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SCMP Reporter

SUBDUED would probably best describe the reaction in Hong Kong to the successful conclusion of the seven-year epic that was GATT (General Agreement on Tarrifs and Trade).

  Even though the territory stands to be one of the big gainers from the agreement finally struck last Wednesday, the long lead-time before direct benefits are felt has doused enthusiasm among manufacturers.

  The success of the Uruguay round of GATT will not be visible in hard terms for Hong Kong for years and, in some cases, for more than a decade.

  This sort of time scale coupled with a natural inclination to deal in the present, makes the agreement of the most comprehensive trade deal in history remote from day-to-day activities.

  ''It makes little difference to us. I still don't know what the impact will be but I don't expect any steps forward soon,'' said Dr Kenneth Ng, managing director of watchmaker Silcon Electronics.

  Silcon, which employs 220 people to manufacture watches mainly for the export markets, is in the vanguard of GATT beneficiaries, according to economists.

  In an export-driven economy such as Hong Kong, watchmakers join the textile giants and electronics and toy manufacturers as the round's big gainers.

  As some of the most efficient producers in the world, the territory's manufacturers stand to increase global market share as tariffs and protectionist policies are rolled back under the GATT accord.

  One key area is textiles. Since 1974, the international market has been bound to the Multi-Fibre Arrangement (MFA) which imposes a ceiling on such goods as the amount of knitwear Hong Kong could ship to Europe.

  The good news is that under GATT the MFA will be scrapped. The catch is that the US$240 billion-a-year global textile industry will not be completely free of the MFA's shackles until 2003.

  David Chu, managing director of Hong Kong-based garment maker Regapex, was wary of celebrating the success of the round too early, if at all.

  ''I was surprised to see that GATT was actually agreed. Obviously, it is a good sign for world trade but I can't see any signs at this stage about how it will help us in the short term,'' he said.

  ''There are still many bilateral agreements in place. GATT has produced its ideas but now the member nations have to follow them up,'' said Mr Chu.

  Textile and garment exports last year pumped HK$155.2 billion into Hong Kong's economy, a 12 per cent improvement on the previous year, according to the Trade Development Council (TDC).

  Exports in the first nine months of 1993 have already outstripped the first three-quarters of last year by four per cent.

  Similar gains are being made in the electronics and toys industries, although the leading players point out that GATT will not boost production in the near term.

  Hong Kong's Director General of Trade, Tony Miller, believed Asia and particularly the territory stood to gain significantly from the agreement.

  But he also acknowledged the time span involved, preferring to describe the event as the ''dawning of a new era'' with the benefits still some way down the track.

  The reaction of stock markets to the GATT breakthrough reflects the bullish political rhetoric which accompanied the talks.

  ''Certainly, the settlement will clear up uncertainties that have bothered Hong Kong traders over the past few years. It will give a favourable sentiment over worldwide trade,'' said Edward Leaung, chief economist at the TDC.

  Mr Leaung said total exports from the territory were likely to rise by 14 per cent this year and 18 per cent for next year in value terms.

  The council forecasts export values will hit $1,050 billion next year. Domestic exports will decline by four per cent to $220 billion - as the trend to relocate manufacturing facilities in China continues - more than offset by a 20 per cent increase to $830 billion in re-exports.

  According to the Trade Department, the territory's exporters will save more than US$420 million a year on tariff payments.

  In order to support the removal of trade barriers, Hong Kong has agreed to bind at zero tariff a wide range of items covering about 30 per cent of the territory's imports.

  The territory is most concerned about the phasing out of textiles and clothing quotas over the next 10 years.

  ''Many textile traders were confused about the phasing out. But now it is concluded they can start to plan their strategy,'' said Benjamin Chan, head of economic research at the Bank of East Asia.

  Other bonuses from the accord include the creation of the new World Trade Organisation, which will replace GATT, which provides a firmer legal basis and more effective arbitration in cases of dispute.

  According to Mr Miller, the organisation will give the smaller players on the world trade scene more muscle when settling trade disputes.

  A stronger anti-dumping rule would also help establish a fairer trade environment, he added.

 The package will also extend multilateral trade in services, another key area for Hong Kong, which has expertise in banking and telecommunications.

  The territory is the world's 13th largest exporter of services, accounting for two per cent of the world trade in the sector and earning $144 billion.

  Trade in services had never been subject to discipline until the GATT accord, according to the Hong Kong Chamber of Commerce.

  ''A service accord will create extra demand for the increasingly sophisticated market in Hong Kong services, said Chan Wai-kwan, general secretary of the Hong Kong Coalition of Service Industries.

  The TDC warned, however, that Hong Kong's trade outlook would still be affected by whether the US renewed China's Most Favoured Nation (MFN) status.

  China is the biggest buyer of Hong Kong products but its economy appears to remain dangerously overheated despite economic reforms set in place during the second half of the year.

  ''The outlook for Hong Kong exports to China is somewhat mixed: rapid growth is likely to continue for a while, followed by a possible slowdown in the second half of the year,'' said the TDC.



GATT means gain, in time