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EC hit list may cripple HK traders

HONGKONG'S toy and footwear industries could be cut by as much as 11 per cent if harsh new import quotas proposed by the European Community (EC) are enforced.

A new bill, being debated by the EC's Council of Ministers, will dramatically cut quotas on a wide variety of imported goods in eight categories: chemicals, footwear, toys, tableware, glassware, radios, leather gloves and bicycles.

The bill targets countries whose economies are planned, such as China, one of the world's leading toy and footwear makers.

For some Hongkong manufacturers it could mean ruin as more than 90 per cent of the territory's footwear and toys are made in China.

The bill proposes cutting 73 per cent of last year's quotas on three categories of toys: stuffed toys, parts and accessories; other toys representing animals and non-human creatures; and kites, inflatable balls, balloons and other toys not having a spring mechanism.

Last year, China's exports to the EC in these categories amounted to $8.18 billion.

These categories comprise 54 per cent of the total toy exports to the European market from China via Hongkong, according to Mr Edmund Young Kak-sun, the vice-chairman of the Hongkong Toy Council.

The EC also plans to ''keep under surveillance with the possibility of imposing quota restrictions'' construction sets, constructional toys and puzzles.

The bill also proposes cutting quotas on indoor shoes and sports shoes to 66 million pairs. The Hongkong Rubber and Footwear Manufacturers' Association estimated that last year China shipped more than 70 million pairs of sports and indoor shoes to the EC.

According to the Trade Department of Hongkong, these shoes accounted for 64 per cent of China-made footwear exported to the EC in 1991.

''We're extremely concerned about the bill,'' Mr Young said. ''If the EC goes ahead and adopts the bill, we'll lose the European market which accounts for 27 per cent of our toy exports.'' Mr Chau Mun, the former president of the Hongkong Rubber and Footwear Manufacturers' Association, said: ''We don't have a great deal of information on the proposal as yet but we have asked Brussels for urgent clarification.'' Mr Chau - who is the managing director of Kingsley Shoes Factory, one of the biggest footwear manufacturers in the territory - said: ''The EC should not have any quota restrictions at all. This is not creating a climate of free competition. This is a political move aimed at China without thinking about the consequences, one of which is the impact it will have on Hongkong manufacturers.

''The EC may think that by imposing harsh restrictions on China it will be hurting China but the EC will be hurting itself, not to mention the impact it will have on Hongkong.'' The 12 members of the EC have agreed to cut quotas on certain types of products from China but are still undecided about the level and the priority of products.

Mr Brian Chan Ping-keung, the department's principal trade officer, said the Government had been closely watching developments.

''It is difficult to predict if the bill will be passed,'' he said.

It is understood that Britain, Germany, the Netherlands and Denmark disagree with the bill, while France, Spain, Portugal and Italy are its strongest supporters.

Previously, the member countries had individual quota policies. With the creation of the single European Market on January 1 this year all internal tariff restrictions were removed leaving the old system redundant.

Last year members of the community agreed to establish a new quota system, known as the Community Quota System.

Last November, the European Commission proposed the bill, suggesting that under the Community Quota System, the EC should slash quotas on goods from eight industries from trading partners whose economies were planned such as China, North Korea and Vietnam.

At present, the quota system in the EC is ambiguous because the new system has yet to be enforced, while the old system has been removed.

''We are very confused,'' Mr Young said. ''Each individual country has its own quota policy. We don't know which practice we should follow.'' Although the bill will have a significant impact on Hongkong's manufacturing industries, the Hongkong Government cannot take part in the EC-China negotiations.

''Strictly speaking, the bill is a matter between the EC and China,'' Mr Chan said.