TNAG-0385-FCO40-431-Trade-relations-between-Hong-Kong-and-the-EEC-1974 — Page 57

of Hong Kong's textile and clothing exports to Europe must be in the markets now closed to them by unjustifiable restrictions. The Gur issue is or for less importance to U industry interests; indeed, we gain some marginal protection from the exclusion that is causing so much bitterness. Hong Kong is therefore right to fear that our mixed motives may affect the vigour with which we do settle on their behalf for Gm;nd i'r Corn is likely to Want to keep up the pressure. ..t present there is nothing wo can a.. to ...r Javies' stutcment.

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IS

The

New Hong Long/.../0 textile agreement

Negotiation of this agreement will/complex and difficult. U.. role will be especially awkward. The five items mentioned on the agenda under this hooding may have been included to give warning that Hong kong intends to use every available bargaining weapon (including (DF) in order to get the best possible deal. Iir Jordan is well awire, owever, that the cannot and does not negoti be in the some flexible way so the UK has done in the past, and other textile importing countries still do. ile and his colicegues will therefore atuemp to do the detailed ne,otintion through pressure on the U to influence the mandate given to the Commission. When are limita to the extent that we can agree to be used in this way, although we will push hard for the bro.d objective that is in our interest ag voll ng Hong Long's, manoly the progressive c,ening of those markets within the Community that are now virtually closed to low-cost imports from Asia.

The present meeting is not a suitable occasion for discussion of detailed negotiating tactics and possible provisions of a now Hong Kong/ textile agreement, especially as the international enabling instrument under which it must be framed is still in the melting-pot.

@

GOZ

Under the present Commission proposals, provisionally accepted by the UK, we can expect to grant duty free entry to part of our textile laports from certain producing countries who compete with Hong Kong, notably india, Pakistan, South Korea, Thailand and Yugoslavia, but not faiva.. il these inports will be limited by quotu restrictions, and we estia te thit between 8 and 15 per cent of our imports will be eligible for preferance. Hong Kong can expect to export to the Un in 1974 sode 270-300 million square yards of restricted cotton and polyester cotton to.tiles, and perhaps another 150 million square yards of non-restricted textiles. Pat South Korea and Yugoslavia, the two countries whose competition in the UK market Long kong claims to fear most, will love quotas of "bout 15 and 5 million square yards respectively, and can expect total trade including non-restricted products of less than 25 and 10 million square yards. even if the whole of this trade vere to be eligible for preferences, which it cannot be because of the butoire,

ceilings and other restrictive arrangements in the HBO's Gar, it still represents only the mout marginal competitive edyo over Hong Kong,