HK units.
CONFIDENTIAL
11. It is difficult to know how much weight to attach to the
statement that fabrics were not a problem; but it is unlikely
to have been made without some basis and is therefore of
interest both in the context of a possible Article 4 agreement
with the existing Community and negotiation of British entry.
12. On the specific subject of limits in the context of a
possible Hong Kong/EEC Article 4 agreement, Ernst referred
several times to the "exceptional" figures for Hong Kong in
1969 and the impossibility of conceding growth without taking
as a base the average of the previous three years. We
rejected this concept flatly, pointing out that 1969 could
scarcely be considered exceptional when about 80% of Hong Kong's
cotton textiles exports to the EEC had been subject to restraint
at limits set for the most part in 1966; and that in any case
it was 1967 which was an exceptional year because of the poor
market conditions which had then prevailed in Germany. Ernst
clung to the view that 1969 growth had been at an alarming rate
until it transpired he had been working on nine month import
figures projected to the full year, which gave a growth rate
of about 28% over 1968. We were able to produce full year
export figures which showed that in fact the growth rate had
been somewhere between 5 and 6%. Annual Hong Kong export
licensing figures, converted to metric tons on the basis of
9,000 sq. yards to the ton, were as follows:
The EEF
1967
10,690
1968
11,313
1969
11,956
EEC import figures were higher in total but since they were
based on actual tonnages, and since the proportional differences
1967 to 1968 to Jan.-Sept. 1969 were roughly comparable, the
difference appeared attributable to the use of conversion
factors, perhaps compounded in the case of garments by the
additional conversion of dozens to square yards.
CONFIDENTI'L
/13.
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