move too fast lest the economic stability of Hong Kong should be put at peril: for as a Territory that lives by its exports, it depends on its competitiveness to survive.
7.
This has recently been most case of textile exports from
Another major problem for us over our relations with Hong Kong is that major conflicts can arise between British interests and those of Hong Kong. dramatically illustrated over the Hong Kong to the EEC. Textiles account for about half of Hong Kong's exports, and the EEC is the Territory's largest market. It is, therefore, vital that they should maintain the access to the EEC that they have enjoyed for the past four years under the GATT Multi-Fibre Arrangements which expired in December 1977. They, therefore, looked to Britain to support their interests in the negotiation of a new agreement. But the UK Textile industry has suffered considerably from the competition from low cost imports during the currency of the MFA; and among EEC countries, we have as much interest as any in placing restraints on any further increase in low price imports. In the end, we were able to persuade Hong Kong to accept an agreement which still guarantees them a market for a considerable volume of their textiles, though at levels below their 1976 quota. This was only achieved after very bitter negotiations in the course of which we made ourselves unpopular with both our EEC partners and with Hong Kong.
4