CONFIDENTIAL
RESTRAINTS ON HONG KONG TRADE WITH THE EEC
1.
Prior to UK accession to the EEC, we, the Six and Denmark
all had voluntary restraint agreements on cotton textile imports
from Hong Kong. In addition, the UK and Germany have similar
restraints on polyester/cotton imports. UK quotas are larger than
those for all the rest of the EEC countries put together. Of the
latter, Germany takes by far the largest share. Following negotia-
tions between the major textile exporters and importers, a
Multi-Fibre Textile Arrangement (MTA) was agreed at the end of last
year under the auspices of the GATT.
2.
Under
Hong Kong has acceded to the MTA in her own right.
the terms of the Arrangement, Hong Kong has to present to the
Textiles Surveillance Body (TSB) (itself established by the MTA)
the text of the restraint agreements in force at the time of her
accession. This has given Hong Kong certain technical difficulties
largely because her agreements with the Six are mostly controlled by
confidential side-letters which the Six did not wish to be made
available to the TSB. The Hong Kong Government therefore proposed
that they should unilaterally present revised and updated voluntary
restraint agreements to the Six, Germany (in respect of polyester/
cottons), Denmark and ourselves. We are not yet sure of the
reactions of the other countries but in respect of ourselves, Hong
Kong has gone beyond her earlier proposals and presented a unilateral
declaration which Department of Industry officials find unacceptable.
Discussions are continuing between UK and Hong Kong officials to try
and find an acceptable compromise which DoI officials can present
to their Ministers.
To date, whilst taking a close interest in these
developments, the FCO has not been directly involved.
CONFIDENTIAL
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