XN000022-1981-07-28 — Page 2

TUESDAY, JULY 28, 1981

EVERYONE NEEDS AN MFA ILI

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EVERYONE WANTS THE MULTI-FIBRE ARRANGEMENT (MFA) RENEWED BUT FOR A VARIETY OF DIFFERENT REASONS, SAID THE DIRECTOR OF TRADE INDUSTRY AND CUSTOMS, MR LAWRIE HILLS TODAY (JULY 28).

+AS FAR AS THE DEVELOPED IMPORTING COUNTRIES ARE CONCERNED OVER THE LAST 20 YEARS THEIR TEXTILE AND GARMENT INDUSTRIES HAVE ENJOYED SUCH AN UNPRECEDENTED AND PROTRACTED DEGREE OF PROTECTION THAT THEY HAVE TAKEN SUCH PROTECTION FOR GRANTED, AND CANNOT DO WITHOUT IT, HE TOLD MEMBERS OF THE HONG KONG CHINESE TEXTILE MILLS ASSOCIATION AT THEIR GOLDEN ANNIVERSARY DINNER,

*FOR THEM, THE MFA APPEARS TO OFFER A CONVENIENT SYSTEM WHEREBY THEY NEED ONLY NOMINATE A PARTICULAR PRODUCT FROM A PARTICULAR SOURCE FOR RESTRAINT. THEIR GOVERNMENTS ACQUIESCE AND THEY ACHIEVE RESTRAINT WITHOUT RISK OF RETALIATION.

THE UNITED STATES HAS A CONSTITUTIONAL REED FOR THE MFA, SAID MR MILLS.

+IF IT IS NOT RENEWED IN 1982, THIS WILL TRIGGER OFF A PROVISION IN THE US TRADE ACT OF 1979 REQUIRING THE UNITED STATES GOVERNMENT TO WITHDRAW ALL TARIFF CONCESSIONS MADE DURING THE TOKYO ROUND OF MULTILATERAL TRADE NEGOTIATIONS. THIS COULD GENERATE SERIOUS AND FAR-REACHING CONSEQUENCES FOR THE WORLD TRADING SYSTEM.+

MR MILLS SAID THAT HONG KONG WOULD ALSO WELCOME A SUCCESSOR TO THE PRESENT MFA.

+THIS IS DUE, IN PART, TO THE FACT THAT ALTHOUGH THE MFA IS USED SELECTIVELY, IT DOES PROVIDE FOR CERTAIN CHECKS - AGAINST ABUSE - AND BALANCES - OR COMPENSATORY ADVANTAGES THE EXPORTING COUNTRIES.

FOR

+NOT THE LEAST OF THESE IS THAT IT CONFERS AN ELEMENT OF CERTAINTY, IN THE FORM OF WELL-DEFINED ACCESS RIGHTS,+ STRESSED MR MILLS.

+THE AGREEMENTS WE HAVE NEGOTIATED UNDER IT HAVE ALSO PROVIDED SUBSTANTIAL COMMERCIAL ADVANTAGES, INCLUDING THE RIGHT TO EXPORT CONTROL. IN THE ABSENCE OF AN MFA, IT IS NOT UNLIKELY THAT THE EXPORT CONTROL REGIMES WE CURRENTLY MANAGE WOULD BE REPLACED BY IMPORT CONTROL REGIMES. IMPORT CONTROL WOULD HAVE THE EFFECT OF DEPRESSING THE FOREIGN EXCHANGE EARNINGS THAT ACCRUE TO HONG KONG.

+SO, IN A NUTSHELL, IT IS FAIR TO ASSUME THE DEVELOPED IMPORTING COUNTRIES AND THE DEVELOPING EXPORTING COUNTRIES BOTH WANT A SUCCESSOR TO THE MFA, ALBEIT FOR DIFFERENT REASONS. IT FOLLOWS FROM THIS THAT IT IS NOT SO MUCH WHETHER THERE WILL BE A NEW MFA, AS TO WHAT IT WILL LOOK LIKE, THAT IS IMPORTANT,+ HE SAID.

/MR MILLS