TNAG-0046-FCO40-82-Britain-s-entry-into-EEC-effect-on-trade-with-Hong-Kong-1967 — Page 16

CONFIDENTIAL

U.K. annual quota for Hong Kong is at present set at 187.3 in. square yards of cotton piece goods and made-ups and 6.3 m. lbs. of yarn.

Cotton textiles from Hong Kong enter Britain duty-free, and enjoy a Commonwealth preference which is in many cases considerable (on cotton yarn - 1.e. yarn including less than 5 per cent man-made fibre 71⁄2 per cent; and on cloth

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171 per cent. The c.e.t. in such cases is a little less.)

19. The main points on cotton textiles made in the first round of consultations were as follows:

(a) Hong Kong wishes to see her present access rights to the

markets of the U.K. and the Six unimpaired by British entry into the Community.

(b) Hong Kong officials said that, while the application of the common external tariff to her exports to the U.K. might not in itself affect the level of trade, it would be likely to depress wages and/or profit margins. We agreed that the level of exports was not likely to be affected: but suggested that the pattern of trade might. Hong Kong would probably upgrade the qualities of her exports, and specialise in items where she had a competitive advantage. We also suggested that Hong Kong officials should prepare a note in advance of the next round of consultations, showing how they think that the common external tariff will in fact bear on different categories of textile

exports to the U.K.

(c) Hong Kong officials suggested that the Six were unlikely

to consider isolation of the U.K. market for textiles.

As the present policies of the Six were far more restrictive than those of Britain, they thought that we were likely to come under pressure to reduce our imports from Hong Kong; Germany was already yielding

CONFIDENTIAL

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