TNAG-0243-FCO40-279-Conduct-of-Hong-Kong-commercial-relations-1973 — Page 99

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Kingdom, for its part, is in any case aiming to replace quantitative

restrictions under the LTA from January 1972 by simple tariff controls

with no limits on volumes.

9. In recent months, the USA has intensified its pressure for a system

of comprehensive restraints on imports of non-cotton textiles, notably

from Japan, Hong Kong, Korea and Taiwan. There is no convincing evidence

that the American textiles industry as a whole is threatened with a

serious injury by the scale of imports, although producers of one or two types of garments may be experiencing difficulties.

Other Goods

10. To reduce Hong Kong's reliance on the main export item of textiles,

which has become increasingly subject to import restraints by developed

importing countries, efforts are being made to diversify manufacture and

a large increase has taken place in recent years in exports of radios, wigs, and other commodities. It is possible that importing countries,

especially America, may in due course take action to limit imports of

commodities other than textiles where injury to their domestic production

occurs. In such an event, Hong Kong would be compelled to negotiate

bilateral agreements to ensure that her share of the market was

maintained.

Argument

11.

The arrangements on cotton textiles referred to in paragraph 7 above are well understood in the GATT, and it is now proposed to give Hong Kong the same degree of independence of action on non-cotton textiles and other

goods as is given at present on cotton textiles and to do this by a

delegation of authority in the terms of the attached draft despatch.

Such a delegation is more immediately needed in the field of non-cotton

textiles. However, the Governor has suggested that it would be unfortunate if the implication arose that Hong Kong remained subject to

close direction by H.M.G. in all fields except textiles. For this reason as well as for the reasons mentioned in paragraph 10 it is

considered that the delegation of authority should be extended to

cover all commodities and that it should not be confined to textiles.

What we want to achieve is a situation in which (i) the

12.

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