CONFIDENTIAL
EEC
The EEC also has quotas on Hong Kong cotton textiles.
We are discussing with the Commission how to assimilate our
system with theirs. We expect that in 1973 the pattern and
level of cotton textile quotas will be much the same as this
year.
We
We are also discussing with our partners the question
of long-term textile policy in the enlarged Community.
recognise fully the importance of establishing as far as
possible equal competitive conditions for textile producers
throughout the Community.
COTTON YARN
Cotton yarn is a special problem because it is the only
significant textile product which the Six have liberalised
and we have not. Hong Kong has agreed that her exports of
cotton yarn to us should continue to be subject to quota in
1973.
STERLING
The floating of sterling created special problems for
Hong Kong.
Nearly all Hong Kong's external reserves are held in
sterling, and their value in relation to other currencies
has declined with the fall in sterling's value after the
float (by 7 per cent or so on a total of over £800 million).
Following the earlier loss in November 1967, when sterling
/was
CONFIDENTIAL