TNAG-0333-FCO40-369-Visits-of-Secretary-of-State-for-Foreign-and-Commonwealth-Af-1972 — Page 32

BACKGROUND NOTE

CONFIDENTIAL

POLYESTER COTTON TEXTILES

In early October Hong Kong reluctantly agreed to a

voluntary restraint arrangement controlling the Colony's

export of polyester cotton textiles to the United Kingdom.

The agreement will run to the end of 1976 (subject to review)

and should provide the Hong Kong industry with adequate growth

prospects whilst at the same time giving the United Kingdom

industry the breathing space it requires.

Restraint became

In 1971

necessary owing to the rapidly increasing penetration of the

British market from Far Eastern sources, which is having a

serious effect on employment opportunities and on our industry's

ability to achieve viable levels of production.

developing countries supplied 47 per cent of our imports of polyester/cotton fabrics (Hong Kong alone supplied 42 per cent) and 85 per cent of our imports of polyester/cotton garments (nearly all these came from Hong Kong.) Hitherto Britain was

the only major developed country with no import restrictions

of any kind on non-cotton textiles (except from Japan).

Arrangements to restrain these imports from the Republic of

Korea and from Taiwan are in train.

COTTON TEXTILES

Imports of cotton textiles have been restrained for many

years. Hong Kong's quota amounts to about 45 per cent of our

total cotton textile quotas.

CONFIDENTIAL

/EEC