,
13. Hong Kong is dependent upon markets for the development
necessary to provide employment for the Colony's fast increasing
population. It has been our policy to do everything we can to
discourage other developed countries from extending restrictions
to exports from Hong Kong.
SUMMARY OF FCO POSITION
14. EPC (71)97 seems not to consider our overall economic
interests or the effect of the proposals on our international
relations and, more particularly, our international reputation.
The outcome of the proposed policy would be that we should be
accused and justly of breaches of faith; that in following
a policy of increased protection we shall be in breach of both
the spirit of the LTA and the letter of the GATT; our action
will add to the present undesirable trend towards protectionism
(we protested strongly at the American Agreements on Non-Cotton
Textiles and the Danish import surcharge);
and we shall be
under heavy fire not only in the Cotton Textiles Committee but
also at the UNCTAD meeting next April.
15. The suggestion by the DTI that a decision is necessary on
our textile import policy by the time of the Debate on the
Affirmative Resolution would exacerbate the various difficulties
likely to arise with overseas governments. Not for the first
time we should, if such a timetable were adhered to, be
presenting something of a fait accompli at extremely short notice.
RECOMMENDATIONS
16. I therefore recommend that at the meeting of the Economic
Policy Committee the Minister of State should strongly resist
the proposal to have both quotas and tariffs in 1972 on the
grounds that:-.
CONFIDENTIAL
/(i)