1
justifies it,
In actual fact the position of Hong Kong in the UK market has levelled off in recent years in several knitwear products due to a large extent to competition from Taiwan and Korea. By introducing restraints on Hong Kong, Taiwan and Korea, Hong Kong's position in the UK market may in practice be improved and the application of the burden-sharing formula ought to give increased opportunities for Hong Kong's knitwear exports to the rest of the Community.
9.
Nevertheless, restraints on knitwear products into the UK may well be opposed by the Hong Kong Government and the powerful textiles lobby in Hong Kong. They will see them as a further example of restrictions on their products in the UK market. They may also complain that such restraints would breach the MFA principles of justification (though they have weakened their own case on this by accepting very broad coverage in the parallel agreement with the United States). It is therefore highly desirable to give the Hong Kong Government early notice of what we intend to do and why. This seems the best way to try to defuse a potential conflict with Hong Kong over this issue. RECOMMENDATION
10. I recommend that Mr Hattersley writes to Mr Benn on the lines of the attached draft. Lord Goronwy-Roberts has asked to be consulted about this matter in view of the Hong Kong interest and I am submitting this through his Private Secretary. The attached draft has been cleared with Trade Relations and Exports Department and Hong Kong and Indian Ocean Department.
11.
This question is being discussed further within the Community on Tuesday, 7 January. In order not further to hold up progress on the drawing up of a mandate for the negotiations with Hong Kong and Korea it is very desirable that our representatives at that meeting should be
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