TNAG-0046-FCO40-82-Britain-s-entry-into-EEC-effect-on-trade-with-Hong-Kong-1967 — Page 86

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G.F. 323

CONFIDENTIAL

Garments and Textiles of Cotton

Enclosure 3

General Note

The U.K. Commonwealth preference tariffs on textile items are usually 5/6 of the general rate when the items concerned contain more than five per cent by value of silk or man-made fibres. As Hong Kong trade statistics classify as cotton all textiles containing 50% or more by weight of cotton, it is not possible for the Department to assess the value of the trade attracting the

Nevertheless, zero preference rate applicable to 95% cotton items.

for the sake of simplicity, only the latter rate has been used for this exercise.

Cotton varn, carded, plied, not ornamented, grey, over 15s. but not over 40s. count (651 320; 651 321: 651 322)

This item was not separately classified in Hong Kong trade statistics in 1961.

In 1966, the principal markets were

Value

Tariff

U.K.

$16.4 million

nil

U.S.A.

$2.1 million

12.6%

18% a.v.

S. Vietnam

$1.9 million

Singapore

$1.5 million

unknown

nil

Malaya

$1.5 million

nil

adj

15% a.v.

Indonesia

$800 thousand

unknown

out of total exports valued at $25.8 million. No exports to E.E.C. Member States were recorded, although yarn is not subject to restrictions there.

This item is heavily dependent on the U.K. market. Exporta of all cotton yarn to the U.S.A., the second largest market, are currently subject to a quota of 1.7 million lbs. for the year 1967/68 compared with the U.K. quota of 5.8 million lbs. for 1967 for folded yarn only. Exports to South-east Asian markets are unlikely to make much headway in the face of increasing protectionism and competition from domestic industry. Although the C.E.T. on this item (8% a.v.) is low (and subject to slight reduction in the Kennedy Round), its adoption by the U.K. could have adverse effects on Hong Kong's performance. The creation of reverse preferences favouring E.E.C. suppliers could depress yarn prices in the U.K. market which is in the industry's opinion only marginally profitable for Hong Kong exporters.

Sheeting, cotton, grey (652 131)

In 1961, the principal markets for this item were

CONFIDENTIAL