TNAG-0241-FCO40-277-Agreements-under-GATT-long-term-arrangements-for-exporting-o-1970 — Page 23

CONFIDENTIAL

BACKGROUND

Textiles are Hong Kong's major industry, accounting in

1969 for 47% of all Hong Kong exports. The regulation of

international trade in textiles is a matter therefore of great

importance to Hong Kong and there may be reference in discussions

with the Governor, officials and unofficials to some of the

current difficulties in this field as set out below.

Cotton Textiles

2.

International trade in cotton goods is governed by a

multilateral agreement called the Long Term Arrangement on

Cotton Textiles (LTA) which was negotiated in 1962 within the

framework of the General Agreement on Tariffs and Trade (GATT).

The LTA permits exporting and importing countries to conclude

bilateral agreements in restraint of trade in cotton goods.

Hong Kong has such agreements with all the major importing

countries.

3.

The LTA expires at the end of this year and its renewal is

under discussion in the Cotton Textiles Committee of the GATT.

In view of our intention to move from quantitative restrictions

to tariffs on cotton (see paragraph 8 below) we should prefer to

see it not renewed. However, the majority at least of importing

countries, including the EEC countries and the United States,

are likely to think otherwise, and it is probable that the LTA

will continue for at least a further three years.

4. Hong Kong, while considering that its interests would be

best served by the removal of quantitative restrictions, thinks

CONFIDENTIAL

/that