This is a lucrative business and a difficult one to contain as it is mainly carried out in private premises.

Narcotics

32. In addition to fulfilling its responsibility of preventing the illegal importation of dangerous drugs into the Colony by sea and air, the Service has now taken a more active role in the detection and suppres- sion of drug abuse within the Colony with the result that 145 raids were made during the year on opium divans, manufacturing and dis- tribution centres of dangerous drugs. 1,069 ocean going vessels were either searched or guarded during their stay in port and cargo aboard 1,150 vessels was examined. A total of 2,402 lbs. of dangerous drugs were seized and 819 persons arrested.

Dutiable Commodities Revenue

33. Net revenue collected from dutiable commodities and licences during the year amounted to $456,066,000, an overall increase of 9.3% over the previous year. The main increases came from hydrocarbon oils and imported intoxicating liquors on which revenue went up by

$16.3 million and $13.7 million respectively. This signified another good year and the continued improvement of living standards in the Colony. Revenue from tobacco, amounting to $135.5 million, represented an increase of 8.3% or $10.4 million over the previous year. However, revenue from table waters suffered a fall of 11.8% or $1.2 million due to the increase in retail price coupled with a cool summer.

MISCELLANEOUS

Rice

34. During the year the world rice supply situation was generally one of surplus, as a result of improved harvests in most producing countries and as efforts to establish self-sufficiency in most importing countries were increasingly successful. Export availabilities in 1971 substantially exceeded import requirements and there was greater com- petition for export outlets than in previous years.

35. World rice prices generally remained stable despite keen com- petition among rice exporters in the form of reductions in export premium (export tax) and increases in subsidized sales and exports on concessional and special terms. Local import prices for both Thai and China rice remained more or less constant. Retail as well as wholesale prices followed this trend.

36. Per capita rice consumption in Hong Kong declined further. For the greater part of the year, rice stocks were held at about 73,000 tons.

ADMINISTRATION

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 12 occasions and discussed a range of important subjects, the major ones being loans for small industry, health and safety standards of Hong Kong products, sub- sidiary legislation under the Import and Export Ordinance 1970, generalized preferences and the reports of various Hong Kong delega- tions to ECAFE conferences. 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, O.B.E., J.P., Mr. H. M. G. FORSGATE, J.P., Mr. Daniel S. H. LAM, O.B.E., J.P., Mr. M. C. LEE, Mr. Andrew S. F. LIN, Mr. H. T. LIU, Mr. R. E. MOORE, J.P., Mr. M. G. R. SANDBERG, 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.

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. Sir Sidney GORDON, C.B.E., J.P., the Hon. Sir Yuet-keung KAN, C.B.E., J.P., Mr. G. R. Ross, O.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, Mr. William T. L. YAO, Mr. S. K. CHAN and Mr. Jack C. TANG.

41. The Board met 46 times during the year, concerning itself particularly with advising on the conduct of negotiations and the implementation of international agreements. A number of members accompanied official delegations overseas on several occasions.

Acknowledgements

42. I have pleasure in recording the high level of co-operation which the department has received on a variety of matters from trade and industrial associations, including the Hong Kong General Chamber of Commerce, the Federation of Hong Kong Industries, the Chinese Manufacturers' Association of Hong Kong, the various textile associa- tions and organizations specializing in the promotion of industrial efficiency and export performance. I have sought, I believe with some success, to maintain and, where necessary, improve the liaison between the department and these organizations, which do so much for Hong Kong's trade and industry.

43. Tribute is also due to the permanent missions of overseas countries for the ready assistance they invariably accord to the depart-

ment; and in particular I wish to thank those which have helped to arrange consultations and negotiations with their Governments during

the year.

44. I would be remiss if I did not also record my appreciation of the help and advice which the department has received from other Government departments in many matters of mutual concern and interest. This assistance has been of great value to me and to the de- partment.

45. Finally, I wish to thank the staff of my department for their sustained and valuable support during a period of considerable activity and strain. They have willingly accepted a heavy workload involving much overtime and hard work. The following chapters record the increasing complexity of this work and the problems with which they have had to deal.

26th August, 1972.

J. CATER,

Director of Commerce and Industry.

CHAPTER 2

COMMERCIAL RELATIONS ‘E' DIVISION (EUROPE)

46. While mainly concerned with Hong Kong's external commer- cial 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, the Import and Export Ordinance 1970 and the Import and Export (General) Regulations, 1971 were brought into force as from 1st January 1972. These replaced other legislative controls and represented, among other things, a co- dification of the Department's existing practices in the administration of textiles controls through quota and export authorization systems. Steps were also taken to revise the export licence application forms to align with the standard format recommended by the Working Party on Simpler Trade Documents. The revised forms came into use on 1st January 1972.

The European Economic Community (E.E.C.)

(a) Common Commercial Policy

47. The Treaty of Rome, establishing the European Economic Com- munity, provided 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 fully imple- mented, considerable progress has been made and further progress was achieved during the year.

48. The Department continued to watch these developments closely and to examine the implication for Hong Kong of all new regulations regarding the implementation of the Common Commercial Policy. (b) Textiles

49. The Hong Kong/E.E.C. Cotton Textile Agreement for the period 1st January 1971 to 31st December 1973, which was concluded in Brussels with the E.E.C. Commission in October 1970, was formally

ratified on 22nd July 1971. Hong Kong had, in fact, implemented the export arrangements on a unilateral basis since 1st January 1971.

50. Under the Agreement, exports of cotton finished fabrics, clothing and made-up articles (referred to as Group II products) to the E.E.C. were restricted to specific ceilings in respect of individual E.E.C. Member States. Consultation levels instead of specific restraint limits were established for grey and bleached fabrics (referred to as Group I products), whether for internal consumption within the Com- munity or for re-export to other countries after further processing. An Export Authorization system was instituted to furnish the E.E.C. Commission with advance information on the development of trade in these products.

51. During the first restraint period, 1st January-31st December 1971, utilization of the Group II quotas amounted to approximately 74% of the Community restraint limit. Exports in Group I products amounted to 1,535 metric tons of which 1,367.5 metric tons were for internal consumption and 167.5 metric tons were for re-export after further processing.

52. Consultations were held with the E.E.C. Commission in Brussels in September 1971 on exports of Group I products to Italy which had reached the agreed consultation level in June 1971. This resulted in arrangements being made for the importation of additional tonnage of these products into Italy in the remaining months of 1971.

53. On 1st July 1971, the E.E.C. implemented its Generalized Pre- ference Scheme for imports from developing countries including Hong Kong. It provides unlimited entry at reduced tariff for certain agricul- tural products and duty-free entry for most manufactures provided these can comply with the Community's Generalized Preference Scheme origin rules which are based on the substantial transformation criterion. However, there are quota limits for many items and duty-free entry for certain cotton textiles is only granted to seven independent countries which are signatories to the Cotton Textiles Arrangement. Imports of textiles and footwear from dependent territories including Hong Kong are excluded from the Scheme.

INDIVIDUAL COUNTRIES

Austria

54. In December 1971, the Austrian Government ratified the G.A.T.T. Anti-dumping Code of July 1968 and on 1st January 1972 introduced a new anti-dumping law said to be compatible with the Code. Detailed information was sought about the new law to compare it with the former legislation which was applied to imports of woollen knitted outerwear from Hong Kong and certain other suppliers.

Denmark

55. The Danish Government introduced a temporary import sur- charge effective from 21st October 1971 until 31st March 1973. The surcharge applies to most imports from all sources except a number of developing countries included in her generalized preference scheme which was implemented subsequently on 1st January 1972. The Danish preferential scheme provides unlimited entry for certain agricultural products at reduced tariff rates and unlimited duty-free entry for all manufactured products. Rules of origin are based on the substantial transformation criterion which is similar to that of the E.E.C. Hong Kong is not included in the scheme and representations were made to the Danish government for Hong Kong's inclusion.

56. Following consultations with the Danish government in January 1972 Hong Kong decided to limit exports of cotton and man-made fibre, tailored, woven and knit shirts to Denmark for a period of one year until 31st December 1972, and to introduce at the same time an export authorization scheme covering all other types of cotton and man-made fibre shirts.

The Benelux Countries

57. During the first agreement year 1971, exports of Group I cotton textile products to the Benelux amounted to 169.6 metric tons of which 4.5 metric tons were for internal consumption and 165.1 metric tons were for re-export after further processing. Total exports of Group II products amounted to 1,785.3 metric tons.

Federal Republic of Germany

58. During the first Agreement year 1971, export of Group I prod- ucts to the Federal Republic of Germany amounted to 368.3 metric

tons of which 365.9 metric tons were for internal consumption and 2.4 metric tons were for re-export after further processing. Total exports of Group II products amounted to 9,184.9 metric tons.

France

59. During the first Agreement year 1971, exports of Group I prod- ucts to France amounted to 29.6 metric tons. Total exports of Group II products amounted to 112.1 metric tons.

Italy

60. During the first Agreement year 1971, exports of Group I prod- ucts to Italy amounted to 967.5 metric tons. Total exports of Group II products amounted to 310.2 metric tons.

Greece

61. 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 last of which was made in February 1972, the matter is still unresolved.

Republic of Ireland

62. The Irish Government has continued to maintain discriminatory quota restrictions on imports of most textile items from several countries including Hong Kong. Despite a number of formal exchanges between the Irish and Hong Kong Governments, the issue remains un- resolved.

63. On 1st January 1972, the Irish Government implemented a generalized preference scheme for imports of developing countries in- cluding Hong Kong. The scheme provides unlimited entry at 2/3 tariff reductions for certain manufactured products excluding mainly a range of textile products. Its rules of origin are based on a substantial transformation criterion similar to that of the E.E.C.

Norway

64. The Hong Kong Government continued to administer a textiles Agreement concluded with the Norwegian Government in September 1970 under which Hong Kong agreed to restrain the export of six groups

of textile garments to Norway for a period of 20 months from 1st November 1970 to 30th June 1972. Hong Kong also agreed to institute a system of export authorizations in respect of a further 10 groups of textile garments.

Sweden

65. Following consultations in April and May 1970, an Agreement was concluded between the Swedish and Hong Kong Governments whereby Hong Kong agreed to restrain the export of certain textiles to Sweden for a period of 12 months ending 30th June 1971. In this restraint period, quota utilization reached 87.2% of the effective restraint limit.

66. In May 1971, consultations again took place in Hong Kong between the representatives of the Swedish and Hong Kong Govern- ments whereby Hong Kong agreed to restrain the export of seven groups of textile garments to Sweden for periods of 12 or 14 months until 30th June 1972. At the same time Hong Kong also agreed to institute a system of export authorizations in respect of a further 13 groups of textile items.

67. On 1st January 1972, the Swedish Government implemented a generalized preference scheme for imports of developing countries which provides unlimited duty-free entry for some agricultural and most manufactured products with the exception of most textiles and footwear. Its rules of origin are based on a substantial transformation criterion similar to that of the E.E.C. Hong Kong is included in the scheme.

Switzerland

68. The Swiss Government implemented a generalized preference scheme on 1st March 1972. Commencing from that date, most imports from developing countries were granted unlimited entry at 30% linear tariff reductions. Hong Kong is included in the scheme but excluded from preferences on textiles and footwear. This exemption also applies to South Korea and Macau.

United Kingdom

(a) United Kingdom and the European Communities

69. The Department continued to maintain a close watch on the progress of the United Kingdom's negotiations to join the European

Communities (European Economic Community, European Atomic Energy Community and the European Coal and Steel Community) and the implications for Hong Kong arising therefrom.

70. On 22nd January 1972, the United Kingdom together with the other three applicant countries, i.e. Norway, Ireland, and Denmark signed the Treaty of Accession to the European Communities and subject to ratification on or before 31st December 1972 will become a Member of the Communities on 1st January 1973.

(b) Cotton Textiles

71. Hong Kong's 1971 export performance in all groups was main- tained at a high level. At the end of the year, only small unshipped balances of quota were unused in the cotton yarns, piecegoods and made-ups and garment groups.

72. In the first two quarters of 1971, the High Hong Kong Cost Content Schemes for finished piecegoods and made-ups and garments were operated as previously. Demand for the yardage available was low and a substantial amount of yardage remained unallocated under both schemes. On the advice of the Textiles Advisory Board, the third quarter High Hong Kong Cost Content Scheme for made-ups and garments was brought forward and implemented in late April in order to maximize utilization of available yardage at an early date. Response to this scheme was poor and in June, on the further advice of the Textiles Advisory Board, the High Hong Kong Cost Content Schemes for both finished piecegoods and made-ups and garments were suspended for the rest of 1971. The unutilized balances under both schemes were made available to the trade in the first instance under a special shipment scheme on a first-come-first-served basis in June and again in August. Half the balance then available was opened up to the trade under an Export Authorization Scheme, running parallel to the first special shipment scheme. All unutilized balances remaining were subsumed in early December in the year-end special shipment scheme.

73. On 8th December 1971, the U.K. Government announced its decision to retain quota restrictions in addition to the imposition of a new Commonwealth tariff on imports of cotton woven textiles from Hong Kong and other restricted Commonwealth countries with effect from 1st January 1972. This was a last minute change on the part of the U.K. Government and reversed a decision announced in July 1969

that all quota restrictions on cotton textiles would be removed with effect from 1st January 1972 and replaced on that date by the new Commonwealth tariff which was generally 85% of the full rate applic- able to these products. Consultations were held in London with the U.K. Government in December 1971 and January 1972 on the effects of the U.K. tariff and quota decision on Hong Kong's cotton textile trade with U.K. Following these consultations, Hong Kong decided in February, on the advice of the Textiles Advisory Board, to terminate the Interim Control Scheme implemented on 1st January 1971 in order that the trade would not be disrupted, and to operate in 1972, un- ilaterally, the 1971 export restraint arrangements. In doing so, Hong Kong reserved its position on the question of compensation and requested early consultations with the U.K. Government to discuss the restraint arrangements for 1973.

74. At the time allocation of 1972 quotas were made, the Depart- ment introduced, on the advice of the Textiles Advisory Board, a non- Hong Kong Woven Cloth Permit Scheme whereby Hong Kong garment manufacturers could use, during 1972, up to a maximum of 20 million square yards non-Hong Kong woven cotton cloth in the manufacture of garments for export to the United Kingdom. Hitherto, all cotton garments under restraint for export to the United Kingdom had to be manufactured from cloth woven in Hong Kong.

75. In February, the Department received written representations from various trade and industrial associations and about 300 individual companies seeking a change in the quota allocation principles in respect of the U.K. market. The matter was under consideration by the Depart- ment and the Textiles Advisory Board at the end of the year.

76. The United Kingdom implemented its Generalized Preference Scheme for imports from developing countries, including Hong Kong, on 1st January 1972. The Scheme runs parallel with the Common- wealth Preference Scheme which provides unlimited duty-free entry for certain agricultural products and most semi-manufactured and manu- factured goods from beneficiary countries with the exception of most textile items and certain goods which are subject to revenue duties. Its rules of origin are based on a substantial transformation criterion couched in idential terms with that of the E.E.C.

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 Arrangements (C.T.A.)

77. The Cotton Textiles Arrangement entered into the second year of its extended operation. A meeting of the Cotton Textiles Com- mittee, originally scheduled for November 1971, was postponed to June 1972.

(b) Other Work of the G.AT.T.

78. The 27th Session of the G.A.T.T. Contracting Parties was held in Geneva in November 1971. The Assistant Director (Geneva) attended the Session as a member of the U.K. delegation.

79. The Committee on Trade in Industrial Products, whose main objective was to explore the possibilities for the reduction and final elimination of non-tariff barriers, made some progress in such areas as customs valuation, standards and import licensing for which guide- lines or rules of conduct were drafted for further consideration by governments. A Working Party prepared a preliminary analysis of the post Kennedy Round tariff situation in the major developed countries. The Group on Residual Restrictions and the Joint Working Group examined various residual quantitative restrictions still maintained con- trary to the provisions of the G.A.T.T. The Group of Three formulated proposals to deal with the trade problems of developing countries in the markets of developed countries.

80. Hong Kong's interests in the G.A.T.T. were looked after by the Assistant Director (Geneva), a report on the activities of his office is at paragraphs 118-121.

81. During the year an Assistant Trade Officer attended a 41 months 'in-service' training course on commercial policy in Geneva, run by the G.A.T.T. Secretariat in collaboration with the United Nations Technical Assistance Bureau. He was the eighth officer sent by the Department on this course.

United Nations Conference on Trade and Development (U.N.C.T.A.D.) 82. The past year saw the introduction of the U.N.C.T.A.D. generalized preference scheme for developing countries. With the excep- tion of Canada and the United States, all donor countries implemented their schemes. Hong Kong was included as a beneficiary by Austria, the European Economic Community, Ireland, Japan, New Zealand, Sweden, Switzerland and the United Kingdom.

83. The Third Session of U.N.C.T.A.D. was scheduled to be held in Santiago, Chile in April and May 1972.

United Nations Economic Commission for Asia and the Far East (E.C.A.F.E.)

84. Delegations from Hong Kong, led by Dr. the Hon. S. Y. CHUNG, O.B.E., J.P., a member of the Legislative Council, attended the 27th and 28th sessions of the E.C.A.F.E. held in Manila in April 1971 and in Bangkok in March 1972 respectively. Other members of the delegations included the Director of Commerce and Industry and the Deputy Economic Secretary.

85. Members of the Department attended the 1st Session of the E.C.A.F.E. Trade Negotiations Group and the 15th Session of the E.C.A.F.E. Committee on Trade, held consecutively in Bangkok in February 1972.

Australia

INDIVIDUAL COUNTRIES

86. The Australia/Hong Kong Agreement regarding restraint on Hong Kong's exports to Australia of cotton drills, other than grey, weighing between 6 and 15 oz. per square yard, expired on 30th June 1971. Following consultations with the Australian Government, the export restraint was discontinued and was replaced by an export authorization scheme operated by Hong Kong for the period 1st July 1971 to 30th June 1972.

87. Certain temporary protective measures were introduced by the Australian Government in previous years in respect of knitwear (knitted shirts, coats, jumpers, cardigans, sweaters and similar products) and woven shirts. Although the Australian authorities accepted in principle a Tariff Board's recommendation for the removal of these measures the implementation of the recommendation was deferred, apparently because of concern that their removal might lead to a sudden upsurge in imports. Bilateral discussions held with an Australian delegation in Hong Kong in January 1972 were inconclusive and at the end of the year under review these measures were still in force.

88. In mid 1971 and again in early 1972, the Australian Govern- ment announced further extensions to its Tariff Preference Scheme for less developed countries. The total number of items included in the scheme is now over 240: of these, Hong Kong has been excluded from preference entitlement on 7 items on the ground of established competitiveness.

Canada

89. The Canada/Hong Kong Arrangement regarding Hong Kong's exports to Canada of cotton woven fabrics, cotton woven towels, and certain cotton and man-made fibre apparel expired on 30th September 1971.

90. Following consultations in Hong Kong in August 1971 with Canadian Government officials, a new arrangement was agreed upon with minor modifications.

91. Following a decision announced by the Canadian Government in October to impose import restrictions on certain shirts, further consultations were held in Ottawa, in November 1971. As a result of these consultations Hong Kong retained the right to export control over this item during the period up to 30th September 1972 in ac- cordance with the restraint agreement already negotiated. Canadian imports from all other low cost exporters were subject to import control. The Hong Kong arrangement was amended so that the restraint on woven shirts was extended also to cover certain knit shirts.

92. In March 1972, export restraint by Hong Kong on woollen and man-made fibre knitted sweaters, cardigans and pullovers was lifted following a decision by the Canadian Government to liberalize im- ports of this item.

Japan

93. Japan introduced phase one of its generalized preference scheme for developing countries on 1st August 1971. The scheme provided for limited entry of manufactured goods, either duty-free or at reduced tariffs, and unlimited entry of certain agricultural and fisheries prod- ucts at reduced tariffs. Phase two of the scheme was due to start on 1st April 1972, at which time Hong Kong would be included as a beneficiary. The Japanese Government had, however, drawn up a dis- criminatory list of 96 items, representing over 50% of principal export items to Japan, from which Hong Kong was to be excluded from preferences. At the end of the period, representations to seek improve- ments were being prepared by the British Government and the Hong Kong Government.

New Zealand

94. On 1st January 1972, the New Zealand Government introduced a generalized preference scheme for developing countries including Hong Kong. The scheme provides unlimited duty-free entry or entry at reduced tariff for some agricultural products and manufactures, with the exception of most textiles, footwear and toys.

95. The introduction of the scheme did not, however, affect the existing arrangements for Commonwealth preference, and importers of goods consigned to New Zealand from developing Commonwealth countries and territories may claim preference under either the generalized preference scheme or the Commonwealth preference arrange- ments, subject to the appropriate criteria being satisfied.

South Africa

96. The South African Government introduced intensive import restrictions in November 1971 on grounds of balance-of-payments difficulties. With the assistance of the British Embassy in Pretoria, the Department was able to obtain relief for exporters who experienced hardship when the restrictions were suddenly imposed.

United States of America

97. Hong Kong's exports of cotton textiles to the United States in the first year of the new bilateral cotton textiles agreement, which ended on 30th September 1971, amounted to 412.4 million equivalent square yards or 93.42% of the yardage available. This amount included

11.6 million equivalent square yards carried over from the previous textile year in which the total quantity shipped was 375.5 million equivalent square yards.

98. In May 1971, Mr. David M. KENNEDY, Ambassador-at-Large, visited Hong Kong to consult with the Hong Kong Government on U.S. imports of non-cotton textiles from Hong Kong, among other Asian suppliers, which were allegedly causing difficulties. These and subsequent consultations held during 1971 failed, however, to provide a mutually satisfactory solution. As a result, the textiles trade was subjected to speculative pressures and other uncertainties; and because of this, the Hong Kong Government decided in September 1971 to restrain unilaterally its exports of man-made fibre and wool textile products with effect from 1st October 1971, initially for a period of one year.

99. Consultations with the United States were resumed in October 1971 in Washington where, under the threat of unilateral import restric- tions, Hong Kong initialled, ad referendum, a Memorandum of Under- standing agreeing to exercise restraint over its exports of man-made fibre and wool textiles for a period of five years beginning 1st October 1971. On 6th January 1972, after the Memorandum of Understanding had been ratified by the Governor in Council, a formal agreement was concluded by an exchange of notes between the United States Con- sul General in Hong Kong and the Director of Commerce and Industry.

100. President NIXON, by a proclamation dated 21st August 1971 established a tariff quota for imports of stainless steel flatware into the United States, with effect from 1st October 1971. The types of flatware affected were knives, forks, spoons and sets having stainless steel handles, valued under U.S. 25¢ each and not over 10.2 inches in overall length. Imports within the tariff quota limit were to be subject to the Trade Agreement concession rates, but imports in excess of the limit would be subject to full statutory rates. Allocated on a quarterly basis among supplying countries, the global quota was 48 million pieces for each quarter and Hong Kong's share was 1.5 million pieces. The tariff quota is to last 5 years, unless extended, and may be increased annually commencing in 1972, by not more than 6%.

101. On 15th August, President NIXON announced a number of economic and fiscal measures to increase domestic employment, restore

the U.S. balance of payments and counter-inflation. Among the measures was the imposition of a temporary surcharge of 10% on imports other than those subject to mandatory quota, including textiles and duty-free imports. The surcharge was later lifted following the devaluation of the U.S. dollar on 20th December 1971.

CHAPTER 4

OVERSEAS OFFICES

102. Comparison of this chapter with the same entry in last year's departmental report demonstrates the increased volume of the work of the overseas offices consequent, inter alia, upon Britain's entry into the European Economic Community. The Assistant Commissioner (Com- mercial) in London and the Brussels and Geneva Offices have been closely involved in various negotiations, discussions and adjustments on behalf of Hong Kong's interests during this year of preparation for full British participation in the Community. The Washington Office has been heavily engaged for different reasons, mainly connected with textile restraints imposed by the U.S. on Hong Kong.

Hong Kong Government Office, London

103. The chief task of the Commercial Section of the Hong Kong Government Office in London (situated at 54, Pall Mall) is to main- tain close liaison with British Government Departments responsible for commercial policy, in order to advise the Director of develop- ments of concern to Hong Kong's traders and manufacturers. This work is by its nature largely confidential and is carried on without publicity, although the Assistant Commissioner makes arrangements for, and attends as a member of the Hong Kong team, all formal dis- cussions on trade matters held in London between the Hong Kong and British Governments.

104. A most important development in international trade relations which involved the Commercial Section was the pressure applied by the United States administration to the four major Asian suppliers of non-cotton textiles (Japan, Korea, Taiwan and Hong Kong) to enter into agreements limiting the growth of imports of these commodities. This development was discussed with British Government officials by His Excellency the Governor in June and by the Financial Secretary in September. Discussions continued in London at various times until an agreement between Hong Kong and the United States was signed in January.

105. Much interest was shown by the business community about the effects of British entry into the EEC on Hong Kong's trade, and these effects were discussed by the Director with the British Govern- ment in November, as part of a continuing process of review. Business interest was also shown in the various schemes of preferences for developing countries introduced during the year, and more especially in those put into effect by the European Economic Community in July and by Britain in January. The origin rules for the British scheme were discussed with officials in London in March with a view to their modification.

106. The most difficult situation with which the Commercial Section was concerned was the British Government's decision in December 1971 to retain quotas on imports of cotton yarns and cotton woven textiles, while introducing duties on those imported from the Commonwealth. Although arrangements for implementing the previously announced policy of ending quotas proceeded throughout the summer, speculation grew in the autumn that this policy might be modified. At the begin- ning of December a Hong Kong team led by the Financial Secretary was invited to London by the British Government to discuss the then confidential decision to alter course on textile policy. These discussions were followed by a longer series of talks in January, at which the Hong Kong side was advised by several members of the Textiles Advisory Board, including the Director as Chairman. Although both sides were moving towards a measure of agreement by the end of the talks, this movement was not sufficient to achieve Hong Kong's objectives of securing hardship yardage together with either modernization of the existing arrangements or their alignment with the Hong Kong/EEC agreement on cotton textiles. At the end of the period under review exports of cotton yarns and woven cotton textiles continued to be restrained on the same basis as previously.

107. These formal discussions in London were held against a back- ground of informal exchanges of view between the Assistant Commis- sioner and the various departments of the Foreign and Commonwealth Office and the Department of Trade and Industry responsible for com- mercial 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 19 trading partners of Hong Kong.

108. The staff of the Commercial Section took part in other negotiations during the year. These included detailed discussions with British officials on modifications to the Commonwealth preference arrangements which led to the introduction of a simplified control system at the beginning of 1972. The Trade Officer represented Hong Kong at the 15th Session of the F.A.O. Study Group on Rice which was held in Rome during May.

109. The Commercial Section continued to refer complaints on health and safety aspects of Hong Kong products to the Industrial Develop- ment Branch in Hong Kong. It offered routine services to businessmen, such as answering enquiries and issuing various certificates in con- nection with Hong Kong's textile arrangements with the United King- dom. It also referred enquiries by firms interested in Hong Kong's industrial development to the department in Hong Kong-until the beginning of 1972, when responsibility for liaison between British enquiries and the department was transferred to the Trade Development Council.

BRUSSELS OFFICE

110. The Brussels Office of the Commerce and Industry Department is headed by an Assistant Director of the Department. During the year, the Office continued to fill its primary functions of observing commer- cial policy developments of interest to Hong Kong within the European Community, maintaining contact with European Commission officials and representatives of the various Member States and other national governments both in their capitals and in Brussels, and reporting relevant developments to the Department. These functions involved several visits by the Assistant Director to Community capitals and to London, and two visits during the year to Hong Kong.

111. The pattern of the year's activities for the Brussels Office was largely determined by the continuation of the British negotiations for entry into the European Economic Community, the implementation of a formal multilateral Agreement with the E.E.C. negotiated in October 1970, concerning trade in cotton textiles, and the implementation of the EEC's Scheme of Generalized Preferences under which Hong Kong became a beneficiary with certain limitations which were applicable to other dependent territories also.

112. This latter scheme came into force on 1st July 1971, following the necessary formal decisions by the EEC Council of Ministers and

by 15th July Hong Kong was already issuing the required new certificates of origin to cover shipments claiming preference. This was in advance of any of the other hundred or so beneficiary territories, who were not so well geared, either administratively or commercially, to take early and full advantage of the new EEC scheme. As a result of this expeditious action Hong Kong was able in certain cases to ship a little more than its anticipated share of the tariff-free quotas before the EEC Commission's reporting system began to work in top gear. Nevertheless, because of the limited size of the actual quotas, the total exclusion of textiles and footwear, the small share available to any one beneficiary territory in respect of an increasingly long list of 'sensitive' items, and the circumstances of the trade itself, the major benefit accrued to importers although Hong Kong traders in certain products have at least been able to maintain a respectable level of exports, and perhaps in some instances to expand these a little.

113. In connection with Britain's application to join the EEC, the Assistant Director, Brussels, continued to attend the regular briefing sessions of Commonwealth Heads of Missions in Brussels held after each successive round of the UK/EEC Negotiating Conference. These were stepped up in intensity in the spring and summer of 1971 as matters reached a climax.

114. Although formal negotiations had taken place in Brussels in October 1970 in respect of a self-restraint Agreement in the cotton textiles sector on a multilateral basis, it was not until July 1971 that this Agreement was formally signed by the Director of External Trade (on behalf of the EEC) and the Assistant Director, Brussels Office (on behalf of the Hong Kong Government). The Agreement, which is effective for three years from 1st January 1971 and which was put into force unilaterally on that date, is set out in all the four European languages of the Member States as well as in English, all versions being equally authentic. Reconciliation of the various language versions was a time-consuming and intricate task in the closing stages.

115. Implementation of this Agreement flowed reasonably smoothly although some early teething troubles were encountered as the Member States gradually adjusted their administrative systems to cope with the new multilateral arrangements with Hong Kong (and with other Eastern suppliers under similar agreements). By the time of the summer recess however some serious problems were being encountered on the

level of exports of certain fabrics to one Member State and formal consultations had eventually to be held late in September in Brussels to reach a compromise solution effective for the final three months of 1971. These consultations were conducted by the Assistant Director, Brussels Office, with the assistance of a departmental officer from Hong Kong.

116. In the main the Member States have gradually grown accus- tomed to the administration of the new Agreement and to that of the EEC Scheme of Generalized Preferences also, but it is clear that the Member States need further time to harmonize their administration of any centrally agreed arrangements. No serious harm was done to the trade as a result of these temporary set-backs.

117. The Assistant Director made his regular annual visit to Hong Kong in September 1971, prior to conducting the consultations for Hong Kong with the EEC Commission speaking on behalf of, and in the presence of, representatives of all the Member States. He made a second visit to Hong Kong in January 1972 when he accompanied an official of the European Commission.

GENEVA OFFICE

118. The Geneva Office is headed by an Assistant Director of Commerce and Industry whose principal task is to advise the Director on developments affecting Hong Kong which arise in the delibera- tions of the Europe-based international economic and trade organiza- tions (other than the E.E.C.) and to seek to ensure that Hong Kong's interests are given full weight in these organizations. There was a change of incumbent in May 1971.

119. In the G.A.T.T., work towards the elimination or reduction of non-tariff barriers continued in the Committee on Trade in Industrial Products and its specialized Working Groups. Detailed discussions were held in a series of meetings through the year on the trade- restrictive effects of import licensing procedures, methods of customs valuation and the formulation and application of standards, with the aim of drafting guidelines or codes of conduct for further consideration by governments. The Group on Residual Restrictions and the Joint Working Group continued to examine quantitative restrictions still main- tained contrary to the provisions of the G.A.T.T. Working Parties examined with representatives of the countries concerned the import

surcharges introduced by the U.S.A. and Denmark and the intensifi- cation of quantitative restrictions by South Africa, urging their early removal. The 27th Session, held in November 1971, took decisions about the G.A.T.T.'s future work-programme, which were followed, early in 1972, by a further decision to examine during the year the techniques and modalities which should be employed in another round of multilateral negotiations for further expansion of trade, to start in 1973. The Assistant Director participated in all these developments as a member of the United Kingdom delegation, ensured that Hong Kong's point of view was vigorously presented on the right occasions and reported to the Department. He also reported on other developments in G.A.T.T. of possible direct or indirect interest for Hong Kong, including the work of the Group of Three in seeking improved access for the products of developing countries to developed country markets and the scheme of mutual tariff preferences agreed between a group of developing countries.

120. The most important development of U.N.C.T.A.D. during the year was the introduction of the generalized preference scheme for developing countries in the markets of developed countries. With the exception of Canada and the United States, all donor countries have implemented their schemes, in most of which Hong Kong is included as a beneficiary. Work on a wide range of subjects continued in the Trade Development Board and Committees. Preparations were also made for the Third Session of U.N.C.T.A.D. to be held in Santiago, Chile in April and May 1972 at which such important matters as inter- national monetary reform, development assistance, the generalized pref- erence scheme, reduction of non-tariff barriers and shipping problems would be discussed. The session would be attended by the Assistant Director as a member of the United Kingdom delegation.

121. The Assistant Director also had preliminary discussions with an Australian delegation early in 1972 with a view to obtaining certain improvements for Hong Kong in the existig Australian tariff preference scheme which first started in 1966.

WASHINGTON OFFICE

122. The talks and negotiations with the U.S. Government, resulting in the joint signing in early January 1972 of bilateral and multilateral Agreements relating to non-cotton textiles, and subsequent consultations

connected with these and the Cotton Agreement, involved the Washing- ton Office, and at times other senior members of the British Embassy, in substantially increased activity during the year. These discussions were at times difficult and protracted. The former Assistant Director completed his tour of duty in Washington in June 1971 and his successor was able to take part in the early discussions in Hong Kong and the later negotiations in Washington about the non-cotton textile restraints.

123. During the course of the year the Director made three visits, the Solicitor General one, the Deputy Economic Secretary one, and the Deputy Director (Commercial Relations) three visits for discussions with the U.S. Government on the textile restraints and other matters. At the most critical point in the negotiations over non-cotton textile restraints almost the entire Textile Advisory Board took up residence in Washington in order to give immediate consideration to the develop- ments as they took place. Opportunity was taken of the Financial Secretary's visit to Washington on other business to arrange a number of meetings with senior U.S. Government officials.

124. The Assistant Director, Washington entered into a number of consultations with the U.S. Government about export limits on specific textile products. Regular contacts were maintained and extended with Embassies of other countries having similar or competing interests, and with American business organizations, and U.S. Government Depart- ments, including those concerned with product safety and related import control. Regular liaison was also maintained with the U.S. Representa- tive of the Trade Development Council and the Washington Representa- tive of the Hong Kong Tourist Association.

CHAPTER 5

INDUSTRY DIVISION

CERTIFICATION BRANCH

Policy

125. 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 in world markets without question as to their origin. To this end, the Hong Kong Government has for many years accepted respon- sibility 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 the Government's overall responsi- bility in this field. The Certification Branch of the Department is responsible for administering the complicated certification systems which support exports of Hong Kong products.

General

126. The Certification Branch issued 352,114 standard, Common- wealth Preference and Generalized Preference Certificates of Origin for local products valued at $6,853 million, representing 48.42% of total domestic exports during the year. Compared with $5,764 million for the previous year, the certified valued increased by approximately 18.9%. In addition, it was estimated that the value of local products certified by the four approved non-Government Certificate of Origin issuing bodies, i.e. the Hong Kong General Chamber of Commerce, the Indian Chamber of Commerce, Hong Kong, the Chinese Manu- facturers' Association of Hong Kong and the Federation of Hong Kong Industries, was approximately $4,220 million. Thus, the total value of local products certified by Government and the approved non- Government organizations represented 78.23% of total domestic exports.

127. 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 issued only for products manufactured by factories registered with the Department. On 31st March 1972, the number of manufacturing establishments registered with the Department for the issue of cer- tificates was 11,384, a net increase of 604 or approximately 5.6% over the previous year.

128. 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.

Fees for Certificates of Origin

129. Fees for applications for certificates, collected by means of postage stamps, are $10 for standard certificates of origin, Common- wealth Preference Certificates and Generalized Preference Certificates, and $5 for all other certificates. Revenue from certificates amounted to $3,909,955 during the year, a decrease of 17.68% from the previous year due to the elimination of the Comprehensive Certification of Origin system by the U.S.A. in June 1971.

Standard Certificates of Origin

130. 201,293 standard certificates of origin were issued during the year, an increase of 11.7% over the preceding year. The declared value of goods certified was $4,505 million. The approved non-Government certificate issuing bodies collectively issued 188,552 certificates with an estimated value of goods of about $4,220 million.

Australian Tariff Preferences for Less Developed Countries

131. The Australian scheme of Tariff Preferences for the hand-made products of the cottage industries of developing countries continued to operate. Exports certified under this scheme were valued at $2.4 million.

Commonwealth Preference Certificates

132. A total of 77,969 certificates were issued in support of exports to the United Kingdom, only eleven more than the preceding year. The declared value of goods certified was however $1,490 million compared

to $1,230 million the year before, an increase of 21%. Exports con- signed to other Commonwealth countries and covered by 15,333 Commonwealth Preference Certificates were valued at $142.7 million compared to $131.5 million the year before, an increase of 8.5%.

133. Agreement was obtained from the New Zealand Customs authorities for antiques imported from Hong Kong and accompanied by a Statutory Declaration suitably endorsed by the Department to be allowed duty-free entry.

Comprehensive Certificates of Origin (C.C.O.)

134. The total number of Comprehensive Certificates of Origin (required for the export of certain goods to the United States) issued was 16,018, representing a decrease of 74.54% from the preceding year. This was due to the abolition of the Comprehensive Certificates of Origin system on 10th June 1971 consequent upon the relaxation of the U.S. Foreign Assets Control regulations. To help exporters with their contractual commitments, the Department continued to issue Com- prehensive Certificates of Origin at their request until 20th October 1971.

U.N.C.T.A.D. Generalized Preferences Schemes

135. The year saw the implementation of U.N.C.T.A.D. Generalized Preferences Schemes by the E.E.C., Britain, New Zealand and Sweden. The number of Generalized Preference Certificates issued was 41,501 and the value of products certified was $312 million.

136. The E.E.C. scheme was implemented on 15th July 1971. The Department was informed that Hong Kong was the first administration to get the system under way. Up to 31st March 1972, the Department issued 39,853 certificates for goods valued at $296.2 million. At the request of exporters, who claimed that their buyers insisted on such certification, the Department continued to issue Generalized Preference Certificates even after tariff quotas had been filled. In such cases, applicants were advised that the certificates were unlikely to result in preference being granted.

137. The British scheme was implemented on 3rd January 1972. The number of certificates issued by the end of the year amounted to 702, with a value of $10.4 million.

138. The British scheme does not affect the existing arrangements for Commonwealth Preference and importers may claim preference under either the Generalized Preference Scheme or the Commonwealth Preference arrangements, subject to the appropriate criteria being satisfied. It was noted that Commonwealth Preference continued to be used extensively to obtain preferential rates of duty.

139. The New Zealand scheme was implemented on 3rd January 1972, but was little used. This was largely due to the continued existence of the Commonwealth Preference system.

Certificates of Processing

140. A total of 1,422 Certificates of Processing were issued in respect of goods processed or assembled in Hong Kong but which did not qualify under the established rules for the recognition of Hong Kong origin.

Miscellaneous Certificates

141. The Certification Branch also countersigned certificates of origin issued by the Agriculture and Fisheries Department for vegetable and marine products. During the year, 47 such certificates were issued.

Co-ordination of Certification Procedures with Approved Non-Govern-

ment Organizations

142. 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 had already been achieved between the five issuing bodies and the system works smoothly and efficiently.

INDUSTRIAL DEVELOPMENT BRANCH

REVIEW OF INDUSTRY

General Expansion

143. The overall growth of industry, measured in terms of industrial employment and exports of domestic products, continued at a satis- factory rate, though slower than that of the previous year. Total domestic exports in 1971-72 were valued at $14,154 million, an increase of 12.2% over exports in 1970-71. The Labour Department recorded

a total of 19,474 industrial undertakings, employing 598,555 workers, in March 1972 compared with 17,865 undertakings with 593,494 workers in March 1971.

144. The importance of the garment industry remained paramount: exports were valued at $5,714 million in 1971-72. Exports of other textile products during the period were valued at $1,461 million. Thus, exports of all textile products, including garments, amounted to 50.7% of domestic exports in 1971-72.

145. The plastics industry also retained its important place as an employer of labour and an export earner. Exports of plastic goods increased from $1,417 million in 1970-71 to $1,556 million in 1971-72. 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 1972 reaching $1,201 million, compared to $1,069 million the pre- vious year. The number of employees in the industry declined by several hundred although the number of factories increased from 1,165 to 1,257 during the period. These figures indicate the increasing mechanization of the industry and its continued attraction for entre- preneurs. The largest growth rate in the toys sector was in soft toys, exports of which increased from $96.1 million in 1970-71 to $107.2 million in 1971-72.

146. The electronics industry again registered sustained growth during the year and continued to diversify its product range. In March 1972 there were fifteen factories producing silicon transistors and a further fifteen engaged in the production of computer components and sub-assemblies, nine of which were making sub-assemblies for inte- grated circuits. New and sophisticated products such as desk calcu- lators, tape-recorders, television sets and parts are also being produced. Exports increased by 30.5% from $1,116 million in 1970-71 to $1,457 million in 1971-72 and the industry retained its position as the third largest export earner. This was commendable given that a number of small factories, concentrating mainly in the production of transistor radios, was seriously affected by soft market conditions in the U.S.A. in 1971. Some, which were under-capitalized, found them- selves facing shortened credit facilities and were forced to close down.

147. All sectors of the watch and clock industry continued to grow and to improve the quality of their products. Exports of clocks in- creased from $11.3 million in 1970-71 to $15.4 million in 1971-72 and exports of watch cases increased from $29 million in 1970-71 to $32 million in 1971-72. An associated industry, that producing metal watch-bands, also showed good results, exports increasing from $78 million in 1970-71 to $85 million in 1971-72.

148. Other industries recording substantial growth were umbrellas (from $64 million to $82 million), footwear (from $124 million to $163 million) and travel goods (from $186 million to $235 million). These industries appear to have good potential for further growth.

149. Further details of some of the more important industries are given below.

Textile Spinning and Weaving Industries

150. At the end of the period under review, there were 32 (32)* cotton spinning factories registered with the department for certifica- tion purposes, employing 19,731 (22,178) workers and operating 876,518 (893,552) spindles, a decrease of 17,034 spindles over the total at the end of the previous year. Production of cotton yarn was approxi- mately 309 (356) million pounds, ranging mainly from 10s. to 60s. counts, carded and combed in single or multiple threads, while produc- tion of finer counts and blended cotton/synthetic yarns was 45 (46) million pounds.

151. This reduction in yarn production is a consequence of the movement towards higher technology in the more capital intensive sectors of the industry, such as yarn texturizing and double knitting, and thus reflects the continued development of this highly important industry.

152. Production of woollen and worsted yarns decreased to 19 (28) million pounds. Most of this yarn was utilized by the knitting sector, a small quantity being woven into cloth. Production of wool type synthetic yarns also registered a decrease from 4 million pounds in 1970-71 to 1.2 million pounds in 1971-72.

153. At the end of March 1972, there were 164 (178) cotton weav- ing factories registered with the Department for certification purposes,

* Previous year's figures shown in brackets.

with a total of 24,900 (23,711) looms installed. Production of pure cotton piecegoods was 788 (789) million square yards and consisted chiefly of drill, shirting, poplin and gingham canvas.

Textile Finishing Industry

154. The dyeing, printing and finishing industry 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 1972 there were 440 (409) textile finishing mills employing 12,608 (11,704) workers.

Cotton Knitting Industry

155. Labour Department records at the end of March 1972 in- dicated that there were 255 (262) cotton knitting mills employing 9,105 (8,924) workers. Products were mainly shirts, gloves and undergar- ments. Cotton interlock materials and warp-knitted cotton fabrics were also produced.

Woollen Knitting Industry

156. Exports of woollen knitwear (including blends predominantly of wool) declined slightly and were valued at $843.8 million ($856.6 million) in 1971-72. The number of workers decreased from 40,086 in 1970-71 to 35,099 in 1971-72 but the number of factories increased from 1,119 to 1,238. This reflected an increase in the growth of small- sized factories in this sector of industry: the number of factories employing fewer than 19 workers increased from 664 in 1970-71 to 833 in 1971-72, and the number of employees in these small factories also increased, from 5,316 in 1970-71 to 6,141 in 1971-72. However, factories employing 20 or more workers decreased from 400 to 339 and their work force from 34,770 to 28,958.

Wearing Apparel Industry

157. Hong Kong manufactures a wide range of garments, including shirts, underwear, outerwear, gloves, hats, socks and stockings. This industry continued to thrive. By the end of March 1972, it employed a labour force of 177,535 (165,077) in 4,343 (3,737) industrial under- takings. The value of exports of clothing (including that made of non- textile materials, such as leather) in 1971-72 reached $5,714 (4,571) million, an increase of 25% over the value for the previous year.

Wig Industry

158. At the end of March 1972, there were 290 factories in this industry with a total employment of 15,009. This compared with 435 factories employing 30,375 a year earlier. The sharp decline of the industry, begun in the second half of 1970, thus continued, with exports decreasing from $922 million in 1970-71 to $434 million in 1971-72. Preference for synthetic wigs continued to prevail, 87% ($375.9 million) of all exports of wigs in 1971-72 being made from synthetic fibres.

Steel Industry

159. Most of the industry's products were consumed locally, especially by the local building construction industry where demand continued to be strong. Exports, however, declined sharply from 57,000 tons in 1970-71 to 18,683 tons in 1971-72, reflecting not only increasing competition and production of domestic industries in export markets, but also the strong local market conditions which existed during the

year.

160. The industry is now placing greater importance on the import of scrap steel in preference to the hitherto traditional method of obtaining its raw materials from shipbreaking. This is reflected in the decreasing number of ships broken up in 1971-72-16 vessels totalling 103,094 gross tons compared with 34 vessels of 170,800 gross tons for 1970-71; and in imports of scrap steel, which increased from 89,550 tons in 1970-71 to 109,557 tons for 1971-72.

INDUSTRIAL PROMOTION

161. 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 extend the service further, the Trade Development Council has taken over the external responsi- bilities of foreign industrial investment promotion through its existing network of overseas offices. It is intended to intensify the degree of overseas promotional work through the appointment of specialist officers to posts in Europe and North America in the next financial year. The Department will provide the supporting services in Hong Kong required by these officers.

162. In November the Assistant Director, Industry, attended a meeting in Singapore to promote industrial projects in Asian countries. The meeting was sponsored by the Economic Commission for Asia and Far East (E.C.A.F.E.) and the United Nation's Industrial Develop- ment Organization (U.N.I.D.O.). Although it was not possible to measure immediate tangible results the Department has been able to establish a number of useful contacts with potential foreign investors.

163. During the year the number of manufacturing undertakings either fully or partly owned by foreign interests increased to 230. They employed a labour force of about 71,000 workers, representing over 10% of the total industrial workforce, and produced about 12% of total exports of domestic manufactures in 1971. It is estimated that the total investment involved is in the region of $1,037 million. This is concentrated in the electronics industry, with $273 million or 26.3% of total foreign industrial investment; textile yarns and fabrics with $210 million (20.2%), followed by shipbuilding and repairing with $102 million (9.8%), garments with $79 million (7.5%) and tobacco prod- ucts with $69 million (6.6%).

164. During the course of the year the Department, in co-operation with the Trade Development Council, conducted two major publicity drives. The first of these consisted of publishing and despatching to selected overseas companies in the U.S.A., W. Germany, Britain, Sweden and Australia a small illustrated brochure which was designed to awaken the interest of these companies in Hong Kong by showing what it has to offer as a base for offshore manufacturing.

165. The second operation was related to the publishing of the fourth edition of 'Industrial Investment Hong Kong'. With this edition, a more ambitious distribution plan than for previous editions was developed and executed. Copies were despatched to the same countries as the brochure, but to more substantial companies which were known to be already established in countries other than that in which they maintained their headqaurters or which, even though having no over- seas branches, distributed their products internally on a wide scale.

Loans for Small Industry Committee

166. The Industrial Development Branch continued to service the Loans for Small Industry Committee, which was reactivated at the end of 1970 to investigate the form a loans scheme for industry might

take in the light of comments and suggestions by the various industrial and commercial associations, the Universities and the Government on the Committee's first Report. In May 1971, the Trade and Industry Advisory Board endorsed the Committee's second Report which was subsequently submitted to the Government for consideration. On 1st March 1972, the Financial Secretary announced that the Government had agreed in principle to the Committee's recommenda- tions to establish a pilot loans scheme, subject to the Finance Com- mittee accepting the contingent liability involved and approving funds for administrative overheads.

167. It is intended that the scheme should be administered by a new branch within the Industry Division. Meanwhile, the Industrial Development Branch, in co-operation with the Hong Kong Productivity Centre and the Hong Kong Exchange Banks Association, has the responsibility for devising suitable operational procedures to meet the scheme's objectives.

Water Supply to Industry

168. An adequate supply of water to industry seems to be assured for the foreseeable future. Work on increasing the height and storage capacity of the Plover Cove Dam is expected to be completed by April 1973, by which time the reservoir will hold an additional 13,500 million gallons of water.

169. Construction of the High Island Water Scheme has now begun. When completed, the reservoir will hold some 60,000 million gallons of water, and is scheduled to be contributing to the Colony's water supply by the end of 1976.

170. The world's largest Desalination Water Plant, capable of pro- viding 40 million gallons of fresh water daily, is planned for the Castle Peak area. Work is planned to start in June 1972 and the first of the plant's six units should be in production by mid-1974.

171. Water charges for industrial use were increased from $2 to $3 per thousand gallons on 1st April 1971, and will be further increased to $4 per thousand gallons with effect from 1st April 1972. These in- creases were inevitable given the very large expenditure to be incurred in extending the Colony's water supply.

Industrial Land and Buildings

172. During the year ten industrial sites (nine on Hong Kong Island and one in Kowloon) were sold in urban areas. The total area involved was 170,475 sq. ft. In the New Territories fifteen industrial sites were sold, mainly in the Castle Peak new development area, in- volving some 283,410 sq. ft. of land. Further expansion is anticipated in Castle Peak, and later in Sha Tin, New sites in the existing urban areas are becoming scarce and their sale must, therefore, be expected to decline in future years.

173. By the end of 1971 some 7.6 million sq. ft. of space in multi- storey factories was completed, of which about 3.3 million sq. ft. was vacant. Another 9.5 million sq. ft. of space is expected to be completed in the coming year. The increasing supply of flatted factory accom- modation has resulted in a stabilization in rents for industrial premises.

HEALTH AND SAFETY STANDARDS OF HONG KONG PRODUCTS

174. 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 and the U.S.A. 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 and with the Food and Drugs Administration of the United States Government both direct and through the department's Washington Office. 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 and 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.

175. During the year, a total of sixteen circulars on health and safety standards were sent to manufacturers to bring to their attention new proposals for legislation and regulations in their major markets and to help them improve the standards of specific products.

Health Standards

(a) Toys-Lead Content

176. In view of the stringent requirements in force in our major overseas markets with regard to the paints used on toys, the Depart- ment continued testing samples of paints being used by toy manu- facturers, to ensure that the lead content did not exceed a limit of 5,000 parts per million. During the year, 1,355 samples were drawn from toy factories and submitted to the Government Chemist for testing; 69 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.

177. This scheme has now been in operation for six years, and the measure of its success may be gauged from the fact that, during the year, the Branch received no overseas complaint alleging that Hong Kong toys were coated with paint containing excessive lead.

(b) Pottery, Procelainware and Enamelware-Lead and Cadmium

Content

178. The Branch issued three circulars to local manufacturers of procelainware and enamelware drawing their attention to the permitted levels of lead and cadmium content in pottery and enamelware as laid down in regulations issued by the United States Food and Drug Administration.

Safety Standards

(a) Electrical Products

179. In recent years the Industrial Development Branch has had to deal with a number of overseas complaints about the safety standards of Hong Kong-made electrical products, such as Christmas tree decora- tion lights, plugs, table lamps and battery chargers. All complaints were thoroughly investigated and the Branch was able, in most cases, to secure the co-operation of the manufacturers concerned in improving products which had been found under test to be faulty.

180. 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 Electrical and Mechanical Engineering

Division of the Public Works Department, instituted in May 1971 a second comprehensive system of testing samples of electrical products drawn from factories. Where the test reports showed faults in the products the manufacturers concerned were interviewed and recom- mendations for improvements were conveyed to them.

181. Few overseas complaints were received this year in respect of Hong Kong-made electrical appliances 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

(i) British Code of Safety Requirements for Children's Toys and

Playthings

182. A circular was issued to toy manufacturers on recent amend- ments to the British Code of Safety Requirements for Children's Toys and Playthings which have been made mandatory since 1st January 1972.

(ii) United States Ban on Walker-Jumpers

183. Two circulars were issued to toy manufacturers on recent amendments to the U.S. Child Protection and Toy Safety Act 1969 which prohibited the import of certain walker-jumpers which did not reach prescribed safety standards.

(iii) Canadian Ban on Hazardous Toys

184. A circular was issued to toy manufacturers concerning the Canadian Hazardous Products (Toys) Regulations which prohibited the import into Canada of toys with a variety of features which are considered to be dangerous.

185. Complaints were received from Britain that unpermitted colouring matters and preservatives had been found in oyster juice, preserved fruits and confectionery exported from Hong Kong. The Branch consequently issued a circular letter to the trade, bringing to their attention the provisions of the 'Colouring Matters in Food Reg- ulations', the 'Preservatives in Food Regulations' and the 'Emulsifiers and Stabilizers in Food Regulations' in force in Britain.

186. In addition, the Branch discussed with the Government Chemist and the Urban Services Department ways and means of ensur- ing that Hong Kong's exports of foodstuffs to Britain are free from unpermitted additives.

(d) Garments-Overseas Safety Standards

187. The Branch issued three circulars to garment manufacturers drawing their attention to various regulations covering safety standards for garments in Britain and the United States. These regulations included the British Home Office Working Party Report on Inflammability of Children's Dressing Gowns, the British Night-dresses (Safety) Regula- tions 1967, the U.S. Flammability Standard for Children's Sleepwear and the U.S. Flammable Fabrics Act.

(e) Carpets and Rugs—U.S.A. Flammable Fabrics Act on Inflamm-

ability of Carpets and Rugs

188. The Branch issued a circular to local manufacturers of carpets and rugs drawing their attention to amendments to the revised United States Flammable Fabrics Act which set out the tests prescribed by the Standard for the Surface Flammability of Carpets and Rugs,

(f) Eyeglasses and Sunglasses-Use of Impact-Resistant Lenses

189. A circular was issued to local manufacturers of optical prod- ucts drawing their attention to the U.S. regulations regarding the use of impact-resistant lenses in eyeglasses and sunglasses.

T.I.A.B. Ad Hoc Committee on Health and Safety Standards

190. At the Legislative Council Meeting of 16th May 1971, Dr. the Hon. S. Y. CHUNG suggested that consideration be given to the introduction of an awards scheme to improve the safety and health standards of Hong Kong products manufactured for export. An ad hoc committee of the Trade and Industry Advisory Board was subsequently established in July 1971, to examine Dr. CHUNG's suggestion specifically with respect to electrical products powered by mains supply, toys and children's playthings, and foodstuffs, these being the principal product areas in respect of which complaints are received from abroad.

191. In its Interim Report, the Committee recommended the in- troduction of an awards scheme which, while by itself not a solution to safety and health complaints regarding Hong Kong products, could provide a useful means of promoting higher standards generally. The T.I.A.B. endorsed this recommendation and advised that it should be forwarded to the major trade and industrial associations for their consideration. Subsequently, these associations combined to examine the feasibility of introducing an Industrial Quality Council for the purpose of instituting some form of Quality Label Scheme for Hong Kong exports.

192. After further deliberations the Committee submitted a final Report in which it concluded that a problem existed in respect of the health and safety standards of the products under review and made certain recommendations to deal with it. These recommendations were under consideration by the Department at the end of the year prior to submission to the T.I.A.B.

Minor Complaints regarding Safety Standards

193. During the year the Branch received fifteen minor complaints from overseas regarding the safety standards of Hong Kong products, mainly toys. Investigations were made into the individual cases and the manufacturers concerned were interviewed. All agreed either to eliminate the defects in their products or to cease production of the article in question.

ECONOMIC COMMISSION FOR ASIA AND THE FAR EAST

194. The Industrial Development Branch was responsible for brief- ing a two-member delegation to the Seventh Session of the Asian Industrial Development Council held in Bangkok from 1st to 7th February 1972. The leader of this delegation was the Assistant Director, Industry.

TRADE INVESTIGATION BRANCH

General

195. The Trade Investigation Branch, formerly known as the Industry Inspection Branch, is principally concerned with the system under which the Department, in conjunction with the four approved non-Government certificates of origin issuing organizations, issues

various types of origin certificates. It is responsible for the policing of some 11,000 commercial and industrial concerns registered for origin certification purposes. In this connection, officers of the branch carry out inspections before registering factories for certification and sub- sequent inspections are periodically made to ensure continued com- pliance with conditions of registration. Spot checks are also made of consignments prior to export.

196. In addition, the branch undertakes systematic consignment checks in connection with export licences issued to regulate shipments of various categories of textiles under export restraint. Some of these inspections give rise to detailed and protracted investigations where contraventions of prescribed conditions are suspected. In some cases, investigations result in the prosecution of the firms concerned, suspen- sion or cancellation of their certification facilities, or the withdrawal of textiles export quota.

197. In support of other divisions and branches of the Department, the Branch has responsibility for all field aspects of industrial surveys and for selective sample checks of such products as hand-decorated toys, electrical appliances and foodstuffs before export to ensure that certain health and safety standards are maintained.

198. In May 1971 the Branch was reorganized following abolition of the Comprehensive Certificates of Origin system when it assumed responsibility for processing trade complaints, the administration and policing of the provisions of the Importation and Exportation (Reg- istration of Imports and Exports) Regulations in conjunction with the Census and Statistics Department, and the policing of Industrial Property Legislation.

Inspections

199. In the year under review, the Branch completed a total of 25,251 factory and consignment inspections, a decrease of almost 30% as compared with 1970-71. This decrease can be attributed to the demise of the Comprehensive Certification of Origin system and parti- cipation by Hong Kong in Generalized Preferences Schemes introduced by a number of countries. As the origin criteria applied to these Schemes vary from product to product, the factory and consignment inspections are time consuming. In addition, 25 officers were seconded to the Commercial Relations Division for three months to assist in the compilation of U.S. textile quotas.

200. Arising from these inspections, 2,363 factories were reported to have breached one or more of the conditions governing their registra- tion. The more serious of these, totalling 294, required further in- vestigation to establish the extent of the malpractice. A breakdown of the inspection figures for the year, with comparative figures for 1970-71, is as follows:

(a) Inspections

1971-72

1970-71

(i) Initial inspections for various types of

certificates of origin

3,899

4,906

(ii) Re-inspections

8,912

12,839

(iii) Preference undertaking checks

820

1,500

(iv) Comprehensive Certificates of Origin

procedural checks

130

728

(v) Textile quota checks

2,386

1,941

(vi) Origin certification consignment checks...

8,985

14,473

Total ...

25,132

36,387

(b) Miscellaneous

1971-72

1970-71

(vii) Industrial surveys (No. of premises

visited)

971

1,138

(viii) No. of paint samples drawn for deter-

mination of lead content...

1,389

1,511

(ix) No. of miscellaneous enquiries including

trade complaints

120

451

Trade Declaration Enquiries

201. In addition to the field inspections reported in the preceding paragraphs, branch officers completed a total of 7,188 enquiries arising from late lodgements of trade declarations or in verifying particulars furnished. A breakdown of these is as follows:

(a) Verification (General)

(b) Manifest enquiries

5,539 1,492

157

7,188

Trade Complaints

202. The Trade Complaints Section, formerly a responsibility of the General Duties Branch, was transferred to the Trade Investigation Branch with effect from 1st June 1971.

203. The Section aims to bring about amicable settlements of com- mercial disputes between Hong Kong business concerns and overseas customers. In the absence of legislation to enforce decisions in com- mercial disputes, the department's ability to assist as a mediator is 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. Where the parties cannot agree, the department suggests recourse to civil action.

204. During the year, the number of trade complaints referred to the Department for mediation continued to increase, particularly those arising from the activities of itinerant salesmen operating in the United States. These largely concerned the non-delivery of merchandise ordered and paid for. Of the 2,279 (1,960) complaints which were received from overseas firms or individuals, 60% were amicably settled. Viewed in the context of Hong Kong's overall export trade, the number of complaints received was relatively small but, because of the dis- proportionate amount of adverse publicity generated, especially as a result of frauds practised by unscrupulous salesmen in the United States, the department is considering ways of minimizing the problem. In the same period, 56 (68) local firms/individuals sought assistance in obtaining settlement of disputes with overseas firms. A detailed break- down is given in Table 6.

Prosecutions

205. The staff of the Prosecution Section concluded 1,680 Court actions during the period under review. In the main, these dealt with the prosecution of 795 industrial undertakings, commercial firms and individuals for making false statements in declarations in support of applications for the issue of certificates of origin; breaches of legal undertakings given to the Department; contraventions of registration conditions; late lodgement of trade declarations; incorrect informa- tion on trade declarations, and contraventions of the Merchandise Marks Ordinance. Total fines imposed by the Courts in respect of actions taken during the year under review amounted to $761,421, more than double the amount for the previous year. A detailed summary and breakdown of all prosecutions undertaken during the period is given below:

(i) Total actions...

(ii) Persons arrested

(iii) Industrial undertakings/Commercial firms

summonsed

...

(iv) Total fines imposed by the Courts

111

1971-72

1970-71

1,680

344

795

181

$761,421

$305,290

The five-fold increase in the number of prosecutions was due to the reorganization of the Branch referred to at paragraph 198 above. This permitted greater surveillance of trade declaration offences which accounted for the majority of prosecutions.

(a) Certification

(i) Total actions

(ii) Persons arrested

(iii) Industrial undertakings/Commercial firms sum-

monsed

...

(iv) Total fines imposed by the Courts

(b) Trade Declarations

(i) Total actions

•

358

123

$350,850

1,277

Nil

654

...

$282,371

(ii) Persons arrested

(iii) Industrial undertakings/Commercial firms/persons

summonsed

(iv) Total fines imposed by the Courts

(i) Total actions

(ii) Persons arrested

(iii) Industrial undertakings/Commercial firms/persons

summonsed

(iv) Total fines imposed by the Courts

Nil

---

$128,200

50CHAPTER 6

PREVENTIVE SERVICE AND

DUTIABLE COMMODITIES DIVISION

PREVENTIVE SERVICE

General

206. The Excise Patrol Offices previously located at Kwun Tong Government Building and the Excise Verification Offices at the Ocean Terminal were vacated and moved to the new Excise Headquarters at Canton Road Government Building, 6th floor, on the 26th July 1971. Construction work on the Fanling Excise Station extension commenced in August 1971 and is expected to be completed in June 1972. Other building projects in hand include the construction of rank and file married quarters at Hung Hom which are due for completion in 1972 and a new training school at Tai Lam Chung which is expected to be completed in 1974.

207. As a result of the Salaries Commission recommendations, the rank of Revenue Sub-Inspector was abolished and serving officers of that grade were re-graded as Revenue Inspectors.

EXCISE

Hydrocarbon Oils

208. Checks on road vehicles, suspected sales depots and detreating centres continued to be made throughout the year. A total of 25,982 vehicles were examined and 68 persons prosecuted for offences con- nected with the misuse of industrial diesel oil. Seizures of detreated and treated oil amounted to 1,232 gallons and 191 gallons respectively. These figures represent a marked reduction in the number of seizures made in 1970-71 and 1969-70, and indicated that the illegal practice is being contained. There is no evidence that duty receipts have been adversely affected by this malpractice.

Illicit Distilling

209. Pressure against illicit distillation was maintained with con- stant patrols of the rural areas of the New Territories and outlying islands. During the latter part of the year, there was a noticeable decrease in the number of satellite stills seized and the figures for fer- menting materials dropped considerably. The price of sugar increased by almost 90% in December 1971 and, as this is the principal com- modity used by the illicit distillers for the manufacture of Chinese type spirit, it is believed that some may have been forced out of business because of declining profits. A seizure of molasses late in the year, however, may be an indication that they have turned to this cheaper raw material for making mash but it is still too early to confirm this. There has been a slight increase in the incidence of rectifying denatured alcohol and although this is also a cheap method of obtaining alcohol it is believed that this type of operation will not get out of hand as it requires skill and the dangers of explosion and fire are always present.

Adulterated Liquor

210. The trade in adulterated western-type liquor is still a lucrative one, especially during the festive seasons of Christmas and New Year. A special squad was formed to combat this trade during these periods and in six operations a total of 440 bottles of liquor were seized together with large quantities of empty bottles, fake labels, capsules and associated paraphernalia. Nine operators were arrested and charged and three vehicles seized. Court fines ranged from $100 to $3,000 and totalled $10,350.

211. The largest haul during the period consisted of 201 bottles of adulterated liquor, 16 gallons of alcohol and a large quantity of manu- facturing paraphernalia. It was made in a residential flat in the industrial area of To Kwa Wan and the operator, a youth of 21 years of age, was arrested and charged. He had taken advantage of the industrial surroundings and made his deliveries, ostensibly in the form of air parcels, by private car. He was fined $2,250 for the offence.

212. The main outlets for this type of liquor continue to be restaurants, liquor dealers and private parties. Records seized show that a liquor dealer was found to be a regular customer of one of the operators. The premises were raided and four bottles of liquor seized. The licensee was summonsed and subsequently fined $750.

PREVENTIVE OPERATIONS

Searches

213. Preventive Service officers searched 569 ocean-going vessels, guarded 500 vessels and boarded 1,150 vessels for cargo examination as a preventive measure against the illegal importation of narcotics, dutiable commodities, unmanifested cargo and illegal immigrants. Marine patrols searched 17,019 fishing and trading vessels and the patrol launches steamed 18,062 hours.

214. In spite of the setback caused by the loss of two Macau ferries during a typhoon in August 1971, passenger traffic to and from Macau increased from 1,523,418 in 1970-71 to 1,647,502. Regular searches of ferries and passengers were carried out during the year.

Kai Tak Airport

215. During the year under review the number of arriving passengers showed a further increase and totalled 1,228,559 as com- pared with 1,197,921 for the preceding year. Towards the end of the year, the processing of arriving passengers and their baggage was effected through eight new mechanized counters. A further ten of these counters are being installed, and when introduced are expected to speed up clearance considerably.

216. The number of arriving aircraft totalled 23,497 as compared with 23,978 for last year. The decrease of approximately 2% is attributed to fuller passenger utilization of aircraft and the introduc- tion of the larger 747 types which replaced some smaller and less economical aircraft on certain routes.

217. A total of 24,198 tons of cargo was imported during the current year as compared to 17,382 tons for the year 1970-71. Of the imported cargo 245,939 items were examined and 23,497 high value packages valued at $1,421,709,123 were released under import licences.

Narcotics

218. Preventive Service action included the searching and/or guard- ing of 1,069 ocean-going vessels and the examination of incoming cargo on 1,150 vessels. 145 raids on opium divans, manufacturing the dis- tributing centres of dangerous drugs were made on land. 210 narcotics seizures totalling 2,402 lbs. were made and 819 persons arrested.

219. Continuous launch patrols were maintained throughout the year as a deterrent against smugglers of narcotics, dutiable commodities and other prohibited articles.

TRAINING AND ADMINISTRATION

Investigation

220. Investigations were conducted into 130 cases involving dis- ciplinary offences, infringement of the Importation and Exportation Ordinance, the Dutiable Commodities Ordinance and the Dangerous Drugs Ordinance. Requests for information from other Departments and overseas Customs Authorities were also processed.

221. As from May 1971 action under the Merchandise Marks Ordinance was undertaken by the Trade Investigation Branch, releas- ing officers of the Investigation Division for anti-narcotics duties on land.

222. A total of 112 divans were raided during the period which resulted in the arrest of 620 persons. Investigations carried out in respect of packing and storage dens led to the arrest of 94 persons in 12 major operations.

223. Seizures made by officers of the Division in their anti-narcotics activities consisted of 21,648.1 gm. of a mixture of heroin, 92,739.9 gm. of a mixture of opium including opium dross, 8,364 gm. of a mixture of barbitone, 188 opium pipes and large quantities of cooking, packing and smoking paraphernalia.

224. Court actions totalled 2,516 as compared with 2,416 for the previous year. The sharp increase in the number of arrests was the result of action taken against opium divans. The issue of summonses for failing to lodge declarations under the Importation and Exportation (Registration of Imports and Exports) Regulations was also undertaken by the Trade Investigation Branch causing a further decline in the number of summonses issued.

225. The following table illustrates the trend of prosecutions over the last three years:

Actions

Arrests

Summonses

Fines

1971-72 2,516

1970-71

1969-70

2,416

4,115

850

755 $150,950

362

992

421

2,210

$251,075

$203,894

226. 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

227. The Preventive Service Training School continues to function in temporary accommodation at the Kwun Tong Government Office Building which houses the classrooms, museum and the administra- tive section. Quarters are provided for the trainees in private property leased by Government in the vicinity of the Training School.

228. Piling work on the new training establishment which will be built at Tai Lam Chung in the New Territories will commence at the beginning of April 1972 and construction is expected to be completed in 1974. It will provide full-time residential training for approximately 110 trainees.

229. 78 persons were appointed to vacancies in the Revenue Officer and Assistant Revenue Officer establishments. During the in- duction training period, 37 resigned and one reverted to his previous post in the Hawker Control Force.

230. Induction training courses cover laws under which the Preven- tive 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, and 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.

231. One Revenue Inspector Promotion Course was held for 5 officers promoted on an acting basis from the rank and file. The Course is due to be completed at the end of July 1972.

232. Three of the younger members of the Preventive Service attended courses held at the Outward Bound Training Course at Tai Mong Tsai in the New Territories.

233. Two members of the inspectorate made liaison visits to Japan, Laos, Thailand, Malaya and Singapore.

234. Two Senior Revenue Inspectors were seconded to the Colonial Secretariat for administrative training.

235. One officer attended a 3-week Method of Instruction Course at the Government Training Division.

236. 633 persons from local schools, overseas customs and other Government Departments visited the Training School.

237. Forty-three junior officers completed induction training courses and four passing-out parades were held.

238. Two Revenue Inspectors undertook a 6-month Training Course and attachments in Australia from November 1971.

239. One Senior Revenue Inspector attended a training course and study tour on Customs Administration in Bangkok between the 18th September 1971 and 2nd October 1971.

240. One Revenue Inspector proceeded on a merit trip during which he attended courses in London and attachments to Customs Authorities in Holland, Germany and the United Kingdom. He additionally visited distilleries, breweries, and tobacco factories in Scotland.

Staff and Discipline

241. Mr. M. C. MORGAN succeeded Mr. A. L. TOKLEY, as Assistant Commissioner on 14th February 1972. Mr. TOKLEY left the Colony on 29th February 1972 on pre-retirement leave.

242.

During the period, 62 officers were promoted, these were:

From

Senior Revenue Inspector Revenue Sub-Inspector Principal Revenue Officer

Class II

Senior Revenue Officer

Revenue Officer

Number

Chief Revenue Inspector Revenue Inspector

Principal Revenue Officer Class I

Total

Principal Revenue Officer Class II Senior Revenue Officer

Assistant Revenue Officer Revenue Officer

243. Commendations were awarded to one Senior Revenue Inspec- tor, eight Revenue Inspectors, eight Revenue Sub-Inspectors, two Woman Revenue Sub-Inspectors, six Revenue Officers and nine Assist- ant Revenue Officers for qualities of leadership, outstanding alertness, initiative and zeal displayed in the performance of their duties.

244. One Revenue Inspector, and five Assistant Revenue Officers were transferred to other Government Departments.

245. Three Revenue Sub-Inspectors, one female Revenue Sub- Inspector, sixty-seven Assistant Revenue Officers and two female Assistant Revenue Officers resigned from the Service.

246. Eleven breaches of discipline were reported during the period. Punishments were awarded as follows:

Reprimands

Reprimands and Fines

Fines

1971-72

1970-71

1.0

...

Dismissals..

Food Supplies

247. The Food Supplies Unit continued to compile records and statistical returns of the daily imports of essential foodstuffs, such as rice, pigs, cattle and vegetables. These returns are analysed and sub- mitted to the Food Supplies and Distribution Committee to enable it to deal with any deficiency in essential foodstuffs.

DUTIABLE COMMODITIES BRANCH

Revenue from Excise Duties

248. The total net revenue from duties during the financial year 1971-72, amounting to $451,278,000, exceeded the year's original estimate of $439.6 million by $11.7 million or 2.6%.

249. This total figure also marks an increase of $38.7 million or 9.3% over the net revenue of $412,614,000 collected during the fiscal year 1970-71.

250. For comparison, net revenue figures for the year under review and the past two years are summarized below:

(in $'000)

Hydrocarbon Oils

...

Liquor

Tobacco

...

Methyl Alcohol

Table Waters

1971-72

1970-71

1969-70

172,438

156,102 135,753

ITI

134,317

121,251

103,049

135,456

125,022

125,475

121 8,945

108

10,147

9,960

451,277

412,614

374,345

251. The figures show considerable increases in most categories of dutiable commodities. Most noticeable were the increases in net revenue from hydrocarbon oils and imported intoxicating liquors, which amounted to $16.3 million and $13.7 million respectively.

(a) Hydrocarbon Oils

252. Net revenue collected from this source amounted to a record $172.4 million. It exceeded revenue collected in the previous year by $16.3 million or 10.5%. The main contributing factors for this excep- tional rise were:

(i) the increase in consumption of motor spirit and light diesel oil

for vehicles;

(ii) the increased consumption of furnace oil and heavy diesel oil

for local industries; and

(iii) the continuous action against the illicit use of industrial diesel

oil.

(b) Liquor

253. Total net revenue from liquor amounted to $134.3 million representing an increase of $13.1 million, or 10.8%, over that for 1970-71 and $6.7 million above the original estimate. Imported brandy again accounted for the major portion of the increase reflecting the public's preference for more expensive drinks as a result of improved living standards.

254. Net revenue from tobacco amounted to $135.5 million, rep- resenting an increase of 8.3% or $10.4 million. Gross revenue from leaf tobacco decreased by 9.2% or $9.3 million as compared with last year's $101.3 million. Duties collected from imported cigarettes rose by 9.6% while those from locally manufactured cigarettes decreased by approxi- mately 8%. Collection from Chinese prepared tobacco amounted to only $767,800 showing a decrease of $88,000. Exports of locally manu- factured cigarettes increased by 1.1% to 5.5 million pounds, but due to speedy clearance, drawback outstanding was only $3.2 million on the last day of the financial year.

(d) Table Waters

255. The retail price of table waters was increased at the beginning of the fiscal year and this, coupled with a cool summer, affected the consumption of table waters. Revenue collected from this item dropped by 11.8% or $1.2 million to $8,945,000.

Revenue from Licences

256. The revenue obtained from various types of licences are shown in Table 8. Revenue from this category was $18,000 over the estimate of $4.7 million, an increase of $172,000 or 3.7% over last year.

257. Net revenue from licences in respect of various commodities is shown hereunder together with comparison figures for the previous two years:

Liquor

Tobacco

Hydrocarbon Oils

Table Waters

Ship and Harbour Vessel ..

Methyl Alcohol

(in $'000)

1971-72

1970-71

3,728

3,537

1969–70 3,487

818

843

861

204

201

198

•

4,789

4,617

4,584

CHAPTER 7

GENERAL DUTIES BRANCH

258. The General Duties Branch is responsible for administering trade licensing, strategic and reserved commodities controls, and food supplies. It co-ordinates departmental 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

259. The Importation and Exportation (Southern Rhodesia) Reg- ulations continued in force until 1st January 1972 when they were replaced by the Import and Export (General) Regulations. These Regulations, which subject all imports from and exports to Southern Rhodesia to licensing control, were introduced in May 1966 in con- formity with the policy of the United Kingdom Government in respect of sanctions against Southern Rhodesia.

260. 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 lb. for the 'coffee year' 1st October 1971 to 30th September 1972.

261. 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 obliga- tion is fulfilled in these international undertakings, a surveillance on the pattern of Hong Kong's imports is maintained.

262. The number of import licences issued for all purposes, includ- ing the control of strategic goods and reserved commodities, totalled

44,410 (46,389*). To confirm the arrival in Hong Kong of strategic goods 239 (262*) delivery verification certificates were issued.

263. With the introduction of the Import and Export Ordinance on 1st January 1972 export licences were no longer issued for exchange control purposes. The number of export licences issued (excluding textile licences processed in the Textiles Branch) numbered 474,176 (605,324*), 2,127 (1,259*) delivery verifications or landing certificates issued by the appropriate authority in the country of import were produced by exporters following the export of strategic items.

Reserved Commodities

264. 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 shortages.

(a) Rice

265. 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.

266. The international supply of rice continued to remain favour- able with supply generally exceeding demand. World output for 1971-72 exceeded the previous record production achieved in 1970-71. On the whole, increased production in 1971 was due to higher average outputs per acre. These good yields reflected generally favourable weather and continued improvement in farming methods and outputs, including new seeds and fertilizers, rather than a significant increase in areas seeded to rice. A number of importing countries were successful in their efforts to attain self-sufficiency. Export availabilities substantially increased as a result, and brought about a reduction in prices on the world rice market.

267. Due to the favourable world supply situation and the Thai Government's reduction of the export premium on rice, the import prices of Thai rice declined, reaching the lowest level in April 1971 since when they remained more or less stable. Import prices for China rice also declined slightly during the year.

* Previous year's figures shown in brackets.

268. With the decline in import prices, wholesale rice prices in Hong Kong dropped correspondingly during the year. Retail prices remained unchanged but there were improvements in the quality of the various grades of rice sold.

269. Per capita rice consumption continued its declining trend, though the rate of decrease has slowed in recent years. Offtakes of good quality rice remained at a high level. In view of a favourable world supply situation, it was not considered necessary to maintain a high stock. As a result, rice stocks were kept at a level of 73,000 metric tons for the greater part of the year, sufficient for two and a half months' consumption.

270. Total rice imports during the year were 357,338 metric tons (336,716) as follows:

Source

Thailand

China

U.S.A.

Khmer Republic

Australia

N. Vietnam

Taiwan

Venezuela

Burma

N. Korea

Argentina Japan

1971-72 M/Tons %

1970-71

M/Tons

216,637 60.7

188,388

56.0

97,828

27.4

88,511 26.3

4,358 1.2

11,613

3.4

1,215

0,3

18,170

5.4

22,516

6.3

10,682

3.2

934

0.3

628

0.2

136

221

0.1

13,488

3.8

18,231

5.4

120

300

357,338 100.0

336,716 100.0

Offtakes from stocks were as follows:

Type

Whole Rice-

Thai Origin Chinese Origin

Other Origin

•

1971-72

M/Tons %

1970-71

M/Tons

...

163,838 47.1 96,128 27.7 44,700 12.9

154,097 44.7

86,551 25.1

60,802 17.7

304,666 87.7

301,450 87.5

Type Broken Rice-

Thai Origin

Glutinous Rice-

Thai Origin

Chinese Origin

Other Origin

Sub-Total

•

Low Grade and Other Rice for

Industrial use/Poultry Feeds-

Thai Origin

...

Khmer Republic Origin

Other Origin

1971-72 M/Tons %

1970-71

M/Tons

25,994 7.5

27,141

7.9

11,139

3.2

10,738

3.1

128

0.1

256

0.1

11,395

3.3

10,882

3.2

342,055

98,5

339,473

98.6

2,391

0.7

474 0.1

1,080 0.3 1,753

1,703 0.5

0.5

2,722

0.8

5,224

1.5

4,899 1.4

Total Offtakes

347,279 100.0 344,372 100.0

271. In May 1971, the Department was represented at the Fifteenth Session of the Study Group on Rice of the United Nation Food and Agriculture Organization (F.A.O.) held in Rome. Estimates of world production and demand for rice given at the meeting indicated that there would be a substantial supply surplus in 1971.

272. In September 1971, a two-member delegation was sent by the Department to attend the Expert Group Meeting on Intra-Regional Trade in Rice and Cereals and Harmonization of National Plans sponsored by the Economic Commission for Asia and the Far East (ECAFE) held in Bangkok. A study of the export availability and import requirements of rice in the ECAFE region in 1975 made by the meeting showed that the export availability in the region would be approximately 3.2 million tons whereas import requirements were estimated to reach only 2.1 million tons.

(b) Frozen Meat

273. During the year, importers of frozen meat continued to be registered as stockholders with an undertaking to maintain a certain quantity as reserve stock.

274. Imports of frozen meat amounted to 36,404 (36,540*) long tons in 1971-72. Of this amount 75.6% (78%) came from China.

275. Consumption of frozen meat and fresh meat during the past three years was as follows:

Fresh Meat ...

Frozen Meat

1971-72

L/Tons

1970-71 1969-70 L/Tons

138,703

116,174 116,952

35,772

36,006

32,290

174,475

152,180

149,242

276. Imports of frozen poultry under licence amounted to 57.9 (59.5) million lbs. The major source of supply was China, followed by the U.S.A. and Denmark. These countries supplied 34% (31%), 32% (33%) and 13% (11%) of total imports respectively.

(d) Coal and Firewood

277. Imports of coal amounted to 24,795 (28,520) long tons and no firewood was imported (178).

* Previous year's figures shown in brackets.

CHAPTER 8

DEPARTMENTAL ADMINISTRATION

Senior Staff Changes

278. During the year a number of changes were made at a senior level. Mr. J. CATER, Administrative Officer Staff Grade A, proceeded on leave in December 1971; during his absence Mr. E. I. LEE, Administrative Officer Staff Grade B2, was appointed as Director and Mr. H. WILLIAMS, Administrative Officer Staff Grade C, as Deputy Director (Administration and Industry) vice Mr. LEE. In January 1972 Mr. M. C. MORGAN, Senior Administrative Officer, was appointed as Assistant Director in place of Mr. WILLIAMS.

279. Mr. L. W. R. MILLS, Principal Trade Officer, was promoted to Assistant Director in October 1971.

280. Mr. A. L. TOKLEY, Assistant Director and Assistant Com- missioner of the Preventive Service, proceeded on leave prior to retire- ment in February 1972 and was succeeded by Mr. M. C. MORGAN, Senior Administrative Officer. Mr. J. W. HAYES, Administrative Officer Staff Grade C, succeeded Mr. MORGAN as Assistant Director.

Overseas Offices

281. Messrs. G. L. PEARSON and J. F. BARROW, both on secondment from the British Diplomatic Service, replaced Messrs. D. J. C. JONES and A. H. B. HERMANN as Counsellors for Hong Kong Commercial Affairs in the department's overseas offices at Geneva and Washington in May and July 1971 respectively.

General

282. The Administration Branch is headed by a Senior Executive Officer who is the Departmental Secretary. He is responsible for staff, establishment, and general administration, and is assisted by three Executive Officers.

Departmental Organization

283. The Industry Inspection Branch was re-organized as a result of the abolition of the Comprehensive Certificates of Origin System in June 1971 and the transfer to the Branch of responsibilities for trade complaints, trade declaration enquiries and industrial property legisla- tion. This involved some staff transfers. The Industry Inspection Branch was renamed the Trade Investigation Branch in July 1971, to reflect more accurately its functions and responsibilities.

284. An organization chart of the Department as at 31st March 1972 is in Table 7 with the divisional staff establishment given in brackets.

Establishment

285. At the beginning of the year, the Department's authorized establishment stood at 1,628 posts of which 972 were in the Preventive Service. During the year the civilian establishment was increased by 11 posts and the Preventive Service by 2 posts. On 31st March 1972, there were 30 vacancies in the civilian establishment and 119 vacancies in the

Preventive Service.

Recruitment

286. The Administration Branch undertook six recruitment ex- ercises during the year to fill vacancies in the grades of Chief Preven- tive Officer, Assistant Trade Officer, Revenue Officer and Assistant Revenue Officer. A total of 48 newly appointed officers assumed duty during the period. Other recruitment exercises resulted in the appoint- ment of 17 officers in the minor grades. Response to these recruitment exercises was good; particularly in the case of Assistant Revenue Officer, as more candidates were attracted by an improved salary scale which became effective during the year on the implementation of the 1971 Salaries Commission's recommendations.

Promotions (excluding Preventive Service)

287. Altogether 31 promotions in various grades were approved during the year:

From

Principal Trade Officer

Assistant Trade Officer Executive Officer Class II Personal Secretary Class II Shorthand/Audio Typist Confidential Assistant

Class I

Assistant Director of Commerce and

Industry

Trade Officer

Executive Officer Class I Personal Secretary Class I Personal Secretary Class II Senior Confidential Assistant

Confidential Assistant Class I

Number

Confidential Assistant

Class II

Clerk, G.C.S. II

Clerk, G.C.S. I

Clerical Assistant

Clerk, G.C.S II

Messenger

Office Attendant

...

263

288. Revenue

TRAINING

(see also paragraphs 227 to 240)

Revenue Inspectors, Mr. Ho Kong-sang and Mr. Hu Bo-cheung, undertook an eight-month training course and attachment in Australia from November 1971 to June 1972.

289. Mr. Li Chi-shing, Senior Industry Assistant, attended several training courses and attachments in Britain during the period from 8th November 1971 to 18th February 1972.

290. Mr. NG Yan-chung, 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 January 1972.

291. Mr. MAK Pak-wai, Acting Chief Revenue Inspector, was awarded a U.N. fellowship and attended the ECAFE/UNCTAD Training Course and a study tour on customs administration in Bangkok from 1st September to 1st October 1971.

292. During the course of a merit trip, Mr. No Tat-shing, Revenue Inspector, was attached to customs authorities in London, Liverpool, Scotland, Rotterdam, Hamburg and Frankfurt.

293. Mr. Li Pui-lam, Revenue Inspector, returned to the Colony on 7th August 1971 after attending the 3rd Customs and Excise Pro- cedure Course which started in February 1971 in the United Kingdom, and attachments at various customs stations throughout the country.

294. Provision was made in the 1972-73 Estimates to enable two Assistant Trade Officers, one Revenue Inspector, 1 Assistant Chief Preventive Officer and 1 Chief Revenue Inspector to undertake training

overseas.

WELFARE

295. Staff welfare is the responsibility of the Deputy Director, Administration and Industry, assisted by the Department Secretary.

Welfare Fund

296. During the year the Commerce and Industry Department (Civilian Staff) Welfare, Social and Sports Fund Committee organized various activities including inter-branch soccer and table-tennis com- petitions, picnics and visits, which were well supported by members of the civilian staff.

Preventive Service Senior Officers' Mess

297. The Preventive Service Senior Officers' Mess continued to be well patronized and was the venue for a number of mess dinners and retirement ceremonies. The annual Christmas Dance was the most popular of the many social functions held there during the year.

Clerical Canteen

298. The Canteen, which is located on the 6th floor of Fire Brigade Building and used primarily by junior officers, continued to be well supported.

DEPARTMENTAL ACCOMMODATION

299. In November 1970, the Public Works Department completed an investigation into the renovation of Fire Brigade Building and pro- duced an estimate showing that the renovation would cost over $3.2 million compared with an initial estimated cost of $2.0 million in 1968. The Department sought a revised and less expensive renovation of Fire Brigade Building on the understanding that alternative accom- modation would be provided in the West Wing of the Central Govern- ment Offices by the end of 1976. No decision had been reached at the end of the year.

300. On 1st October 1971, the Kwun Tong Sub-office on the 4th floor of Kwun Tong District Branch Office Building was moved to the Hong Kong Airport Inspection Control Building. This sub-office, apart from providing the public with information on certification, licensing and other departmental procedures, receives applications for, and issues certificates of origin and preference, as well as import and export licences.

301. The new Rank and File Married Quarters of the Preventive Service in Ko Shan Road, Hung Hom is due to be completed in June 1972. It comprises 229 units of grades IJ and JKL. Of these, 46 have been temporarily allocated to the staff of Kowloon-Canton Railway. At the end of the period authority was sought to convert the 26 units on the top two floors (11th and 12th) of the building into temporary quarters to house Preventive Service trainees on residential training courses who are now occupying leased premises in Kwun Tong. This will only be a temporary measure until the completion of the new Preventive Service Training School at Tai Lam in 1974.

302. The extension to the Fanling Revenue Station is expected to be completed in August 1972. One of its two new wings extending to the north of the existing station comprises four floors with six grade H quarters and five Type IV or grade E quarters for the Revenue inspec- torate. The other wing comprises two single officers' barracks, five single units and two messes, one for senior and one for junior officers. Apart from additional office space, a confiscated goods store with parking space is also provided at the back of the new building.

303. At the close of the year Stage III of the Modification of the Kai Tak Terminal Building was nearing completion. Projects in the planning and tendering stage included the new Preventive Service Training School, the Tsuen Wan District Branch Office, the Colony Transit Mail and Sorting Office, the Kowloon Canton Railway Hung Hom Development and the Redevelopment of the Lowu Railway Station.

CHAPTER 9

FINANCE AND STORES

REVENUE

304. Net revenue collected by the Department amounted to $479.1 million, an increase of 8.3% over the previous year (Table 8). This represents 13.5% of all revenue collected by Government. Details of revenue for dutiable commodities are given in tables 4 and 5.

305. Revenue collected from ad valorem charges on import and export declarations amounts to $19.1 million, or $1.7 million more than the previous year. This represents an increase of 9.9%, showing a continued growth in the value of Hong Kong's trade.

306. In view of the large amount of revenue collected from duti- able 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

307. The total departmental expenditure amounted to $23.1 million, an increase of 13% over the previous year. The cost of operat- ing the three overseas offices (Washington, Geneva and Brussels) for the year was $849,500.

308. During the year, nine delegations participated in consulta- tions and another nine delegations attended overseas conferences, in connection with trade and related matters, outside Hong Kong. The cost of these amountd to $545,000.

STORES

309. 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

Distributed Free:

Liquor Cigarettes Cigars... Tobacco

•

...

1971-72

1970-71

Quantity

Value

Quantity

Value

391 bots.

4,723

3,923 bots.

19,161

16,620 pcs.

831

8,400 pcs.

424

170 pcs.

108

1,942 pcs.

381

Total

... $ 5,662

Total

... $19,966

1971-72

1970-71

Quantity

Value

Quantity

Value

1,366 bots.

7,937

1,843 bots.

5,059

151,591 pcs.

3,699

299,124 pcs.

11,012

90 pcs. 28 lbs.

1,193 pcs.

159

397

149 lbs.

742

Total

...

$12,087

Total

$16,972

310. Proceeds of cash sales are apportioned between the appro- priate revenue subheads, viz. Duties and Revenue Reward Fund. The latter 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 were:

Revenue Head 1 Duties: Subhead 2-Liquor Revenue Head 1 Duties: Subhead 4-Tobacco Revenue Reward Fund

Total

2,504

458

2,699

$5,661

WELFARE FUNDS

311. The department operates two Welfare Funds, one for members of the Preventive Service and the other for civilian staff. The latter is described in paragraphs 295 and 296. 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 $3,410.00 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 $5,379.00 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 one deposit-at-call of $5,000 previously invested, $20,000 was placed on fixed deposit during the year.

•

TABLE 1

CERTIFICATION OF ORIGIN STATISTICS

1969-70

1970-71

Year

Value of Goods

Certified $Mn.

No. Issued

(Percentage

Certificates

(Percentage Change

Compared with 68-69)

Change

(Percentage Change

Compared with

Compared with 69-70)

Change

68-69)

69-70)

1971-72

(Percentage Change

Compared with Compared with 70-71)

Value of Goods Certified $Mn. (Percentage

Change Compared

with 70-71)

Standard Certificates

of Origin

175,169

2,547.29

180,242

3,120.05

201,293

4,504.76

(-15.3)

(+-23.7)

(+2.9)

(+22.5) (+11.7)

(+44.4)

Commonwealth

Preference Certs.:

(a) Britain

82,046

1,255.08

77,958

1.230.38

77.969

1.489.50

(-5.7)

(-0.1)

(-5.0)

(-2.0)

(0.0)

(-21.1)

(b) Other Countries 22,094

344,870

150.48

16,734 | 337,858

131.50

15,333

310,613 142.69

(-2.4)

(+4.12)

(-14.3)

(-24.3)

(-2.0)

(-12.6)

(-8.4)

(-8.1) (--8.5)

Comprehensive

Certificates of Origin:

(a) Commercial

53,593

55,394

1,282.48

14,821

(-1.1)

(+3.36)

(−0.1)

(-73.2)

403.96 (-68.5)

(b) Sample ...

11,968

(-22.7)

7,530 (-37.08)

1,197

(-84.1)

*(c) Mail Order

16,523

(-28.8)

1,284.19 (−6.9)

*(d) Tourist

59.469

(-18.8)

79,794 (-22.3)

*(e) Gift Plan

3,802

(-39.4)

296.21 10.41

0.002

5.37

6,852,902 (+18.9)

14,154 48.4

}

311.992

Certs.:

(a) E.E.C.

(b) Britain

39,853 702

41,501

(d) Sweden ...

944

Total

424,664

(-2.1)

5,237.04 (--7.5)

337,858 (-20.4)

5,764.41 (-10.1)

352,114

(+4,2)

11,004

47.6

12,620 45.7

†Generalized Preference

Domestic Exports

($Mn.)

Percentage Certified...

Value of Stamp Fees Paid (Including Mis- cellaneous Certificates, not recorded above).....

$5,151,295

$4,750,010

The issue of all types of C.C.O. was discontinued with effect from 20th October 1971,

* The issue of these types of C.C.O. was discontinued with effect from 23rd January 1970.

† Date of commencement of Generalized Preference Schemes:

(a) E.E.C.

(b) Britain

-15th July 1971

-3rd January 1972

-6th March 1972

(d) Sweden

$3,909,955

TABLE 2

MAJOR CONFISCATIONS UNDER OTHER LEGISLATION

Legislation

Quantity

Commodity

Unit

1970-71 1971-72

Importation and

Exportation

Gold...

lb.

622.60

Acetic anhydride

gals.

8.00

Ordinance, Cap. 50* Wrist watch...

nos.

270

and Regulations

made thereunder

Transceivers...

sets

Walkie Talkie

sets

Rice

lb.

9.90

8,034.4

Transister radio

sets

170

Movie camera 16 mm.

set

Electronic capacitors

pkg.

Post Office Ordinance,

Cap. 98

Toy percussion caps Explosive caps

pkt.

...

pbs

韻

218

Ordinance Cap. 138

succinate

Pharmacy and Poisons Sulphanilamide

Hydrocortisone sodium

caps

24,590

bottles

...

Oxytetracycline

bottles

Methapyrilene

hydrochloride

caps

Chloromphenicol

...

caps

1,000

O-ethyl O-p-nitro phenyl

phenylphosphonothiate... tin

Diphenoxylate

hydrochloride

vial

Succinylsulphathiazole

tablet

Methylamphetamine

hydrochloride

tablet

Nicotine sulphate

tin

Antibiotics Ordinance

Crystalline

Cap. 137

Dihydrostreptomycin

Ampililin

Oleanodomycin

Penicillin Potassium

Tetracyline hydrochloride... caps

vial

bottles

caps

tablet

* With effect from 1st January 1972 this Ordinance was replaced by the Import

and Export Ordinance, Cap. 60.

TABLE 3

CONFISCATIONS UNDER THE DUTIABLE COMMODITIES ORDINANCE CHAPTER 109 AND DANGEROUS DRUGS ORDINANCE CHAPTER 134

Commodity

Quantity

Unit

1970-71

1971-72

Tobacco

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

Denatured alcohol

lb.

50.23

71.142

lb.

1,512.18

297.815

lb.

327.85

352.61

lb.

15.19

113.74

lb.

18.00

Ib.

471.71

nos.

370

732

lb.

7.80

1.26

gals.

342.25

1,730.3612

gals.

913.49

1,292.023

gals.

236.64

3.53

gals.

49.51

84.733

gals.

76.82

408

gals.

Mash

Stills

gals.

94,385.00

59,341.00

nos.

129

180

Vehicle

nos.

Sampan

no.

Hydrocarbon Oils

Treated diesel oil

gals.

9,801.75

1,699.09

Lubricating oil

gals.

104.75

Dangerous Drugs

Opium, raw

lb.

54.77

1,697.77

Opium, prepared

Ib.

6.66

211.53

Opium, dross ...

lb.

0.07

84.77

Cannabis

Opium, water...

Opium, residue

Morphine hydrochloride

Salts of esters of morphine

Diacetylmorphine

Barbitone

Cannabis resin

Opium poppy straw

Opium pipe

Opium pipe head

Opium lamps.

Bicycle

fl.oz.

7,53

103.01

lb.

13.13

Ib.

25.18

267.32

lb.

0.03

33.60

lb.

3.30

lb.

0.04

16.92

lb.

4.50

4.59

lb.

23.11

69.63

lb.

94.16

nos.

228

nos.

nos,

239

789

no.

Liquor:

Whisky

Brandy

Gin ...

Wines

Beer

Other European Type

Chinese Type:

(a) Locally Distilled

(b) Imported

Spirituous Liquor other than intoxicating

liquor

Methyl Alcohol

Total

Unit

TABLE

DUTY FROM DUTIABLE

1969-70

Quantity

% Change

Duty

% Change

Gallons

201,295 462,935 58,533 194,265 10,813,984

+- 21.0 ÷ 16.2

9.8

13,170,502 33,568,991 3,941,437

13.4

+ 17.1

27,127

1,648.799

+ 13.0

3,880,274 20,793,053 1,860,234

15.4

2,089,411

÷ 23.6

11,432,578 18,683,553

-- 20.8 + 16.4

8.9 + 13.6 + 16.7 +10,3

15.3 21,0

170,382 4,840

15,671,571

+ 11.7 + 11.5

2,276,745

÷ 10.6

108,100 +/- 33.4

+13.2

109,715,467

+ 12.7

Tobacco:

Cigarettes and Cigars

Pounds

6,321,119

European Smoking Tobacco (including

Snuff)

68,421

Chinese Prepared Tobacco

Tobacco Leaf

367,480 11,774,328

Total

18,531,348

+÷|+ +

4.8

67,521,178

+ 14.1

7.2

586,318 918,698

3.7

93,761,213

3.9

162,787,407

+÷+ |-

÷ 4.6

+ 14.1

7.2

4.2

4.4

Hydrocarbon Oils:

Liquefied petroleum gas

Light Oils

Pounds 48,090,011 Imp. Gal.

+ 29.6

961,800

Diesel Qils..

Furnace Oils

35,730,994 85,366,461 402,829,460

11.5

Other Type

Total

! 56,707,013

+ 12.5 + 13.7 4.0

47,405,513 41,546,953 40,282,946

5,559,835

i 48,090.011 lb. + 29.6

580,633,928 gal.

+ 12.3

135,757,047

Table Waters

Locally manufactured liquor

Intoxicating liquor

Spirituous liquor other than intoxicating

liquor

Table Waters

Tobacco

Hydrocarbon Oils

Total

= 29.6

·|- -↓· ----+--+-

11.5

24.8

+ 13.7 3.7

15.7

Gallons 20,759,959

+ 21.3

9,964,781

21.3

$ 101,890 6,398,779

-|·

4.1 +10.5

57,622 5,084

+1+

+ 38.7

77.8

37,312,640 3,586

43,879,601

―

0.3 19.4

1.7

COMMODITIES (GROSS)

1970-71

1971-72

Quantity

% Change

Duty

% Change

Quantity

% Change

Duty

% Change

280,259 604,308 66,519

239,888

12,555,611

31,899

+++++ |·

39.2

18,298,789

30.5

43,866,324

38.9

253,436

9.6

16,546,751

30.7

723,409

19.7

52,593,125

13.6

4,459,673

13.1

69,669

4.7

4,681,803

23,5

4,734,343

22.0

255,404

6.5

+ 16.1

24,344,931

17.1

12,395,858

1.3

4,946,865 24,203,974

17.6

2,182,635

17.3

32,098

0.6

2,223,842

T++++

9.6 19.9

5.0

4.5

1.4

1.9

1,483,573 2,233,523

10.0

10,168,801

11.1

1,476,378

+ 6.9

20,152,545

7.9

2,419,039

0.5

10,176,830

8.3

21,916,936

÷ +

0.1

8.8

177,476 3,587

17,676,643

4.2 25.9

+ 12.8 130,712,517

2,412,234

6.0

168,635

5.0

92,242

14.7

4,379

+ 19.1

17,798,305

+ 22.1

2,294,808 120,628

4.9

+ 30.8

0.7

139,705,562

+ 6.9

7,290,482

70,293

342,447 12,679,739

20,382,961

+ 15.3

78,086,953

2.7

603.574

6.8

856,116

7.7

101,278,942

+++

+ 15.6

7,950,723

-F. 9.1

85,459,021

9.4

2.9 6.8

÷ 8.0

100,416 307,114 11,597,250

+ 42.9

―

10.3

850,530 767,786

-+- 40.9

10.3

8.5

92,575,596

8.6

10.0

180,825,585 + 11.1

19,955,503

2.1

179,652,933

0.6

68,252,180 37,587,440 93,685,370

426,812,784

56,463,425

1++++

41.9

1,365,044 + 41.9

98,704,295

5.2

50,346,823

9.7

56,189,859

6.2 42,531,510 35.2 106,135,132

6.0

42,681,278

6.0 434,938,828

0.4

5,523,514

0.7

54,419,667

|+++÷

+- 44.6

+ 13.2

13.3

1,974,084 56,381,260 65,310,395

1.9

43,463,456

3.6

5,310,700

++++|

+ 44.6

+ 12.0

16.2

1.8

3.9

68,252,180 lb. + 41.9

614,549,019 gal.

5.8

156,106,518

+ 15.0

98,704,295 lb. |638,025,137 gal.

+44.6

172,439,895

+ 10.5

3,8

21,140,435

1.8

10,147,410 1. 1.8

18,638,267

11.8

8,946,370

11.8

Refunds and Drawback

133,181

30.7

9,140,602

42.8

$ 130,584 5,064,427

1.9 44.6

95,178

+ 65.2

214

95.8

55,804,006

-- 49.6

72,574 1,000 44,196,611

23.7

+ 367.3

4,413

+ 23.1

1,834

20.8 58.4

65,177,594

-1- 48.5

49,467,030

24.1

TABLE 5

REVENUE FROM DUTIABLE COMMODITIES LICENCES, 1971–72

No. of Licences Issued

Revenue

Importer's:

Liquor

Tobacco

Hydrocarbon Oils

Table Waters

Methyl Alcohol

Exporter's:

Liquor

Tobacco

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:

182

Distillers

Brewer...

Liquor Still

...

Liquor Manufacturer

Tobacco

Table Waters

Warehouses :

General Bonded

Liquor

Tobacco

Hydrocarbon Oils

Table Waters

...

396

888588

198,000.00 43,000.00 94,500.00 21,300,00 680.00

5,350.00

241

3,210.00

950.00 2,560.00

90.00

818

1,227,000.00

2,780

1,656,710.00

489

48,900.00

171

85,500.00

499

49,900.00

580.00

100.00

382

57,000.00

་་་

1,790

165,300.00

5,061 10,987

292,580.00

656,603.50 31,300.00

...

1,252

...

310.00

450.00

18,100.00

4,000.00

9,300.00

100.00

38,000.00

18,000.00

22,000.00

800.00

Ira

303

60.00 3,030,00

33,837.01

25,972

4,789,100.51

Methyl Alcohol

Ship and Harbour Vessel Licences

Licence fees for persons importing for own

use and miscellaneous

Net Total

TABLE 6

TRADE COMPLAINTS FROM OVERSEAS COMPANIES OR INDIVIDUALS HANDLED BY THE DEPARTMENT

FROM 1.4.71 TO 31.3.72

American Continent

Source

Rest of the World

Total

Type

U.S.A.

Rest of the Continent

Non-delivery.

Inferior Quality

1,221

164

1,424

107

217

Outstanding Debt

...

115

215

Short-shipment

Miscellaneous

225

115

348

Total

...

1,682

516

2,279

*Assistant Director, Administration

Deputy Director,

Administration &

Industry

TABLE 7

COMMERCE AND INDUSTRY DEPARTMENT, HONG KONG

DIRECTOR

Assistant Director, Industry

Industry Division

Deputy Director, Commercial Relations

Assistant Director, Preventive Service & Dutiable Commodities

Assistant Director, Commercial Relations

(Europe)

Assistant Director, Commercial Relations (Regions other than Europe)

Overseas Offices

Administration

Branch

Senior Executive Officer

Departmental

Establishment.

Departmental

Reports.

Internal Administrative

Matters.

Preventive Service

"E" Division

"R" Division

Finance & Supplies

General Duties Branch

Industrial Development

Branch

Certification Branch

Trade Investigation Branch

Dutiable Commodities

Trade Officer

Principal

Trade Officer

Treasury Accountant

Departmental

Financial Control. Ad Valorem Charges

Collection. Supplies and Stores.

Legislation. Departmental Publicity

and Public Relations. Import and Export

(other than textiles) Licensing.

Strategic Commodities. Reserved Commodities.

Branch

Principal

Trade Officer

Industrial Land. Industrial Investment

and Promotion. Industrial Infrastructure. Health and Safety

Standards of Hong Kong Products. Liaison with Industrial

Organizations.

Loans for Small

Industry Scheme, General Assistance to

Industry.

(80)

(49)

(33)

(30)

Establishment (excluding

supernumerary posts)

Certification of Origin (including Standard Certificates, Generalized Preference & Commonwealth Preference

Certificates).

(96)

Senior Industry Officer

Inspection of Factories and Consignments under Certification and Export (Textiles) Licensing Requirements, including Investigations and Prosecutions. Trade Complaints. Trade Declarations &

Ad Valorem Charges (Penalties and Appeals).

Industrial Property

Investigations

(including patents,

designs, trade marks,

(118)

Dutiable Commodities control-Tobacco, Hydrocarbon Oils, Table Waters, Alcoholic Liquors.

(1) Uniformed (37) Civilian

Chief Preventive Officer

Protection of Revenue. Excise Duties. Anti-Smuggling

Operations. Essential Supplies

(Food).

Principal

Trade Officer

Commercial Policy

(Europe). Textiles Advisory

Board.

Textiles Licensing

Systems.

Principal Trade Officer

Commercial Policy (Regions other than Europe). Liaison with Trade

Development Council and Export Credit Insurance Corporation, Trade & Industry

Advisory Board.

Brussels Washington Geneva

(940) Uniformed

(51) Civilian

(58)

(40)

(6)

Note *Administrative Officer Staff Grade C to be held against a vacant post of Administrative Officer in General Duties Branch.

1st March 1972.

Total Permanent Establishment:

Total Cost

Total Revenue Collected

598 civilian officers plus 941 in the uniformed Preventive Service.

About $271 million (estimate for 1972–73).

: About $5234 million (estimate for 1972-73).

TABLE 8

NET REVENUE COLLECTED FROM ALL SOURCES

Actual Revenue

Approved

Estimate

Increase/ Decrease

1971-72

1970-71

Duties

Imported hydrocarbon oils Imported intoxicating liquor...

Imported liquor other than

intoxicating liquor Imported tobacco

175,000,000 172,438,061| 156,102,105 105,000,000 113,726,231 100,038,913

2,600,000 2,342,862 2,409,298 126,000,000 135,456,323 125,021,579 20,000,000 18,368,885 18,895,345 11,000,000 8,945,370 10,

10,147,196

10,5

13.7

2.8

8.3

2.8

11.8

Locally manufactured liquor... Table waters

Licences

Liquor

...

Tobacco

Hydrocarbon oils

Miscellaneous (table waters)

Fines, Forfeitures and Penalties

200,000

203,801

200,963

3,640,000

3,729,731

3,538,816

895,000

818,093

842,921

36,000

37,475

34,115

+1++

1.4

5.4

2.9

9.8

Fines

...

Forfeitures

150,000

672,648

4,501,574

85.0

Penalties (others)

...

960,000

2,228,888

2,051,677

8.6

Fees of Court or Office

Denaturing

330,000

313,217

420,429

25.5

Import and Export declaration 20,125,000

19,116,271

17,394,226

Official certificates

Official signatures

Departmental Services and

supervision

10,000

9,340

10,480

1,500

1,465

1,360

+1+1

9.9

10.9

7.7

100

104

131

20.6

Overpayments in previous

years...

Loan repayments

100

2,537

222

+ 1042.8

14,400

Bonded warehouses

supervision

474,000

511,193

447,118 + 14.3

Loss of, or damage to,

Government property

200

Publications

35,000

1,152 86,565

686

+ 67.9

44,178

95.9

Surplus and condemned stores

124

Miscellaneous

150,200

64,974

136,831

52.5

466,607,100 479,089,586| 442,240,287

8.3

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