CONFIDENTIAL
negotiation.
Another important factor would be the terms to be
applied on Britain's imports of cotton textiles and these would
need to be worked out.
50
It must be recalled that since the last negotiations there have
been developments which may perhaps make it less difficult for Hong
Kong to accept these sort of terms. Hong Kong's overall exports
have continued to increase by 12 15 per cent a year and her
exports to Britain have been expanding less rapidly than in previous
years. As a consequence the proportion of her exports going to
Britain has been falling and is now about 17 - 18 per cent compared
with over 30 percent to the U.S.A. Her exports to the Six also
increased by about 2 times between 1962 and 1965, particularly to
Western Germany.
6. It could be argued that the real danger to Hong Kong's trade is
not so much the common external tariff as the possibility of the
development of a restrictive and protectionist common commercial
policy operating through quantitative restrictions. France is still
severely limiting her imports from Hong Kong but the Five have, so
far, been relatively liberal. No common commercial policy has yet
been developed but there are signs that a more restrictive mood is
coming over the Community in the face of Hong Kong competition.
This is revealed in the attitude they seem to be developing in talks
on the renewal of the GATT Long Term Cotton Textiles Arrangement in
Geneva. Germany has requested the Hong Kong Government to open
negotiations for a bilateral agreement to limit cotton textiles.
exports across the board and they are likely to press for a cutback
from present levels. Negotiations on this will open in Hong Kong
early next month.
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17.
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