TNAG-0370-FCO40-416-Visit-of-Edward-Heath--UK-Prime-Minister--to-Hong-Kong--12-1-1973 — Page 27

CONFIDENTIAL

Hong Kong Trade Advisory Group (an area advisory group of the British Overseas

Trade Board).

These were responsible for the staging in autumn 1972 of a

major British Industrial Exhibition in Hong Kong. A British Motor Show is to

be held there in February 1974. The number of sponsored missions has been

increased (15 outward missions so far this year); and during their visits to

this country, contact has been set up with senior Hong Kong officials and

businessmen who will influence the placing of major future contracts (eg for

the rehousing of 11⁄2 million people; for pollution control; for medical

supplies).

4 The improvement in the UK's export performance in 1973 does not however

compare with the sharp increase in UK imports from Hong Kong this year (up 39%).

Clothing accounts for half the increase; the trade in electrical appliances is

also growing fast. HMG has been under some pressure from the UK knitwear and

cutlery industries for protection against imports from Hong Kong; these

pressures have been resisted, as have moves in Brussels to set up comprehensive

EEC controls on Hong Kong garments of all fibres. In adopting this course, we

have taken into account not only the inadequacies of the cases made out for

protection, but also Hong Kong's interests.

5 The restrictions on Hong Kong textile exports to the UK are confined to

woven cotton (under restraint since 1959) and woven polyester/cotton (which has

the same end use as woven cotton, and has been under restraint since October

1972). Hong Kong's very large quotas permit her to supply nearly half the

UK's restricted cotton textile imports, and some 30% of total UK consumption

of polyester/cotton. As the enlarged EEC has to negotiate a textile agreement

with Hong Kong once the new GATT multi-fibre agreement has been concluded, the

UK has agreed with Hong Kong that the 1973 bilateral quotas should be increased

proportionately to cover the eighteen month period to June 1974, to avoid

disruption of trade while the negotiations are in progress.

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CONFIDENTIAL