continental markets, particularly France and Italy. Under the MFA, Hong Kong's growth rate on restricted items to the Community as a whole will be better than 6%, the bulk of which will go to the continental countries.
11.
This will be an important agreement for Hong Kong, both because it should ensure a satisfactory growth rate for their textile exports and because it will begin to open up new continental markets to them. It has largely been made possible by the "burden-sharing" agreement; but we still have to ensure that it is not watered down in the negotiating mandate. The French, for example, are trying to insist on a less than 6% growth rate for Hong Kong, at least on some items.
This may possibly need Ministerial intervention in which we should be on strong ground in seeking to protect Hong Kong.
PROPOSED RESTRAINTS ON KNITWEAR
12.
Apart from growth rates, the main problem in negotiations under the MFA is coverage. The UK are committed to liberalisation. This is also in Hong Kong's interest. Unless it can be shown for example that imports of a particular item from a low cost supplier are threatening or causing substantial disruption of the importing country's market, then restrictions are not justifiable under the MFA. Imports of knitwear have previously been restrained in the rest of the Common Market, but not in Britain. Last year we agreed that there was no case for knitwear restrictions in the UK and the Department of Industry admit that the case is still only marginal. Nevertheless the DOI want the UK to fall into line with the rest of the Community (which would also be welcome to the knitwear industry in the UK) since to opt out of Community-wide restrictions might jeopardise the "burden-sharing" scheme. The DOT strongly disagree. The two Departments' Ministers have been unable to reconcile their differences.
13.
Within the FCO there is some divergence at official level. The geographical departments, and particularly HKIOD, stress that our Commonwealth suppliers would have a legitimate cause for
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