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Fabric exporters must adjust to liberalised market

HONG KONG'S clothing and textile exporters should brace themselves against uncompetitive countries attempting to obstruct their new trade freedom, the director-general of trade, Tony Miller, said yesterday.

Mr Miller, speaking to the Hong Kong Exporters' Association about the 10-year phasing out of the Multi-Fibre Arrangement also warned of a possible threat to Hong Kong jobs as the industry cut costs by shifting its factories to China.

He said: ''This is a reasonable period for Hong Kong's economy to adjust to a more liberal regime and I have no doubt that the trade will successfully adjust and that, contrary to popular expectations, we will still have a considerable textile and clothing industry for some time to come.'' The 20-year old Multi-Fibre Arrangement was the framework for bilateral agreements regulating half the world's textile and clothing trade.

The arrangement bound 90 per cent of Hong Kong's textile and clothing exports to export ceilings.

It was introduced as a series of bilateral quotas negotiated between importing and exporting nations. As such, it contradicted the market principles of the General Agreement on Tariffs and Trade (GATT).

The recently concluded Uruguay Round of trade talks agreed that the arrangement's replacement should begin on January 1 next year.

Mr Miller said: ''This phasing out period is designed to provide certainty to the trade and avoid abrupt changes. It is designed to allow both importers and exporters to adjust, recognising that over time the restraints have introduced enormous distortions in both trade and investment world-wide.

''The phase-out of the arrangement will bring the industry some relief, albeit a little late. Ten years provides a reasonable period for the world to adjust to a new regime. We will be looking for ways within the phase-out to ensure that the adjustment for Hong Kong's industry is as smooth as possible.

''Key elements of industry are likely to remain in the territory, but the more labour intensive jobs will tend to move to lower-wage economies. The labour force will need to adapt, but the experience with other industries has been that more than sufficient jobs are being created in the service sector all the time to take up any slack.'' Mr Miller cautioned that some importing countries could seek protection through the use of anti-dumping laws.

''The increasingly global nature of textiles and clothing production processes should encourage competition and make such protection more difficult to sustain,'' he said.

Meanwhile, Hong Kong became the world's eighth largest exporter and seventh largest importer last year, an annual report from the GATT secretariat said.

On the basis of trade value in 1992, Hong Kong was placed 10th in the world.

The report, entitled Overview of Developments in 1993 and Outlook for 1994, predicted there would be improved growth in world trade this year, despite a two per cent drop in growth to 2.5 per cent last year.

Mr Miller said Hong Kong's improving trading position demonstrated the benefits of the territory's strict adherence to free trade principles.

''It is also an illustration of how dependent Hong Kong is on the free flow of trade,'' he said.

He also said the successful conclusion of the Uruguay Round would provide a further boost to world trade.