HK's textiles and clothing industry to remain competitive

Hong Kong will remain a competitive manufacturer of textiles and clothing after the removal of import quotas by the World Trade Organisation on January 1, the Secretary for Commerce, Industry and Technology, Mr John Tsang, said today (August 17).

Mr Tsang said the trade's outlook remained optimistic and he did not believe local factories would move all their facilities to the Mainland after the quota removal. Many would want to spread their risk, he said.

According to the WTO Agreement on Textiles and Clothing, quota restrictions imposed by all WTO members on their textiles and clothing imports will be completely lifted on New Year's Day 2005.

In addition, certain domestic exports of textiles and clothing to the US, the EU and Canada will no longer be subject to quota restrictions.

Mr Tsang said the removal of the quota system marked an important milestone in the liberalisation of international trade in textiles and clothing.

He said that while trade liberalisation could broaden the scope for trade and facilitate market expansion by Hong Kong business people, it would also intensify market competition.

Mr Tsang pledged that the government would continue to offer the trade a business-friendly environment and improve services. For example, all existing quota-related regulatory measures would be lifted. A simple and reliable system would be kept to protect the rights and benefits of locally made products.

He urged the trade to lower production costs and boost product quality to sharpen Hong Kong's competitiveness.

Mr Tsang said the proposed regulatory framework for textiles after the quota removal had been worked out and amendments would be tabled in the Legislative Council in October.

"We will still continue to allow our manufacturers here to make use of the outward processing arrangement that helps them to deal with a lot of the more labour-intensive aspects of the manufacturing," he said.

On Hong Kong's competitiveness after the quota removal, Mr Tsang said a number of factors besides cost affected business and investment decisions.

While production costs in Hong Kong were higher than in neighbouring cities, Hong Kong still had advantages such as product quality and prompt response to market demand.

Hong Kong has become a key financial, logistics, information and services support and co-ordination hub in the region.

"I think Hong Kong will continue to remain a pretty attractive place for the manufacturing of textiles and clothing," Mr Tsang said.

Ends/Tuesday, August 17, 2004