LCQ13: Quota restrictions for textiles and clothing imports

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Following is a question by the Hon Tam Yiu-chung and a written reply by the Secretary for Commerce, Industry and Technology, Mr John Tsang, in the Legislative Council today (November 5):

Question:

According to the World Trade Organisation Agreement on Textiles and Clothing, quota restrictions for textiles and clothing imports will be completely lifted on 1 January 2005. In this connection, will the Government inform this Council:

(a) whether it has estimated and assessed:

(i) the percentage points by which Hong Kong's textiles and clothing exports will grow annually; and

(ii) the number of jobs which will be created as a result of manufacturers relocating some of the textiles and clothing manufacturing processes to Hong Kong, following the complete removal of the quota system;

(b) of the measures to encourage redevelopment of old-type factory buildings into fashion design centres so as to increase the added value of Hong Kong's clothing products;

(d) of its plans to provide incentives for manufacturers to relocate some of the textiles and clothing manufacturing processes to Hong Kong with a view to creating more employment opportunities?

Reply:

Madam President,

According to the World Trade Organisation (WTO) Agreement on Textiles and Clothing, quota restrictions imposed by all WTO members on their textiles and clothing imports will be completely lifted on 1 January 2005. As a result, in about a year's time, certain domestic exports of textiles and clothing to the United States, the European Union and Canada will no longer be subject to quota restrictions. According to 2002 figures, the total value of exports involved is close to HK$43 billion (amounting to about 90% of the total value of Hong Kong's exports of textiles to the above three countries/regions). The replies to the specific issues raised are as follows:

(a) The removal of the quota system marks an important milestone in the liberalisation of international trade in textiles and clothing. While trade liberalisation can broaden the scope for trade and facilitate market expansion by Hong Kong businessmen, this will at the same time intensify market competition. In view of the complex and fast-changing international business environment, we need to observe further as to whether, and how many, manufacturers would relocate their production processes to Hong Kong, and the number of jobs that would be created, as a result of the abolition of the quota system in 2005. We believe that we would have a clearer picture as we approach 2005. The Government will conduct an assessment on the impact of quota abolition on the textiles and clothing industry next year.

(b) Whether owners will convert their old-type factory buildings for fashion design purpose is a matter for them to decide, based on their assessment of the market demand. The Government will facilitate the process if there is proven market demand for such conversion. The Steering Committee on the Development of the Fashion Industry, established by the Commerce, Industry and Technology Bureau last year, has discussed the proposal of setting up a fashion centre to provide stronger infrastructure support to the fashion industry in Hong Kong. The Committee has yet to reach a consensus on the matter, due to difference of views among members on the location, objective, main functions and mode of operation of the centre. The Government will continue to explore the matter with the industry.

(c) At present, training for personnel in the textiles and clothing industries is mainly provided by the Clothing Industry Training Authority, two organs of the Vocational Training Council, namely the Department of Fashion and Textiles of the Institute of Vocational Education (Kwai Chung) and the Textile Industry Training Centre, the Hong Kong Polytechnic University and the Skills Upgrading Scheme.

(i) Clothing Industry Training Authority (CLITA): Established by the Government in September 1975 under the Industrial Training (Clothing Industry) Ordinance (Cap. 318), CLITA is financed by a levy from the industries (Note 1). Measures taken to enhance training for the industries include establishing a Centre of Excellence for the textile and clothing industries, stepping up dissemination of expertise and technology on textiles and clothing, offering self-study and internet courses for in-service personnel of the clothing industry who are unable to attend regular classes, providing and designing integrated training courses for enterprises, organising seminars on various topics for the industries, and supporting the Employees Retraining Board in offering tailor-made coaching for individual garment factories.

(ii) Vocational Training Council (VTC): The Department of Fashion and Textiles of VTC's Institute of Vocational Education (Kwai Chung) offers diploma and higher diploma courses. Another organ of VTC, the Textile Industry Training Centre also provides all-round courses with due emphasis on both theoretical and practical training. Major manpower training initiatives include increasing places for full-time training courses, providing in-service education opportunities, providing multi-skills training to professionals in a flexible manner, providing evening courses on printing, dyeing and finishing, designing and providing tailor-made training courses on behalf of manufacturers to help upgrade the skills of the employees in the industry and to promote operational efficiency, and organising thematic seminars to disseminate updated market information for technological exchange in the industry.

(iii) Hong Kong Polytechnic University (Poly U): Poly U currently provides full-time, part-time and evening part-time courses for sub-degree, bachelor's degree, post-graduate and post-graduate research programmes in textile studies with duration ranging from two to six years.

(iv) Skills Upgrading Scheme: The Government set up the Skills Upgrading Scheme in 2001 to provide focused training to in-service workers of various industries with a view to upgrading their skills. The wearing apparel/textile industry was one of the sectors included in the first phase of the Scheme. Through the Scheme, the Government aims to help workers of the wearing apparel/textile industry to acquire the latest skills so as to enhance their employability and competitiveness to meet the demands arising from technological changes.

Besides, the Government will follow up on and implement the proposals of the Steering Committee on the Development of the Fashion Industry to enhance cooperation between the industries and the training institutions mentioned above in manpower training.

(d) After meeting with the business community and union representatives, the Government has agreed that in view of the new circumstances brought about by the Mainland and Hong Kong Closer Economic Partnership Arrangement, consideration should be given to exploring ways to seize the enormous business opportunities so created. We should try to attract investors or manufacturers to set up factories in Hong Kong, which in turn will promote economic development and increase local employment opportunities. In order to attract more investors or manufacturers including those in the textiles industry to set up factories in Hong Kong, thereby benefiting more local workers, a consensus has been reached among the labour side, the employers' side and the Government that flexible measures may be considered to allow manufacturers to import non-local skilled labour, provided that this will contribute to enhancing Hong Kong's competitiveness and creating employment opportunities. Specific proposals will be worked out by the Government to facilitate further discussion. The business community and trade unions will be consulted in formulating and implementing relevant plans.

Note 1: CLITA is financed by a levy of 0.03% on the Free on Board value of clothing and footwear items produced in and exported from Hong Kong.

Ends/Wednesday, November 5, 2003

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