TNAG-0440-FCO40-505-Visits-of-Hong-Kong-officials-to-UK-1974 — Page 27

CONFIDENTIAL

RESTRAINTS ON HONG KONG TRADE WITH THE EEC

1.

Prior to UK accession to the EEC, we, the Six and Denmark

all had voluntary restraint agreements on cotton textile imports

from Hong Kong. In addition, the UK and Germany have similar

restraints on polyester/cotton imports. UK quotas are larger than

those for all the rest of the EEC countries put together. Of the

latter, Germany takes by far the largest share. Following negotia-

tions between the major textile exporters and importers, a

Multi-Fibre Textile Arrangement (MTA) was agreed at the end of last

year under the auspices of the GATT.

2.

Under

Hong Kong has acceded to the MTA in her own right.

the terms of the Arrangement, Hong Kong has to present to the

Textiles Surveillance Body (TSB) (itself established by the MTA)

the text of the restraint agreements in force at the time of her

accession. This has given Hong Kong certain technical difficulties

largely because her agreements with the Six are mostly controlled by

confidential side-letters which the Six did not wish to be made

available to the TSB. The Hong Kong Government therefore proposed

that they should unilaterally present revised and updated voluntary

restraint agreements to the Six, Germany (in respect of polyester/

cottons), Denmark and ourselves. We are not yet sure of the

reactions of the other countries but in respect of ourselves, Hong

Kong has gone beyond her earlier proposals and presented a unilateral

declaration which Department of Industry officials find unacceptable.

Discussions are continuing between UK and Hong Kong officials to try

and find an acceptable compromise which DoI officials can present

to their Ministers.

To date, whilst taking a close interest in these

developments, the FCO has not been directly involved.

CONFIDENTIAL

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