CONFIDENTIAL ·
the Community.
There is a general feeling that in the
past Hong Kong has done too well out of textile exports to the Community. Regardless of our own views, there are strict limits
to what we could do for Hong Kong.
The Hong Kong Case
5.
We wish to see Hong Kong's economy prosper. We have
therefore been concerned that, in the Hong Kong Government's view,
the proposed quota levels which Mr Tran discussed in Hong Kong in early August could have a significant adverse effect on the rate of growth and on employment opportunities in Hong Kong.
However, our impression is that the Hong Kong Government may
have over-emphasised the possible consequences of the Commission's
approach. The following points are relevant:-
(i)
As far as we can see (and officials will be ready to
discuss this further) it seems that even if the cut-back in textile
exports to the Community were to be on the lines of the Commission's
proposals, the reduction in Hong Kong's projected GDP growth rate
would be of the order of 0.8% rather than 1.5%. While this
reduction would be unfortunate, it seems that Hong Kong would
still expect, to achieve a growth rate of around 6% in the 1980s.
(ii) It is by no means certain that the Americans would in fact
insist on a reduction in Hong Kong's quota access under the
recent US/Hong Kong agreement, if the terms of the new EEC/Hong Kong
agreement were to be tougher. The Commission say they have already
told the Americans that any downward revision of their agreement
with Hong Kong might cause the Community to attempt a similar downward
CONFIDENTIAL
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