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The Financial Secretary rebutted both these points, referring to the production and marketing decisions taken in Hong Kong on the basis that there would be no quotas and pointing out that there was no need for complete equity of treatment between suppliers. He argued that HMG had a special responsibility for Hong Kong's well being because it was a dependency and this fact alone must qualify the equity concept insofar as Hong Kong was concerned. Furthermore, the UK/Hong Kong arrangement was not the same as those with other suppliers and there was no reason why concessions to Hong Kong should become known to other suppliers and, consequently, be offered to them. After further discussion the Department of Trade and In- dustry officials thought that Ministers would agree to further talks provided the Hong Kong Government "was prepared to take the risk that no ameliora- tion might result". The British side then tabled the text of a statement which they thought the Financial Secretary might make on his return to Hong Kong. This was to the effect that "the British and Hong Kong Governments agreed that further talks might be held in 1972 about trade in textiles between the two countries".
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The Financial Secretary commented on the reference to "textiles" rathan then "cotton textiles" in this statement and the Department of Trade and Industry officials replied that they saw advantage in using further talks as a "vehicle where any problems outside the cotton field could also be examined". The Financial Secretary responded that, while Hong Kong was always ready to discuss any problem with any of its trading partners, any move by Britain to restrict imports of non-cotton textiles from Hong Kong without proven injury would be quite unacceptable to the Hong Kong Government. He added that, although he had gained the impression that all of his proposals for amelioration appeared to create difficulties for the British Government, it might be best for both sides to reflect on the situation and to meet again later in the day,
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At this third meeting, after the Financial Secretary had pro- tested again at the emphasis given by the British side to the question of equity and stressed that the British position generally tended to ignore the new sit- uation in which Hong Kong suddenly found itself, it was agreed that the best method of proceeding would be to attempt to draft a letter from Mr Ridley to Mr Haddon-Cave setting out Hong Kong's desiderata and HMG's difficulties. The resulting draft, which was eventually accepted by Ministers, is at Annex A. It will be seen that it indicates that both sides agreed to meet again in London for further discussions on 10th January 1972 and from Hong Kong's point of view, although the draft avoids any commitment, it is satisfactory to the extent that paragraph 1 read in conjunction with paragraph 4 will provide a starting point for the further discussions, the agenda for which is estab- lished in paragraph 2. A press statement was also agreed (a copy is at Annex B).
Reaction of the Textiles Advisory Board
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A full report on the discussions was given to members of the Textiles Advisory Board last Tuesday afternoon. Their reaction was robust. They were incensed by the suddenness of HMG's decision and declared that the decision itself was completely unacceptable to them, that HMG had acted in a high-handed and irresponsible manner, and that by so doing it had created
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