The haubert 18. K. Dept.
MR C W S DEXTER
Commodities Division
FCO
Gt George Street
SW1
SECRET
LL..
Mr Gray
CRE1
33
Mr K C Price : CRE2 Miss Welch
CT Division
HONG KONG DEFENCE CONTRIBUTION
I agreed to suggest a form of 'words which could be used in reply to the suggestion in paragraph 5 of Hong Kong telegram 291 of 29 April, that we should admit that the cotton textile tariff will have adverse effects on Hong Kong's trade, and should give assurances about the reimposition of qr. As I have already said when we spoke on the telephone, DTI could not accept any formula on the lines proposed by Hong Kong; as you know, we do not admit that the tariff will necessarily have adverse effects on Hong Kong's trade. As for the reimposition of quotas, we are having to fight off strong pressure from the industry for assurances that we will be favourably disposed towards the reintroduction of quotas. If we are to continue to resist these pressures we cannot give Hong Kong, or other overseas suppliers, undertakings in the opposite sense.
2. CT Division have suggested that if anything is to be said to Hong Kong about textiles in the context of the defence contribution it should be on the lines of what has already been said in FCO Saving despatch 95 of 18 March.
3. We suggest, therefore, that you should include in your telegram in reply to Hong Kong a paragraph on the following lines:
"Our views on the likely effect of the cotton textile tariff on Hong Kong's trade remain as set out in our Saving despatch 95 of 18 March. If you consider it necessary that there should be a reference to textiles in our reply, we could not go further than the following:
'We are aware of the apprehension felt by the Advisory Committee to the Textiles Advisory Board on behalf of certain firms in the Hong Kong textile industry about the effect on their trade and profits of the new tariff on cotton textiles, in view of their dependence on the British market, but we feel that such apprehension must be balanced by a recognition of the opportunities that will exist in future for the Hong Kong textile industry to complete free of quantitative restrictions in the UK market. You are aware that HMG have announced that the UK would only consider the reimposition of quota restrictions on particular products if there was a significant rise in total imports of cotton textiles, as well as disruption of the market in these particular products. We do not expect situations to arise in which we are compelled to resort to widespread quota restrictions as a result of disruption to our market.*"
40 I do not think in fact that this draft, or any draft which is possible in view of the fact that the Governor wishes us to say that we are aware of likely adverse effects which we do not consider will exist, will be of much use; and I should not be surprised if you decided that it would be better simply to say that, as the Governor will be aware from 95 Saving, we do not consider that there are likely to be adverse effects on Hong Kong's textile trade generally, though wo
MUI DI GHEIMS 2014 1/71 T.P. Op.651
SECRET
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