CONFIDENTIAL
FIRST SESSION MONDAY 10 JANUARY 3.50 p.m. (MILLBANK TOWER)
I OPENING STATEMENTS
A
HONG KONG
I
Mr Haddon-Cave opened for Hong Kong. He recalled that in the first arrangement between Hong Kong and UK in January 1959, HMG had recognised that Hong Kong was acting in a spirit of Commonwealth economic co-operation by temporarily limiting the rate of growth of her exports of cotton textiles to a level suited to Lancashire's needs. This arrangement had survived for thirteen years, and its coverage had been broadened during that period. Its effect was to limit the expansion of Hong Kong's trade to a modest 11m. sq. yds. (from 185m. sq. yds. in 1962 to 196m. sq. yds. in 1972) or 10% over ten years, compared with a growth rate of 5% per annum to which LTA signatories are normally entitled. These points were particularly important to the Hong Kong industry at the present time; exporters felt that HMG had certain obligations towards them given that the restraint arrangements were to be maintained for the foreseeable future.
2. The recent history of the UK's cotton textile policy since 1969 and Hong Kong's own doubts as to its efficacy and practicability had · been discussed at length during the December talks. Mr Haddon-Cave had explained then the suspicions aroused in Hong Kong about HMG's motives in announcing one policy in July 1969, with many assurances as to its immutability, and changing to another at very short notice in December 1971; the situation now was that Hong Kong officials were accused of being insufficiently alert in not foreseeing the change (see article in "Textile Asia" of
) Hong Kong attached importance to re-formalising trading relations between the two countries after this incident and to agreeing a joint intention to follow in the future at least some of the guidelines on procedure laid down in GATT.
3. Finally Mr Haddon-Cave said he did not wish to dwell at length on the embarrassment caused to the Hong Kong Government by HMG's volte-face, but he wanted to put on record the ill-feeling and uneasiness it had caused in Hong Kong's industrial community, It had been interpreted (perhaps wrongly) as a precursor of worse things to come, and as setting a pattern for the future, particularly when conflicts of interest arose out of the forthcoming alignment of EEC/UK commercial policy. There was apprehension that Hong Kong's interests would be sacrificed when the UK became a member of the enlarged Community, and a suspicion that HMG would find it difficult to continue to offer support to the Hong Kong textile industry. The change in policy had occurred at a time when the industry was already complaining bitterly about the US "ultimatum" technique, and about Canadian and Australian unilateral action on shirts and knitted outergarments. The industry expected better treatment from the UK, but any attempt by the Hong Kong Government to bring a more balanced view to bear inevitably gave rise to accusations that they were taking a soft line with HMG.