TNAG-0345-FCO40-381-UK-and-Hong-Kong-talks-on-cotton-textiles-1972 — Page 178

a)

Modifications in the present UK/Hong Kong quota arrangement, that is to say:

(1) a once-for-all transfer of yardage from Groups II, III and V to Group IV (partly to recognise the changing pattern of the trade, and partly as compsensation for the reduced competitiveness of fabrics);

(ii) modernisation of the categorisation of the trade covered

by Group IV, perhaps in line with the categorisation in the Hong Kong/EEC bilateral agreement on cotton textiles.

b)

Compensation for hardship cases in the form of uncategorised yardage to accommodate:

(i) orders booked by non-quota holders;

(ii) orders booked by quota holders in excess of quota rights.

c) An "upswing" facility and swing between specific categories in Group IV (to provide an opportunity of trading-up in order to offset the reduced competitiveness of fabrics).

You also asked for some undertaking that Hong Kong would not suffer further as a result of duty-free competition from EFTA countries. "I agreed that the next round of talks should consider all the foregoing in more detail, whilst making it clear that all these requests would raise very great difficulties for us, and that in the present situation I could not undertake that we would be able to accede to any of them.

"When discussing the ground to be covered at the talks in January, you argued that the new Commonwealth tariff should be decalaged because commercial decisions had been entered into on the basis that there would be a tariff but no quotas. I explained that there were both policy and legislative reasons why we could not entertain this, just as we could not contemplate deferring the introduction of the tariff, the point here being that our industry had based its investment and other commercial decisions on the assumption that tariff protection would be available from 1 January 1972."

3 It was then decided that a short Press Notice should be issued, agein worded in neutral terms; subject to Ministers' approval this could be issued Wednesday, 8 December to reach Hong Kong newspapers by Thursday.

DRAFT PRESS NOTICE

"A delegation of Hong Kong officials held discussions on 6 and 7 December with Mr Anthony Royle, Parliamentary Under Secretary of State at the Foreign and Commonwealth Office, and Mr Anthony Grant, Parliamentary Under Secretary of State for Trade, and FCO and DTI officials about the British Government's decision to retain the existing systems of quantitative restriction on imports of cotton yarn and woven cotton textiles from Hong Kong and other currently restricted countries. The Hong Kong officials visited London at the invitation of HMG. As a result of thi visit, the British and Hong Kong Governments have agreed to furthor talks beginning on 10 January 1972 in order to examine in more detail the implications of the decision for Hong Kong's Trade in cotton textiles with the

UK."

4

The meeting ended at 7.45 p.m.

Miss V M WALTERS

CT Division

December 1971

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