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Agenda Item 3
The future or the B3C/Hong Kong textile Agreement
1. Background
The UK's former restrictions on imports from Hong Kong of cotton and polyester-cotton products have been largely replaced by an EEC agreement negotiated with Hong Kong under Article 4 of the GATT Multifibre Arrangement (MPA). The Agreement is operative until the end of 1977, and is more extensive in its coverage than the previous regime. It includes new restraints on products of fibres other than cotton and polyester-cotton as well as maintaining most of the former restraints. Community ceilings were also introduced on various knitwear articles, with the result that most textile yarns, fabrics and made-ups are subject to quantitative restrictions. Provisions for consultations on other textiles products are also included in the Agreement. The UK has shares of the quantitative ceilings established by the Community agreement according to a formula created to share the burden of low cost imports more equitably among EEC Member States. The UK also has regional ceilings on certain products by application of the consultation provisions.
Overall we are still the largest importer in the Community of textile products from Hong Kong. Germany takes marginally more clothing (1977 quotas are 44 Germany; 41.43 UK), but UK takes substantially more cloth (1977 quotas are 10.5%; Germany; 69% UK). (Under the burden-sharing formula Gernany's 'economic share is 28%; UK's is 23.5%)
2. Present situation
Hong Kong has run true to form in her operation of the Agreement ie she has been legalistic, uncompromising in her interpretation of even such apparently established provisions as the actual coverage of the Agreement that she has signed and has scrubed pretty close to the wind in her manipulation of 'flexibility' provisions. The most recent Community difficulties with Hong Kong are again on details. Hong Kong maintains that rubberised or plastic-coated garments are excluded from the agreement, whereas we do not, and the subject is a technical matter which has been under consideration by the Department of Industry and Hong Kong's Department of Commerce and Industry. The dispute has been referred to the Commission. Consultations on this are due to take place in February. Meanwhile the UK is allowing imports of these items without HK quota certificates but is counting them against the quota.