TNAG-0250-FCO40-286-Discussions-on-EEC-negotiations-between-officials-of-Hong-Ko-1970 — Page 110

CONFIDENTIAL

Hong Kong Exports

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. The other main items exported by

Hong Kong are electrical goods 10%, plastic toys 7%, wigs 6%,

transistor radios 4% and artificial flowers 3.

Cotton Textiles

2. 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 agreemen's 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. These 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

in the United Kingdom market and since then imports from all

other developing countries have been brought under control.

Besides Hong Kong, India has a bilateral quota and there is

also a global quota for all other developing (i.e. low cost)

producers (apart from Portugal); there are no quantitative

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CONFIDENTIAL