TNAG-0304-FCO40-340-Effects-of-tariffs-on-imports-of-cotton-textiles-to-UK-from--1971 — Page 55

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The Financial Secretary responded by saying that it was of the greatest importance that the Hong Kong Government should be in a posi- tion to state publicly that an unequivocal understanding had been reached with HMG that there would shortly be consultations on how the effects on Hong Kong of this new policy could be ameliorated. In addition, it would be essen- tial to have established the specific areas to be explored. He elaborated on this by suggesting that Hong Kong should be compensated for the decision to continue with quotas in four ways, namely:

(a)

(b)

(c)

(d)

the tariff should only be imposed in stages;

improvements and modifications should be intro- duced in the present quota arrangement for Hong Kong;

compensation should be given for hardship cases in the form of uncategorised yardage; and

a greater degree of movement between groups (fabrics, garments, made-ups) and between specific categories should be permitted,

Furthermore, the Hong Kong Government would need some undertaking that Hong Kong would not suffer further as a result of duty free competition from EFTA countries, especially Portugal. The British officials expressed doubts that they would be able to meet Hong Kong on these points, but it was agreed that a considered response would be forthcoming from them at a further meeting arranged for the following day.

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The Financial Secretary then had a meeting with the Parlia- mentary Under Secretary of State for Foreign and Commonwealth Affairs (Mr Royle), who regretted that, despite its best efforts, the Foreign and Commonwealth Office had been unable to change the policy in a way favourable to Hong Kong. He assured the Financial Secretary that the Foreign and Com- monwealth Office would make every effort to secure some improvement in the quota arrangements.

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The Financial Secretary had a second meeting with the Foreign and Commonwealth Office and the Department of Trade and Industry officials on Tuesday morning, 7th December. This was mainly taken up with diffi- culties the Department of Trade and Industry officials foresaw in meeting Hong Kong's request for amelioration of the tariff and quota situation. The first difficulty was that it was impossible to delay the imposition of the tariff or to introduce it by stages because investment decisions by the British industry had been taken on the basis that there would be a tariff with effect from 1st January 1972. Also they claimed that there were enormous prac- tical and legislative difficulties involved in the recalculation, rewriting and reprinting of the tariff if changes were to be made, which would have to be put all over again to Parliament. The second difficulty was that any modi- fication of the existing quota arrangements which was agreed for Hong Kong would have to be extended to all other restricted suppliers which wished to have them.

CONFIDENTIAL