TNAG-0387-FCO40-433-Exports-of-non-cotton-textiles-from-Hong-Kong-to-the-EEC-1973 — Page 26

CONFIDENTIAL

Reference....

REC

PA

IN

1

(seperate copies)

Mr Gregory-Hooa SEAD

Mr Baker 3RD

MP Austin

REGISTRY N

- 7 ASC 1973

HK K6/6.

LAD

Mr Fairwouther

EID

LASI

:

95/6

as

POLYE. TER COTTON TEXTILES

1. 1 enclose a draft submission in which the DTI are proposing to negotiate restraints on imports of polyester cction textiles from Thailand, Macao and Colombia. Last year we negotilled a similar restraint arrangement with Hong Kong; and because South Korea (and Taiwan) would have replaced the Hong kong exports by their own, it aus Lecessary to negotiate restraints with them also. NOW chit these new importers are getting in on the act it will be similarly unthinkable that we should not restrain their cxports mile Long Kong remains under restraint.

2. Briefly, all imports of polyester cottons have been sub,cel to import licensing in order to keep an eye ou the quantities involved. Licences granted sofar are for Thailand 10.7 million square yards, Macao 1.15 million, ana Colombia 2.5 million. The DTI tell me what licence applications are pouring in by each post. Spain, which is mentioned in the report, will not be similarly restrained since it is a Meuiterranean Associate and must be treated separately.

3. As a matter of interest, Hong Kong money is undoubtedly behind the increased production in Thailand and Macao. In fact, most of the orders for Thai polyester cottons are being laced with agents in Hong Kong. This does not however affect the issue.

You will see that the TI are proposing voluntary restraint arrangements with the exporting countries concerned with the quota levels for 1974 held at either the 1973 performance level plus 5% or 2 million square yards, whichever is the lower. As an added inducement they are proposing to give Thailand and Colombia a minimum of 2 million square yards for their cotton textile quotu. This woulu, I imagine, satisiy Colombia although it will probably mean a net reduction for Thailand.

5. I have pointed out to the DTI that it is unrealistic to expect the countries concerned to be able to settle the arrangements "in a couple of weeks" from the initial

/approach

CONFIDENTIAL

Ti! 80736* f} £71GWBT-* Gp 863