XN000022-1980-01-07 — Page 2

MONDAY, JANUARY 7, 1980

1

HK/USA TEXTILE TALKS TO RESUME

****

MEMBERS OF THE TEXTILE ADVISORY BOARD WILL ACCOMPANY HONG KONG'S NEGOTIATORS TO WASHINGTON WHEN TALKS ON THE HK/USA TEXTILE AGREEMENT RESUME THERE ON JANUARY 9. THIS WAS DECIDED AT THIS (MONDAY) AFTERNOON'S MEETING OF THE BOARD.

THE DIRECTOR OF TRADE, INDUSTRY AND CUSTOMS, MR. WILLIAM DORWARD WILL CUT SHORT HIS CURRENT VISIT TO EUROPE AND JOIN THE BOARD IN HIS ROLE AS CHAIRMAN, HE WILL ALSO BE ON HAND TO GIVE ADVICE TO THE HONG KONG NEGOTIATING TEAM AND DIRECT ITS EFFORTS AS NECESSARY.

THE HONG KONG DELEGATION WILL, AS IN THE PREVIOUS DISCUSSIONS, BE LED BY THE DIRECTOR OF TRADE, MR. PETER TSAO.

+1 DO NOT WISH TO PREDICT THE OUTCOME OF THESE TALKS, BUT I HAVE TAKEN NOTE OF A NUMBER OF STATEMENTS ATTRIBUTED TO WASHINGTON SOURCES, SAID MR. TSAO.

+FIRST AND FOREMOST WE MUST REMEMBER WE HAVE A BILATERAL AGREEMENT WITH THE USA NEGOTIATED ONLY IN 1977 AND EFFECTIVE FROM THE BEGINNING OF 1978.

+WHEN THAT AGREEMENT WAS CONCLUDED, HONG KONG EXPRESSED CERTAIN RESERVATIONS ON IT, BECAUSE IT WAS THE MOST RESTRICTIVE AGREEMENT HONG KONG HAS EVER NEGOTIATED WITH THE USA AND OUR NEGOTIATING HISTORY GOES BACK TO THE EARLY 1960'S, HE SAID.

+ IN ONE CONCESSION WE MADE IN 1977 WE GAVE UP DURING THE FIVE-YEAR LIFETIME OF THIS AGREEMENT SOMETHING LIKE 300 MILLION SQUARE YARDS OF TRADE POTENTIAL. NEVERTHELESS, WE ACCEPTED IT BECAUSE WE FELT THAT, ON AN OVERALL BASIS, THE TERMS OF THE AGREEMENT REPRESENTED A BALANCED PACKAGE. THE DIFFICULTY THAT WE HAVE HAD IN TALKING TO THE USA THIS TIME IS THAT AN ATTEMPT IS BEING MADE TO UPSET THAT BALANCE,+ ADDED MR. TSAO.

MODIFICATIONS WERE BEING SOUGHT ON THE BASIS OF A POLITICAL COMMITMENT MADE BY THE USA ADMINISTRATION TO ITS TEXTILE INDUSTRY, AND NOT ON THE BASIS OF ECONOMIC RATIONALE, HE COMMENTED. NUMEROUS PRESS REPORTS AND ECONOMIC PUBLICATIONS HAVE REPORTED ON THE EXPANSION IN PRODUCTION AND EXPORTS OF USA TEXTILE PRODUCTS AND APPAREL.

MR. TSAO CONTENDED THAT NEVERTHELESS HONG KONG HAD A REPUTATION OF BEING CO-OPERATIVE AND PRAGMATIC IN ITS TRADE NEGOTIATIONS WITH OTHER COUNTRIES.

+THIS IS EVIDENCED BY THE HELP WE GAVE THE USA IN 1979, WHEN WE AGREED NOT TO USE THE CARRY-OVER AND CARRY-FORWARD PROVISIONS TO WHICH WE ARE ENTITLED UNDER THE AGREEMENT.

+WE ARE STILL WILLING TO HELP, PROVIDED THE REQUEST IS NOT EXCESSIVE, AND PROVIDED THAT IN MEETING THE USA DEMANDS WE WOULD NOT BE TRIGGERING A CHAIN REACTION FOR OTHER SIMILAR, OR WORSE, PROTECTIONIST DEMANDS FROM IMPORTING COUNTRIES, INCLUDING THE ÚSA ITSELF AFTER 1980, + HE COMMENTED.

MR. TSAO CONFIRMED THAT THE CURRENT DISCUSSIONS DO NOT AFFECT INDIVIDUAL COMPANY QUOTAS FOR 1980.

0

/2