XCC(71)73
CONFIDENTIAL
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a most damaging precedent for other countries to follow. Members also felt that they could no longer trust any statement made by HMG.
16
Some members of the Board went on to say that they were not satisfied with the explanation as to why they had not been invited to accompany the Financial Secretary to London, namely, that a negotiation was not envisaged at this stage and the presence of a large delegation in London at that time would have been counter-productive. They also asked what was thought to be the purpose of the Board if not to advise on matters affecting the Hong Kong textiles industry. They asked whether the Hong Kong Government had judged that the matter was not one of importance and consequently not one on which the immediate advice of the Textiles Advisory Board was required. If this was the case, however, why had the matter been considered sufficiently important to be placed before the Executive Council some days (in fact two days) before they were informed?
17
The majority of members even went so far as to suggest that, before the January discussions to discuss measures of amelioration took place, the matter should first be discussed at the political level and specifically between British Ministers and members of the Executive and Legislative Councils, who should proceed to London forthwith for this pur- pose. These members felt that it was necessary to place before HMG the important point of principle which was at stake, namely, that there was no guarantee that HMG would not act in the future in a similar manner in res- pect of such matters as imposing restraints on man-made fibre and wool textiles without warning, or failing to protect Hong Kong's interest when Britain was in the EEC.
18
Other members, whilst registering their distaste for HMG's action, felt that a political confrontation would fail to secure any change in HMG's decision and would only serve to exacerbate ill feeling between the two sides.
Assessment
19
In the present highly charged and suspicious atmosphere, it is difficulat to make a definitive assessment of the effects which HMG's de- cision will have upon the cotton sector of the Hong Kong textile industry. It is the view of the Financial Secretary and the Director of Commerce and Industry, however, that the decision will not be entirely adverse to Hong Kong's interests. The immediate disadvantages are apparent, namely:
(a)
there will be some disruption because some companies have taken orders in excess of their quota entitlement and other companies, which hitherto have not held quota, have similarly contracted for orders in Britain. There will also be some disruption for Hong Kong weavers arising from the fact that a locally imposed quota rule, designed to require Hong Kong gar- ment manufacturers to use Hong Kong woven cloth, will have to be abandoned. This is
CONFIDENTIAL