TNAG-0301-FCO40-337-Effects-of-tariffs-on-imports-of-cotton-textiles-to-UK-from--1971 — Page 84

CONFIDENTIAL

Mr Hale (Commodities Dept)

COLTON TEXTILES

25

Mr. Laird Have I see

M. Ridley's mininte

TRANSITION FROM QUOTAS TO TARI FS

M

1.

We spoke on the telephone this morning about Mr Ridley's minute to Mr Carter of 23 April. I explained that I had discussed this with both Mr Heath and Mr Ridley last Friday evening and that Mr Ridley had agreed to hold up action until we had had a chance of looking at the implications of the Chancellor's decision at least so far as Hong Kong is concerned. He said that our point of contact in the DTI should be Mr McEnery.

2. I am of course concerned about this because of the unfortunate impact the decision is likely to have on the Unofficial Members of the Executive and Legislative Councils in Hong Kong. I mentioned to you on the telephone that we had for some weeks now been engaged in negotiations with Hong Kong over the size of the defence contribution for the next 5 years. These negotiations are not going well. We have been advised by the Governor that one of the main reasons for this is - "The resentment which has aecumulated over the last 15-20 years and more especially over the last 8 years or so, over actions by IMG of various kinds which have appeared locally to constitute a disregard for Hong Kong's needs, rights and vital intereste". The Governor has urged more than once that every- thing possible should be done by HMG to counteract this feeling.

3. As you know the original decision to replace the quotas by a tariff was taken nearly 2 years ago, and subsequently endorsed by the new Government last autumn. The Hong Kong Government have always maintained that they were given hardly any time in which to consider the implications of this major change in policy before the change itself was announced in Parliament. The Hong Kong Government feels strongly that, particularly if we are successful in our application to join the EEC, their exporters will before long find their market in the United Kingdom controlled both by a tariff and by quotas. The basic issue was raised at the talks we had with Hong Kong last October and it was then agreed that there should

The se be further talks devoted to this particular matter. further talks were held last February. During them, we made it clear to the Hong Kong side that we could see no possibility of HG altering the decision to introduce a tariff on imports of cotton woven textiles and garments and cotton yarns from the Commonwealth from 1 January 1972. At the same time we said that we would consider urgently and sympathetically ways of excluding from the tariff cotton textiles shipped against quotas in 1971 but arriving in Britain in 1972.

CONFIDENTIAL

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