TNAG-0046-FCO40-82-Britain-s-entry-into-EEC-effect-on-trade-with-Hong-Kong-1967 — Page 218

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be, Hong Kong regarded the extent of the present free trade

sector as the total additional yardage which might be forth-

coming from the Six in the short term.

12. In reply to a question from Sir A. Snelling, Mr. Haddon

Cave said that, although Hong Kong would not expect to lose its

present 150m. yards worth of trade with the Six when the common

commercial policy was formulated, this yardage would neverthe-

less be subject to severe categorisation and other restraints

designed to reduce flexibility.

13. Hong Kong believed that it must be satisfied with its

present access rights to the Six. It would be ill-advised to

press for more than a freezing of present performance. What

safeguards did the territory then require from the U.K. if the

latter were to accede to the E.E.C.? The Hong Kong Delegation

wished to put several questions to the U.K. in order to learn

what the U.K. believed would be the effects of joining E.E.C.

on Hong Kong's export trade.

14. What was the status of the present U.K.-Hong Kong bilateral

agreement of restraint in cotton textiles?

Prima facie, this

was a relationship outside the aegis of the G.A.T.T. No

document had been exchanged; Heads of Agreement drawn up by

Hong Kong had merely been accepted by both sides. The present

inter-governmental understanding which would last until 1970

had supplanted the previous inter-industry agreement of 1963-

1965. This had possibly been concluded between the industries

of both countries because the U.K. felt unable to make a trade

agreement with a Dependent Territory. Nevertheless, in

paragraph XIV of this agreement, there was provision for Hong

Kong to withdraw its co-operation in observing quota limits in

the event of tariffs being imposed on her exports. No specific

reference was present in the current agreement on the action

which might be taken in similar circumstances. The Hong Kong

Delegation wished to know what the implications of the present

Heads of Agreement would be for Hong Kong, if the common

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