TNAG-0250-FCO40-286-Discussions-on-EEC-negotiations-between-officials-of-Hong-Ko-1970 — Page 20

CONFIDENTIAL

14.

B. U.K. Textile Policy

The Governor then raised the question of the application of the new tariff on imports of Commonwealth cotton textiles in the U.K. He said that, if implemented, this would face Hong Kong

with a tariff with no decalage as from the beginning of 1971. If the U.K. joined the EEC shortly afterwards, there would then be both tariffs and quotas. He proposed that the decision should be reconsidered and perhaps be put off until 1973 when it should be known whether the U.K. was definitely entering the EEC.

15.

Mr. Carey confirmed that the present Government had reaffirmed the previous Government's policy and had also accepted

the implementation date of 1st January, 1972.

16.

Sir J. Cowperthwaite said that, despite assurances to the contrary, there had been no chance of consultations before

the policy decisions had been made in 1969. But it had been agreed that Hong Kong's reactions should be made known to the U.K. in due course, quite apart from the complication of EEC enlargement which had since arisen. He said that Hong Kong had

always believed that ultimately-irrespective of EEC entry-

Lancashire would be protected by both a tariff and a quota system;

a quota system on top of the tariff was inevitable under the

C.C.P. should Britain join the Community. The point now was

that, in the context of the present negotiations for British

entry into the EC, a tariff would be inevitable anyway and a

decalage arrangement should apply to cotton textiles as to other

products. Notice of intention was not the equivalent of decalage because the process of adjustment would not begin until a tariff

was imposed. The need for decalage was emphasised by the concentration of the trade with the U.K. on particular firms

as a result of the special nature of the market, the origin requirements for Commonwealth Preference and the long period of quota control. All the adjustment would fall on this sector, which in all employed some 62,000 people, of which 138 firms employing 12,000 people sold 70% or more of their production in

the U.K. market.

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CONFIDENTIAL