NOTHING TO BE Written in THIS MARGIN
W(B)L 51-7406
CONFIDENTIAL
only over the conduct of bilateral negotiations
between Hong Kong and other countries but also
over major policy issues affecting international
trade; and we have been in the invidious
position of trying to influence Hong Kong to
proceed from time to time along lines which she
regarded as inimical to her own interests. This situation has contributed to a large extent to the unhappy state of relations between the United Kingdom and Hong Kong in recent years.
Recommendation
4. It is recommended that we should make a
general delegation of authority in the field of
Hong Kong's external commercial relations covering non-cotton textiles. A draft despatch
is attached.
Background
5. 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.
Cotton Textiles
6. Towards the end of the '50s imports of cotton textiles from Hong Kong (which enter the United Kingdom free of duty) began to cause
serious problems for our domestic industry.
To deal with the situation, inter-industry agreements were drawn up providing for the development of Hong Kong's trade with the United Kingdom in a reasonable and orderly manner, having regard to the need to avoid disruptive effects in the United Kingdom market
and on individual lines of production in both
the United Kingdom and Hong Kong. The se arrangements (the "Lancashire Agreement") were later embodied in an inter-governmental agreement known as the "Heads of Agreement". Thus, since 1959 imports from Hong Kong of woven cotton textiles (including cotton clothing) have been subject to quantitative
/restrictions
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