CONFIDENTIAL W
8
(Annex 3)
T
3.
3.1
Consequences for other bilateral agreements
A new
Mr. Tran's proposals also have implications
for Hong Kong's textiles and clothing exports to other markets. The most significant of these is the USA which
in 1976 accounted for HK$5,135 million or 30% of Hong
Kong's total exports of textiles and clothing. bilateral agreement under the MFA was recently concluded
extending the restraints for 5 years from 1st January
1978. This new agreement provides for no overall growth
in the first year, 1978, and an overall growth of 6%
per year from the second year onwards. It also contains flexibility provisions which are on overall terms more generous than the minimum provided for in the MFA.
3.2
These provisions could be placed in jeopardy
if Hong Kong were to conclude an agreement with the
EEC the terms of which were substantially worse than
those in the new US/HK agreement. The reason for this
is that, in a side letter (copy at Annex 3) to their
Agreement, the Americans noted they might seek consultations if they considered that measures entered
into by Hong Kong with a third country placed them in
an inequitable position.
3.3
In 1976, Hong Kong's exports of clothing
to Sweden were worth $548 million and to Norway
$218 million. The bulk of these exports are subject
to restraint in two bilateral agreements concluded
under the MFA, both of which expire at the end of 1977.
/Sweden