TNAG-0329-FCO40-365-Briefs-for-UK-officials--visits-to-Hong-Kong-1972 — Page 8

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is better; but so are those from developed countries such as

West Germany and the United States. The restrictions would

therefore be aimed almost entirely at Hong Kong. The DTI are

seeking agreement of their ministers in principle to the

imposition of restraints on such imports from Hong Kong. We

have emphasised to them the importance of taking the Government

of Hong Kong fully into our confidence and not presenting them

with a cut-and-dried decision.

EEC Textile Policy

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3. The DTI have prepared a draft memorandum for submission

to the Commission about the philosophy which should underlie

the enlarged Community's textile policy. It'is a liberal

document and has general FCO support; it is much more liberal

than proposals submitted by the British Textile Employers'

Association. It proposes a new Long-Term Agreement. In cases where restrictions on textile items are to be phased out by

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the end of a transitional period, it suggests that import

quotas should gradually be levelled up. In other cases, where

restrictions are not to be phased out in short-term, a more

complex but still liberal formula would apply. The Commission

have been proposing to submit to the Council on 1 May an outline proposal for comprehensive restraint agreements on non-cotton textiles with Hong Kong, and also with Japan, Korea and Taiwan,

presumably on the lines of the agreements which the USA forced

on these countries last autumn. The DTI memorandum is intended

to pre-empt this proposal.

GATT Aspects

4. An important problem for Hong Kong will be their GATT

relationship with the Community when we become members. Because

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/of their

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of their constitutional position, it is difficult to see how

they could have a GATT relationship with the United Kingdom.

Nevertheless, they will need to maintain such a relationship

with the enlarged Community, since they will wish to ensure

that the Community abide by the trading rules which the GATT

enshrines.

Hong Kong Department April 1972

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