SECRETARY OF STATE'S VISIT TO HONG KONG
31 MARCH/1 APRIL
RECEIVED N
REGISTRY No. $1 23 MAR 1973
61
BRIEFING ON TEXTILES
1
Background
HKK3/548/3
Hong Kong depends heavily on textiles for export earnings and the UK is one of its most important markets. The value of this trade is a little over one hundred million pounds a year. The Hong Kong Government and industry are very sensitive to anything which suggests we pay too little heed to their interests.
2 UK restrictions
Hong Kong's exports of woven cotton textiles to the UK are limited by a bilateral agreement. The quota, which has been increased annually by 1% since 1965, is generous in that it allows Hong Kong, despite its small size and population, to supply about half the United Kingdom's total of restricted cotton textile imports.
Knitted cotton textiles are free of quantitative restrictions at present.
Woven polyester/cotton cloth and made-up goods, which are increasingly substitutable for cottons, became subject to quota last year for the first time. After hard bargaining, Hong Kong obtained an agreement that can be considered reasonably satisfactory to both sides.
Other man-made fibre and wool textiles remain free of restrictions.
3
EEC restrictions
The EEC has a bilateral agreement with Hong Kong restricting her exports of woven and knitted cotton textiles to the Six to about half the quantity which Hong Kong exports to the UK. For the time being these two arrangements are continuing in parallel, and there is no free circulation within the Nine of imported textiles from the Far East, but we are pressing hard for steps towards a more equitable distribution of low-cost imports within the Community.
The EEC's import restrictions on non-cotton textiles are operated by the Member States individually. Germany and the Benelux countries are now suffering from a marked increase in polyester/cotton imports from Hong Kong, just as the UK was suffering last year. New restrictions have to be negotiated on a Community basis, and we are therefore involved in the discussions presently taking place in Brussels on the form such restrictions should take. There is thus a potential conflict between our interests as a Member of the Community and our responsibility for Hong Kong. But in practice we want to see restraints on international trade in textiles limited to cases of real damage to the markets of the importing countries, which is what Hong Kong also wants.
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