TNAG-0300-FCO40-336-Entitlement-of-Hong-Kong-to-generalized-tariffs-preferences--1971 — Page 25

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FRIDAY NOTES HONG KONG DEPARTMENT

HONG KONG'S OVERSEAS MARKETS

1.

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It looks as if we are entering a difficult period in our relations with Hong Kong. There are three ways in which the Colony's overseas trade may be curtailed, perhaps quite drastically.

2.

First, by the Americans.

The Executive Council have

advised that a further attempt be made to limit the period of the restraint agreement covering the export of textiles from Hong Kong to the USA which was recently initialled in Washington, We shall of course do what we can to help Hong Kong in their efforts to retain their market in the USA but it seems unlikely that the Hong Kong delegation will make much headway in Washington.

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Second, Hong Kong's trade with the EEC. There are reports that the French have suggested that at the first review of the EEC's GPS arrangements for Hong Kong the Colony should be excluded completely from the Community's scheme. Ministers have already accepted that our textile policy should be adapted to that of the EEC.

4.

Third, increasing pressure is being exerted on behalf of the textile interests in Lancashire. This may well lead to limitations being placed on Hong Kong's access to our market.

5.

The DTI are preparing a paper on our textile policy generally for submission to Ministers. The position is most complex. However Hong Kong is at the centre of the problem. It seems that the best way (and perhaps the only way) of avoiding trouble in the Colony quite apart from unpleasantness between Hong Kong and London is to push the idea of extending the scope of the LTA to include non cottons as well as cottons. It is by no means certain however that this idea will be accepted generally in Whitehall.

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5 November 1971

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Mr D A Scott

Mr Wilford

Mr Watt (A&IOD)

Mr Shaw (DTGD) Miss Emery (PDTD) Mr Posnett (WID)

EMaria.

E O Laird

Hong Kong Department

CONFIDENTIAL