BRIEF 3 PART IV
BACKGROUND
1
Hong Kong provides about 31% (by value) of UK imports of textiles and clothing from low-cost sources. Our present quotas on these products operate as part of the EC-Hong Kong bilateral agreement under the MFA which is effective until the end of 1982. The 1978 quota levels involved a reduction on 1976 trade in some products; the Hong Kong Government office has produced a paper arguing that these cutbacks have largely benefitted developed countries and Mediterranean associates of the EC. Hong Kong's public line is that the "reasonable departures protocol which distinguished the second phase of the MFA from the first, and allowed growth rates to be agreed which fell below the 6% of the original MFA
should be discontinued.
2
At the GATT Textiles Committee Meeting held in Geneva on 8 and 9 July the developing countries, led by India but supported by Hong Kong, attacked the developed countries over the use of "reasonable departures". The claim was made that although these departures were introduced on a temporary and strictly limited basis, they had been widely used by the developed countries who appeared to see them as being a long term provision. It was argued that the departures should be discontinued immediately. The argument was put forward that much of the reduced employment in the developed countries' industries was caused by increased productiv rather than low-cost imports. The Hong Kong representatives also quoted from a magazine interview (copy attached) given by the Minister for Trade in May as proof that the UK industry, at least, was not being adversely affected by imports from low-cost countries.
3
As a
Although imports (by value) from Mediterranean suppliers did increase dramatically in 1978 (by 43% over 1977), the Community has negotiated voluntary restraint arrangements with most of them. result the growth in imports from those countries for 1979 over 1978 was reduced to 29%. Imports from MFA countries rose almost as quickly by 26% (13% in 1978). Despite the 1978 cutbacks, Hong Kong does have an agreed share of our market, with some scope for growth.
It should be noted that but for the intervention of the UK in the negotiations for renewal of the MFA Hong Kong might have suffered even sharper cutbacks in trade with the EC.