G.F. 326
CONFIDENTIAL
7.
3
(a)
(b)
(c)
(a)
(e)
(f)
(g)
(h)
Hong Kong's present position is as follows :
Since the announcement of the decision to impose a tariff on Commonwealth cotton textiles Hong Kong has been considering the need to seek consultations but wished to complete its own survey of the industry concerned before formally requesting discussions.
Now that the survey has been completed this has emphasised the dependence of certain sectors of the industry on the British Market and these firms will need time to adjust to the new conditions if disruption is not to be too severe.
The decision to impose a tariff and dispense with quotas from 1 January 1972 was made (without the prior consultation that had been promised) in the context of the needs of Lancashire and before the question of membership of the E.E.C. had been reopened. The revival of this application has put a completely different light on the issue and in Hong Kong's view justifies reconsideration of the decision to make this change from 1 January 1972.
There is a general belief in Hong Kong that if Britain succeeds in joining the E.E.C., the Community will insist on the application of the common commercial policy on cotton textiles, which will involve quota restrictions.
If the present quota restrictions are lifted on 1 January 1972 there will be a scramble to do as much trade as possible and to establish new levels of performance against the eventual re- imposition of quotas this will have disruptive effects in Britain and in the exporting countries.
Such developments could indeed cause such disruption that the British Government will find it necessary to seek new quota restrictions even before the E.E.C.'s common commercial policy is applied.
The imposition of the tariff from 1 January 1972 and the subsequent 'E.E.C.' quotas will discriminate unfairly against exporters of cotton textiles to Britain since they will not enjoy the cushion of décalage which will apply to other manufactured goods.
In these circumstances Hong Kong considers that in order to minimise the period of uncertainty and disruption it would be in the interests of both Britain and Hong Kong if the implementa- tion of the 1972 tariff was postponed until the outcome of Britain's application to join the E.E.C. is known and if an early announcement of this was made.
CONFIDENTIAL