TNAG-0046-FCO40-82-Britain-s-entry-into-EEC-effect-on-trade-with-Hong-Kong-1967 — Page 219

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external tariff were imposed on her exports.

15.

Sir A. Snelling interjected that, if the E.E.C. countries

were to accept the idea of a twelve months' standstill before

any tariff alterations were made, assuming a successful outcome

of the negotiations, it was probable that the present agreement

with Hong Kong would expire before the c.e.t. could be applied.

In that case the whole question of UK-Hong Kong trade in cotton

textiles would be re-opened anyhow.

16. Mr. Haddon-Cave submitted that, in the light of paragraph

XIV of the 1963/65 Agreement, it could be argued that the

present quotas should lapse if a tariff were imposed on Hong

Kong's trade. Although the effect of the c.e.t. imposition on

the present pattern of trade could not be forecast, it would

The exert a depressant effect on wages and profit margins.

UK Delegation was formally asked to note that the application

of the c.e.t. would fundamentally change the situation in which

the present restraint agreement had been negotiated.

17. It was pointed out by the UK Delegation that pressure from

UK industry for the re-negotiation of quotas with Hong Kong

after entry into E.E.C. had so far been resisted by the Board

of Trade. It was idle to speculate whether new quotas would be

devised if tariffs were imposed. The inter-industry agreement

had been replaced by an inter-Governmental one because by 1965

pressure from imports on the UK market had become so intense

and diverse that only a multilateral system of restraint was

feasible. This was only negotiable by the Government and it was

thought logical to bring Hong Kong within this scheme. Prior

to 1965, however, the UK Government had preferred industries of

different countries to conclude agreements amongst themselves,

because it had not wished to encourage the growth of world wide

trade restrictions on cotton textiles.

18. It was the UK's belief that the imposition of the c.e.t.

might not reduce the aggregate level of exports from Hong Kong

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