TNAG-0301-FCO40-337-Effects-of-tariffs-on-imports-of-cotton-textiles-to-UK-from--1971 — Page 112

MC 13/393/2

SAVING DESPATCH

CONFIDENTIAL

RECEIVED IN

REGISTRY No.51

19 MAR 1971

HKK 6/548/3

19

From the Secretary of State for Foreign and Commonwealth Affairs.

To the Governor, Hong Kong.

Date

18

March 1971

No.

95

Saving

Your Saving Despatch No. 28 of 8 January 1971

Exports of cotton textiles to Britain:

Post-1971 Arrangements.

1. The meeting between your representatives and officials of the United Kingdom Department of Trade and Industry and Foreign and Commonwealth Office requested by you took place in London on

1 February 1971. It was agreed that the matters discussed at that meeting should be further considered by the UK Government before a reply was sent to your Saving Despatch No. 28. We are now in a position to reply to the points which you raised.

2. We are grateful for the summary in paragraphs 3 to 6 of your Saving Despatch of the findings of the Advisory Committee to the Hong Kong Textiles Advisory Board on the likely effects of the United Kingdom's new policy on imports of cotton textiles which is to be introduced on 1 January 1972. We note the Committee's references to the dependence of some sections of the Hong Kong textile industry on the British market and to their fears about the effect on their trade and profits of the new tariff on imports of cotton textiles into the UK from the Commonwealth Preference Area. We can appreciate this apprehension on behalf of the particular firms concerned. But from the viewpoint of the industry as a whole it perhaps ought to be balanced by a recognition of the opportunities that will exist in future for the industry to compete free of quantitative restrictions in the UK market. We had earlier understood that some sectors of the Hong Kong industry were looking forward to increased trade opportunities, particularly in the made- ups sector, following liberalisation. Our view has always been

that the new policy would lead to some changes in the pattern of our imports of cotton textiles in which Hong Kong could reasonably expect gains in some sectors to balance - and may be outweigh losses in others. For this reason we believe that calculations of future profitability based on present patterns of trade may be misleading.

1.

CONFIDENTIAL

M