TNAG-0388-FCO40-434-Exports-of-knitwear-from-Hong-Kong-to-the-UK-1973 — Page 28

CONFIDENTIAL

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1. Goochfellow

with Flag A

Mr Wilford

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HONG KONG: RESTRAINTS ON IMPORTS INTO THE UK OF KNITTED GOODS

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1. You will be aware from our Friday Notes that the request

by British Industry for restraints on knitwear imports is

still being considered by DTI. Although DTI officials did not

consider the case adequate, Mr Anthony Grant nevertheless,

after seeing representatives of the Industry, asked the

officials to provide a formula to reassure the industry and

encourage investment.

Flag B 2.

Having

C & T Division have now prepared a revised paper.

concluded once again that there is no case for restriction,

this nevertheless proposes (paras 7 and 8) that if total

imports of certain of the more sensitive items of knitted

outerwear exceed say 30% by value of the domestic market and

if it is demonstrated that there has been significant

disruption of the UK industry, we should (automatically) be

prepared to seek voluntary restraints on major suppliers.

This in effect means Hong Kong.

3. This proposal is better than agreement to negotiate

restraints now. But it is nevertheless a substantial hostage

to fortune, not only in relation to knitwear imports but as

a precedent for action on the whole range of Hong Kong exports.

Hong Kong would undoubtedly regard the proposal as the informal

equivalent of a 30% restriction trigger point and will make a

fuss. In the case of Polyester Cottons there was at least a

respectable case for restriction; this time there is none

which we could put to the Hong Kong Government.

CONFIDENTIAL

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