CONFIDENTIAL
MULTI-FIBRE ARRANGEMENT : ESSENTIAL FACTS
1.
The Multi-fibre Arrangement (MFA) provides a framework
for regulating international trade in textiles.
Originally
negotiated in 1974 as a 'temporary' arrangement; extended 1977
by Protocol permitting 'reasonable departures' from 1974
provisions; due for renewal again at end of 1981.
Complemented
by a series of bilateral agreements including one between EC
and Hong Kong which expires at end of 1982.
2. Hong Kong is dominant supplier of low cost textiles.
Quotas are greater than for other suppliers.
3. In 1978, EC used 'reasonable departures' Protocol to cut back
Hong Kong's quotas to below the 1977 level. There will be pressure
within EC to repeat these cutbacks. However, reaction from
Hong Kong would be very hostile. Low-cost suppliers claim
UK job losses due mainly to higher productivity and developed
country imports.
4.
Strong pressure in developed countries for some tightening
of restraints on MFA suppliers. Prime Minister has spoken of need
for 'tough' successor. Developing countries want liberalization
but acknowledge that they need some form of framework arrangement
guaranteeing them even very limited access to developed markets.
Governor and senior officials have discussed the MFA with UK
Ministers and officials.
(Not for use)
5.
DOT are lead Department in Whitehall. At a meeting of OD(E)
on 6 April Ministers endorsed DOT view that while trying to keep
Hong Kong down to very low or even nil growth rates UK should
resist pressure within EC to impose a new round of cut-backs on
the Territory. Present indications are that this will, in the
last resort, be acceptable to Hong Kong.