er 1600
IMMEDIATE
Y CLAIR
FM HONG KONG 035803Z
UNCLASSIFIED
1 HKK 013/1
TO IMMEDIATE F.C.Q TELNO.994 OF 3 OCTOBER.
3 OCT 1977
No
M.I.P.T.
Tol
1QQ2
Ser
Loy
14.
FOLLOWING IS PASSAGE, BEGINS :-
·
TURNING NOW TO THE OUTLOOK FOR 1978, WE ALL HAVE VERY MUCH
IN OUR MINDS THE FORTHCOMING BILATERAL NEGOTIATION WITH THE E.E.C
ON TEXTILES. THE COMMUNITY SHOWS EVERY SIGN OF WISHING TO IMPOSE
ON US A MORE RESTRICTIVE REGIME THAN HITHERTO. THE PRINCIPAL
FEATURES WOULD BE A ROLL-BACK OF QUOTAS FOR 1978 TO THE 1976 LEVEL
OF IMPORTS: BUT FOR 8 SENSITIVE ITEMS, FOR SO-CALLED 'PRINCIPAL
SUPPLIERS' ONLY AND HONG KONG IS ONE OF THESE - THE QUOTAS WOULD
BE CUT BACK BELOW THE 1976 LEVEL OF TRADE. IT IS OF COURSE ALMOST UNPRECEDENTED TO DEMAND A ROLL-BACK OF QUOTA AT ALL, AND THIS DISCRIMINATION AGAINST HONG KONG AND THE OTHER PRINCIPAL SUPPLIERS
FOR THE 8 ITEMS WOULD BE AS DAMAGING AS THE PRECEDENT IS DANGEROUS,
SEVEN OF THESE ITEMS AFFECT HONG KONG AND ACCOUNT FOR 57 PERCENT
OF OUR TEXTILE EXPORTS TO THE E.E.C. WHILE THE EFFECT OF THE COMMUNITY'S IDEAS MIGHT NOT REDUCE OUR PRESENT LEVEL OF TEXTILE TRADE WITH THE E.E.C IN THESE ITEMS, WHICH IS DEPRESSED, THEY WOULD BLOCK THE POSSIBILITY OF RECOVERY OF OUR EXPORTS ONCE BUSINESS IN THE E.E.C PICKS UP AGAIN. IN OTHER WORDS THE PRACTICAL EFFECT FOR THESE ITEMS WOULD BE TO NAIL US DOWN TO SOMEWHERE NEAR THE PRESENT DEPRESSED LEVEL OF TRADE. THE LOSS OF TRADE BELOW
THE 1976 LEVEL ENVISAGED BY THE COMMISSION WOULD BE ABOUT DOLLARS 480 (480) MILLION, BUT THE LOSS IN TRADE POSSIBILITIES IN THE E.E.C COULD BE OVER DOLLARS 1,000 (1,000) MILLION.
15. WHILE I UNDERSTAND THE PRESSURE GENERATED BY A HIGH LEVEL OF IMPORTS, BY UNEMPLOYMENT AND POLITICS, UNDER WHICH THE E.E.C HAVE EVOLVED THESE IDEAS, THEIR APPLICATION TO HONG KONG IS AS
LACKING IN EQUITY AS IN LOGICAL STATISTICAL BASIS. HONG KONG HAS NOT BEEN THE CULPRIT, IF THAT IS THE RIGHT WORD, IN SURGE OF IMPORTS INTO EUROPE IN THE LAST TWO YEARS: THIS HAS COME FROM
/ OTHER COUNTRIES.
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