}
CONFIDENTIAL
THE EFFECT OF U.K. ENTRY INTO THE E.E.C. ON
6.
HONG KONG'S RIGHTS UNDER THE G.A.T.T.
Correspondence on this question has been initiated
separately with the Board of Trade and the Foreign Office (Mr.
Audland's letter to Mr. Muir of 8 August), and this section of
the brief will be drafted in the light of the views which
emerge. Departments have been asked to let us have their
comments by 20 August.7
COTTON TEXTILES
7. Cotton textiles are Hong Kong's biggest problem. Her
exports of cotton textiles to the U.K. alone were worth £41m.
in 1966 and constituted over 11% of her exports of all commod-
ities to all destinations. Her exports of cotton textiles to
the Six were worth a further £28m. of which four fifths went
• 9
to the Federal Republic of Germany.
International trade in
cotton textiles from less-developed countries has, since 1962,
been conducted within the framework of the G.A.T.T. Long Term
Arrangement, which was recently extended to run until 30
September 1970. At the time of the last negotiations, cotton
textile imports into the U.K. were limited by a system of
agreements with our traditional suppliers for the voluntary
restriction of their exports. In 1966, however, a quota system
was introduced. Today, both we and the Six, acting in accor-
dance with the guiding principles laid down in the Long Term
Arrangement, control imports by a system of quotas closely
related to past performance and with some provision for growth.
The U.K. annual quota for Hong Kong is at present set at 187.3m. square yards of cotton piece goods and made-ups and 6.3m.
lbs of yarn. Cotton textiles from Hong Kong enter Britain duty-
free, an
enjoy a Commonwealth preference which is in many cases
considerable; the common external tariff of the Community
ranges from 2% to 40%.
8. The main points on cotton textiles made in the "irst round
of consultations were as follows.
CONFIDENTIAL
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