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is better; but so are those from developed countries such as
West Germany and the United States. The restrictions would
therefore be aimed almost entirely at Hong Kong. The DTI are
seeking agreement of their ministers in principle to the
imposition of restraints on such imports from Hong Kong. We
have emphasised to them the importance of taking the Government
of Hong Kong fully into our confidence and not presenting them
with a cut-and-dried decision.
EEC Textile Policy
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3. The DTI have prepared a draft memorandum for submission
to the Commission about the philosophy which should underlie
the enlarged Community's textile policy. It'is a liberal
document and has general FCO support; it is much more liberal
than proposals submitted by the British Textile Employers'
Association. It proposes a new Long-Term Agreement. In cases where restrictions on textile items are to be phased out by
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the end of a transitional period, it suggests that import
quotas should gradually be levelled up. In other cases, where
restrictions are not to be phased out in short-term, a more
complex but still liberal formula would apply. The Commission
have been proposing to submit to the Council on 1 May an outline proposal for comprehensive restraint agreements on non-cotton textiles with Hong Kong, and also with Japan, Korea and Taiwan,
presumably on the lines of the agreements which the USA forced
on these countries last autumn. The DTI memorandum is intended
to pre-empt this proposal.
GATT Aspects
4. An important problem for Hong Kong will be their GATT
relationship with the Community when we become members. Because
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/of their
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of their constitutional position, it is difficult to see how
they could have a GATT relationship with the United Kingdom.
Nevertheless, they will need to maintain such a relationship
with the enlarged Community, since they will wish to ensure
that the Community abide by the trading rules which the GATT
enshrines.
Hong Kong Department April 1972
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