TNAG-0334-FCO40-370-Visits-of-Secretary-of-State-for-Foreign-and-Commonwealth-Af-1972 — Page 25

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mendments and modifications to our Cotton Textile Agreement with

Hong Kong. Although these modifications would not have given Hong Kong

a bigger quota in aggregate, they would have permitted greater

flexibility in transfer between categories. We also offered to

redefine garment quota headings to bring them more into line with Hong Kong's agreement with the EEC (again a method allowing greater flexibility to Hong Kong).

7. Mr Haddon-Cave agreed with these proposals but his trade advisers did not. The proposals are to be considered by the various Hong Kong bodies, including the Executive Council.

EEC

8. Hong Kong may argue that when we enter the Common Market they

should have a bigger textile quota. We expect the EEC Commission to

undertake during 1972 the task of renegotiating the quota levels set

in their present restraint agreements to take account of the fact that, after the accession of the candidate countries, the agreements will

apply to the whole of the enlarged Community. We shall be closely

involved in this and during the discussions we shall of course bear in

mind the views expressed by Hong Kong.

EFTA

9. We cannot give Hong Kong a formal undertaking that they will not

suffer further from duty-free EFTA competition, but we can assure

Hong Kong that we are watching the position very carefully, and that

we do not rule out the possibility of an approach to Portugal if her

cotton textile exports reach a level where they seriously undermine our

import controls.

It would be difficult to take restrictive action against an EFTA

partner.

However, Portugal has twice secretly agreed in the past to

restrict her exports of cotton textiles to the UK.7

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