CONFIDENTIAL
BRIEF D (Defensive)
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FUTURE OF THE MULTI-FIBRE ARRANGEMENT (MFA)
Background
1.
The MFA expires in December 1977. The EEC is seeking the renewal of the MFA subject to modifications designed to cope with the problem of disruption, in the textile and clothing industries. in member countries. The DOI/DOT are taking the line that there are serious flaws in the MFA and that full-scale renegotiation is necessary. Hong Kong's interest, on the other hand, lies in the renewal of the MFA in more or less its present forms in order to preserve its access to the markets of the developed countries and to defend its position against new and cheaper suppliers. The Governor of Hong Kong sent a telegram on 4 February which (a) referred to the rumours that the MFA will be modified so as to permit the Community to deprive Hong Kong of all growth in quotas (b) pointed out that the fulfilment of Hong Kong's social programmes is dependent on its continued economic growth and (c) advised that any further reduction in growth potential imposed on Hong Kong textile and clothing industries could put social programmes at risk. The Governor asked for a general assurance that HMG would protect Hong Kong's interests and, where they conflict with UK's interests, that HMG would seek a compromise. Specifically, he asked that there would be no further reduction of Hong Kong's growth potential. 2. At the annual round of UK/HK textiles consultations on
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8 February, Mr Jordan, the Director of Commerce and Industry in Hong Kong, argued that the MFA should remain unchanged. pointed out, as is the case, that the Americans favoured continu- ation of the present agreement; asserted that it was the Community only that wanted changes; and referred to rumours that the Community wished to change the MFA so as to penalise Hong Kong
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The DOI/DOT representatives would neither deny nor confirm the rumours to which Mr Jordan referred. They pointed out that many ideas were being canvassed within the Community by the end of March on proposed changes in the MFA. Mr Jordan was warned that both within the UK and other Community countries there was support for
be reached within the Community
CONFIDENTIAL
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