CONFIDENTIAL
BACKGROUND
Textiles are Hong Kong's major industry, accounting in
1969 for 47% of all Hong Kong exports.
The regulation of
international trade in textiles is a matter therefore of great
importance to Hong Kong and there may be reference in discussions
with the Governor, officials and unofficials to some of the
current difficulties in this field as set out below.
Cotton Textiles
2.
International trade in cotton goods is governed by a
multilateral agreement called the Long Term Arrangement on
Cotton Textiles (LTA) which was negotiated in 1962 within the
framework of the General Agreement on Tariffs and Trade (GATT).
The LTA permits exporting and importing countries to conclude
bilateral agreements in restraint of trade in cotton goods.
Hong Kong has such agreements with all the major importing
countries.
3.
The LTA expires at the end of this year and its renewal is
under discussion in the Cotton Textiles Committee of the GATT.
In view of our intention to move from quantitative restrictions
to tariffs on cotton (see paragraph 8 below) we should prefer to
see it not renewed. However, the majority at least of importing
countries, including the EC countries and the United States,
are likely to think otherwise, and it is probable that the LTA
will continue for at least a further three years.
4. Hong Kong, while considering that its interests would be
best served by the removal of quantitative restrictions, thinks
CONFIDENTIAL
/that