Confidential
HONS KONS
Textiles
TO ENTER
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S. of S. asked about the present negotiations between London and Hong Kong on Textiles. The Governor explained that this was a relatively small matter in the overall field of textiles, but DTI's latest offer had conditions attached which Hong Kong could not accept. saw no point in reopening negotiations as there have been two lots of talks already. This is an unreasonable amount of time to spend on so limited a matter and tended to sour rather than improve relations. We could not sacrifice certain well tried and accepted principles.
2.
S. of S. asked how this situation had arisen. Mr. Haddon-Cave said HMG's move affected Hong Kong in two
ways:
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(a)
(6)
in the short term: in the expectation that quotas were coming off, many manufacturers had accepted orders in excess of quota right: in the longer term: the UK/HK quota arrange- ment was constructed some years ago in a tariff free situation. It is too inflexible now that there is to be a new tariff. At the talks in London last month Hong Kong sought some right of transfer from fabrics to garments, but the DTI's offer was so derisory that the local industry would not aceept it.
S. of S. asked whether it was the amount of swing, or the conditions attached which was causing the trouble. Mr. Haddon-Cave explained that he had originally wanted swing rights up to 24 million yards, he had been prepared
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