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HONG KONG'S PROPOSAL TO LINK TEXTILE RESTRAINTS WITH THE GSP
1. In a telegram dated 11 October, Mr Jordan said that because of the effect of the super-competitive proposals (which would reduce whatever advantages were secured on textiles and footwear, and could have reper- cussions on Hong Kong's treatment under the US and other schemes) he felt it would be essential for Hong Kong to insist on a minimum of quantitative restriction on her largest export industry textiles. He went on
"It seems to me time that we played our only card. The EEC wants a Multifibre Textile Arrangement Article 4 agreement with us, and others. If the 1975 GSP were to discriminate against us even to the extent envisaged in the Commission's original proposals, we should be obliged to stand on our rights under the MTA and to insist that the EEC limit its request to MTA Article 3 ie we would consider restraint only on a product by product, member state by member state basis (or Community basis if there was a Community-wide case). We feel we could reasonably expect your support in doing this. Cur proposed action will become even more necessary if Tran's current ideas are accepted. I think that Dodge, with your agreement, should make this clear in Brussels. GSP and textiles cannot be kept in separate compartments when GSP includes discrimination against our textiles."
2. The distinction between Articles 3 and 4 of the Multifibre Textiles Arrangement is outlined in paras 4-7 below.
3. Along with our colleagues in the FCO and the Department of Industry, we have looked carefully at Mr Jordan's proposal to make it clear to the Community that Hong Kong would stand on its MFA rights, failing a satisfac- tory outcome on the GSP. We are agreed that we should strongly advise Hong Kong in her own interests not to take this line and make it clear that we could not support such a move. In dissuading him, the following argu-
ments could be used:
(a)
(b)
(c)
the rest of the Community are unlikely to be moved by threats; Hong Kong would be antagonising them to no purpose. There would be considerable erosion of such sympathy as there is for Hong Kong's position; this might lead to the abandonment of any idea of GSP improvements for Hong Kong's textiles, or even footwear; indeed, it could increase support for the Dutch view that super- competitive suppliers should not receive GSP benefits at all."
We are pressing hard for concessions on Hong Kong's textiles and footwear in this year's GSP review. From the way the super- competitive discussions are going, we do not believe the arrange- ments which eventually emerge will be as detrimental to llong Kong as Mr Jordan seems to think. But our efforts on both these fronts would not be helped by the kind of intervention Mr Jordan has in mind.
by insisting on negotiating under Article 3, Hong Kong would increase the risk of losing administration of the controls (see para 4). There are financial and other advantages to Hong Kong in retaining management of the quotas in her own hands. (para 7)
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