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8.4/12
HKC 026/3 CONFINE
In Quill I Thappen on
Jeder
MEETING BETWEEN THE PERMANENT SECRETARY, DEPARTMENT OF TRADE AND THE GOVERNOR OF HONG KONG, AT THE DEPARTMENT OF TRADE, 23 NOVEMBER, 1977
Permanent Secretary
DoT
Mr Hellings
CRE 1
Miss Macfarlane
Mr Dring
CRE 1 CRE 4
YHE
HE THf Governor
Mr Bray, Hong Kong Commissioner, London
Sir Leo began by saying that the current EEC/Hong Kong textile negotiations placed the UK in a difficult position. As well as being part of the Community the UK was anxious to do its best for Hong Kong. Our concern on this point had recently been made to Viscount Davignon during a recent visit to London. However, Hong Kong would have to accept that their level of access to the EEC would not be as good as in the past.
2 The Governor replied that Hong Kong had a considerable amount at stake in the current negotiations. The balance between signing an agreement and facing the imposition of autonomous measures needed to be carefully weighed. There were three main problems. Firstly, there was the problem of whether the importing or the exporting country maintained control of quotas. Sir Leo said the Department would look into this although as far as we knew there was no proposal to change the present control arrangements.
3
Secondly, there was the difficulty that the new product categorisation would not be published until December. This made life impossible for the Hong Kong authorities, and for importers wanting to place orders. Miss Macfarlane said that transitional arrangements were currently under discussion. No decisions had been taken and it was not clear whether these arrangements would apply to all suppliers.
4 Thirdly, there was the issue of cut-backs. The Governor felt that the principle of cut-back to 1976 levels could be argued as a special case. However, the additional cut-backs below that level for large suppliers to facilitate the newcomers was an entirely new concept. In reply Sir Leo sympathised with Hong Kong's concern over the cut-backs; the UK would do its best to protect the offer already made to Hong Hong. But it had to be understood that the UK could only help Hong Kong if they continued negotiating. It would be a disaster if they withdrew.
5 The Governor felt that it was an easy thing to exhort Hong Kong to sign an agreement at any cost but what had to be appreciated was that she had a great deal to lose. If they accepted the EEC's terms they could stand to lose textile exports to the USA worth up to £100m if the US reopened their agreement as they had threatened to do. Sir Leo said that this concern would be made known to the Community. Mr Hellings felt that the US could also take this course of action if the EEC acted unilaterally. The Governor replied that he thought this unlikely. Miss Macfarlane said that the EEC did have a certain amount of room for manoeuvre on some of the sensitive items, but there was little chance of this taking Hong Kong back to 1976 levels. The Governor said he understood this.
6
Turning to the subject of UK export performance in Hong Kong, the Governor said that UK had missed many export opportunities in Hong Kong. It was one thing to be successful in winning major project business, but a properly balanced export effort included smaller exporters. It was the small to medium-sized companies who needed re-educating about Hong Kong. Mr Dring said that the BOTE was conscious of this and had plans for a major exhibition in Hong Kong next year
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