CONFIDENTIAL
U.K. annual quota for Hong Kong is at present set at 187.3 in.
square yards of cotton piece goods and made-ups and 6.3 m. lbs.
of yarn.
Cotton textiles from Hong Kong enter Britain duty-free,
and enjoy a Commonwealth preference which is in many cases
considerable (on cotton yarn i.e. yarn including less than
5 per cent man-made fibre 7 per cent; and on cloth
-
<
17 per cent. The c.e.t. in such cases is a little less.)
19. The main points on cotton textiles made in the first round
of consultations were as follows:
(a) Hong Kong wishes to see her present access rights to the
markets of the U.K. and the Six unimpaired by British
entry into the Community.
(b) Hong Kong officials said that, while the application of the
common external tariff to her exports to the U.K. might not
in itself affect the level of trade, it would be likely
to depress wages and/or profit margins. We agreed that the
level of exports was not likely to be affected: but
suggested that the pattern of trade might. Hong Kong
would probably upgrade the qualities of her exports, and
specialise in items where she had a competitive advantage.
We also suggested that Hong Kong officials should prepare
a note in advance of the next round of consultations,
showing how they think that the common external tariff
will in fact bear on different categories of textile
exports to the U.K.
(c) Hong Kong officials suggested that the Six were unlikely
to consider isolation of the U.K. market for textiles.
As the present policies of the Six were far more
restrictive than those of Britain, they thought that
we were likely to come under pressure to reduce our
imports from Hong Kong; Germany was already yielding
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