TNAG-0337-FCO40-373-Visit-of-the-Chancellor-of-the-Duchy-of-Lancaster--Sir-Geoff-1972 — Page 34

CONFIDENTIAL

45

VISIT OF THE CHANCELLOR OF THE DUCHY OF LANCASTER TO HONG KONG

September 1972

HONG KONG: POLYESTER COTTON TEXTILES

1.

In July the Prime Minister endorsed Ministers' view that

British industry had made a case for the temporary restraint

(until 1976) of imports of polyester cottons from low-cost Asian

sources. These came almost entirely from Hong Kong but clearly

any restraint would have to cover other exporters namely the

Republic of Korea and Taiwan (Japan is already restrained).

2.

A team from the DTI and FCO accordingly went to Hong Kong

and Seoul in August.

3. The case presented was based on the under-utilisation of

British industrial capacity in this new industry due to rapidly

increasing imports especially from low-cost sources with which

the UK industry could not compete. Despite considerable

concessions being offered in the hope of reaching a voluntary

agreement there were no corresponding moves from Hong Kong's original opening position. (South Korea was even less forth-

coming). It was agreed that the UK team would report back.

4. The present position is that Hong Kong (and South Korea)

will be invited to send a team to London to take up the

discussions where they were left off. It is to be hoped that

agreement can be reached which, whilst it affords the UK

industry the breathing space it requires, will at the same time

not inflict undue hardship on the Kong Kong textile industry.

Given understanding on both sides a compromise should be possible.

CONFIDENTIAL

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