Fing B
}
insisting that the case of Hong Kong had been definitively i in the accession negotiations. In his reply (Hong Kong telno. the Governor acknowledged that this was helpful, and the Hong Kong Government have since stressed the point in their press releases.
BILATERAL TEXTILE AGREEMENT
8.
The next step is the negotiation of quantitative restraints on exports of textiles from Hong Kong to the Community under the GATT Multi-Fibre Textile Arrangement (MFA) which came into effect on 1 January 1974. The Community as an entity (though not individual Member States singly) is a party to this arrangement, which requires participating importing countries to dismantle quantitative restrictions unless they can be justified under agreed rules. It is an important provision of the MFA that any remaining import quotas should be increased at a reasonable rate. On this basis the Community has now entered on negotiations with India and Pakistan for the conclusion of bilateral textile agreements which will cover the next three years. Hong Kong is next in line, and a Community mandate for their negotiations is currently under discussion within the Nine.
9.
The United Kingdom have made their agreement to any mandates conditional on a prior understanding between EEC Member States on a scheme of "burden-sharing". The essence of this is that traditionally large importers, such as the United Kingdom, will receive a proportionally smaller share of the growth in the Community's annual aggregate quota, whereas hitherto small importers such as France and Italy will accept an increasing proportion of that growth. After protracted negotiations, agreement on "burden-sharing" was finally reached in October. The DOI, which is primarily concerned with the protection of the domestic interests of the British textile industry, regard the "burden-sharing" agreement as of major importance.
10.
Hitherto about half Hong Kong's total textile exports to the Community countries came to the UK. This trade was limited under the predecessor to the MFA to an overall growth rate of about 2% (1% for cottons plus 5% for polyester cottons under other arrangements). There was very little permitted growth to the
CONFIDENTIAL
/continental
i