TNAG-0279-FCO40-315-Visit-of-Secretary-of-State-for-Foreign-and-Commonwealth-Aff-1970 — Page 62

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up to 1 January, 1972 when the tariff replaces quantitative

restrictions. We can expect Hong Kong then to seek some

assurances about our use of such restrictions after that date.

Hong Kong and EEC

12.

Hong Kong is also concerned about the future of its trade

in textiles with EEC countries now that the community is in

process of formulating a common commercial policy. The fear is

that members of the Six who follow liberal trade policies (like

Germany) may be compelled to adjust their policies to meet the

restrictionist attitudes of cther members (e.g. France). The

Six, apart from France, do not impose restrictions on non-cotton

textiles and only if a major exporter to the United States were

to concede restraint in this field does it seem likely that the

position would change. On cotton textiles, the Commission

bases its current position on the expectation that the LTA will

be renewed and it is currently engaged in discussions with the

Hong Kong Government on this basis. The indications are that

each Member State will continue to operate individual quotaz

for cotton textiles, within au overall EEC ceiling, at least

until the end of 1972.

13. Hong Kong have much more reason to fear the effect on

their position of our entry into the Common Market. The EEC

would almost certainly be unwilling to allow Britain to import

unlimited quantities of low-cost cloth for processing and free

circulation within the enlarged Community.

Hong Kong therefore

/foresees

CONFIDENTIAL