TNAG-0332-FCO40-368-Visits-of-Secretary-of-State-for-Foreign-and-Commonwealth-Af-1972 — Page 40

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into mmf textiles, but already faced restrictions (actual

in the United States, possible in the UK and EEC).

6. Mr Haddon-Cave emphasised the importance of textiles to Hong Kong. They formed 44% of exports and generated perhaps 20% of its national income. Hong Kong's greatest worry was the imposition of comprehensive restraints on an ad hoc basis, following the American precedent, and Mr Haddon-Cave hoped that any calls for restraints by the UK would be on a product by product basis only (in accordance with the GATT injury concept). Hong Kong was unclear about UK or EEC intentions though there was some indication the EEC intended to operate restraints on a selective basis. The approach favoured by Hong Kong was that the GATT Cotton Textile Arrangement should be extended to cover all textiles so that multilaterally agreed rules would be applicable. These were preferable to bilateral agreements. Whitehall had not agreed with our view at one stage but now appeared to be waiting to see what was going to come out of the forth-coming meeting of the Cotton Textiles Committee.

7. Sir Alec Douglas-Home asked what proportion of the Hong Kong labour force was affected by the textile industry, and also what effect Hong Kong was likely to have on Lancashire. Mr Haddon-Cave said that about half Hong Kong's labour force was engaged in the textile industry. As far as Lancashire is concerned, they were in fact a very important supplier of semi-finished goods (grey piecegoods) to Lancashire manufacturers.

8.

Sir Alec Douglas-Home asked when Mr John Davies was coming to Hong Kong. Sir Stanley Tomlinson said that Mr Davies would be going to Japan at Whitsun, but it was not known whether he would be coming to Hong Kong.

9. Mr Haddon-Cave then referred to the question of alignment of the UK's import policy for cotton textiles with the EEC's. Hong Kong's concern was that there should be no cutback and that the new categorisation arrangements should be negotiated as soon as possible. He believed the UK would be discussing post-1972 arrangements with the Commission soon.

10.

Sir Murray Maclehose emphasised the urgency and magnitude of this problem and said that the UK/Hong Kong cotton arrangements must be aligned with Hong Kong/EEC arrangements before the end of the year, and might have to be extended to cover mmf as well. Early action was necessary. This was one of the reasons Hong Kong wanted the comparatively small matter of the quota extension negotiations out of the way as soon as possible. Mr Haddon- Cave said that Hong Kong needed to know the post-1972 arrangements within two or three months. Hong Kong exporters must have as much warning as possible of the new arrangements to minimize disruption. Sir Alec Douglas- Home then said that firstly, a telegram be sent to try to clear up the problem outlined in paras 1-4 above, and secondly the DTI be asked to arrange meetings as soon as possible on the alignment question.

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