TNAG-0333-FCO40-369-Visits-of-Secretary-of-State-for-Foreign-and-Commonwealth-Af-1972 — Page 33

CONFIDENTIAL

EEC

The EEC also has quotas on Hong Kong cotton textiles.

We are discussing with the Commission how to assimilate our

system with theirs. We expect that in 1973 the pattern and

level of cotton textile quotas will be much the same as this

year.

We

We are also discussing with our partners the question

of long-term textile policy in the enlarged Community.

recognise fully the importance of establishing as far as

possible equal competitive conditions for textile producers

throughout the Community.

COTTON YARN

Cotton yarn is a special problem because it is the only

significant textile product which the Six have liberalised

and we have not. Hong Kong has agreed that her exports of

cotton yarn to us should continue to be subject to quota in

1973.

STERLING

The floating of sterling created special problems for

Hong Kong.

Nearly all Hong Kong's external reserves are held in

sterling, and their value in relation to other currencies

has declined with the fall in sterling's value after the

float (by 7 per cent or so on a total of over £800 million).

Following the earlier loss in November 1967, when sterling

/was

CONFIDENTIAL