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Foreign and Commonwealth Office
London SW1A 2AH
W J Hall Esq
ITP 3
Department of Trade & Industry
1 Victoria Street
LONDON SW1
HKK 040/245 February 1985
27 FEB 1985
10
Дели Гоши,
MULTI-FIBRE ARRANGEMENT-
1.
My letter of 20 February referred to the need to exercise care given the change in the political circumstances of Hong Kong It may be helpful if I expand the point, though without wishing to suggest any reformulation of the point as expressed in my earlier letter.
2.
Hong Kong's dependence on international trade and the importance to its economy of the textiles and clothing sectors will probably lead the Hong Kong Government to lobby strongly against renewal of the MFA restrictions at the end of 1986. Failing full liberalisation, they may be expected to press for reduction in restrictions and for an end to what they regard as a discriminatory system which in effect penalises Hong Kong and some others for their competitiveness and for eschewing protectionism. Moreover, Hong Kong would be bound to react badly to any further discrimination in favour of the poorest LDCS to their detriment (variant (c) in paragraph 20) and to a more restrictive regime for clothing (variant (a)): clothing and clothing accessories exports are worth much more to Hong Kong than textile exports (the clothing sector is the largest single sector within the Hong Kong, manufacturing industry, employing 33% of Hong Kong's industrial workforce).
3.
All this is only to be expected. There is, however, a new element. If the UK were to advocate (or perhaps only endorse) measures which further restrict Hong Kong exports, especially if these were to discriminate against Hong Kong in favour of other places of origin, we should be open to the charge (from Hong Kong itself or even possibly China) that we were going against the spirit of the recent agreement with China on Hong Kong's future. Under the agreement HMG and the Chinese Government agreed on the object of maintaining Hong Kong's stability and prosperity. Paragraph 4a of Annex II of the agreement (attached) dealing with the Sino-British Joint Liaison Group to be established later this year, specifically mentions the MFA as a subject for discussion. If the UK were to collaborate in, or fail to resist, new arrangements which caused Hong Kong's position in the MFA to deteriorate, we could expose ourselves to Chinese criticism in the JLG. More importantly, our hand would be weakened if we found
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