TNAG-0613-FCO40-761-Visits-of-Governor-of-Hong-Kong-to-UK-1977 — Page 86

CONFIDENTIAL

BRIEF E

W65

PROBLEMS IN ANGLO/HONG KONG RELATIONS

(a) Conflicts of Interest

Hong Kong is unique among our remaining dependent territories in having developed into a significant economic, and in particular international trading, power in its own right. Inevitably this means there are times when Hong Kong's and Britain's interests are in conflict. Two recent cases illustrate the problem that this can create for us in fulfilling our responsibility to safe- guard Hong Kong's interests:-

(i) The MFA Negotiations

The GATT Multi-Fibre Arrangement (MFA) which regulates international trade in textiles, expires at the end of 1977. So do the bilateral agreements which the EEC has concluded with its main textile suppliers under the MFA. One of the most important of these agreements is between the EEC and Hong Kong, and

for a NRW negotiations have therefore been going on

low cost

agreement,

These negotiations

have shown that there is a direct conflict between the interests of the UK textile industry (which require us to allow little or no increase in imports of certain very sensitive categories of textiles) and the interests of Hong Kong (who, while accepting the need for control, want to ensure that they at least maintain their exports at

levels, and preferably are able to plan a limited expansion). It has proved impossible to reconcile these interests. We have done our best to get improvements in the terms

with Little smecess offered to Hong Kong >

1976

but the Government acknowledge a strong responsibility to the UK textile industry (where 100,000 jobs have been lost in the last five years) and the room for concessions is very small; the problem is complicated by the fact that it is the EEC not the UK that is negotiating with Hong Kong. The Commission's negotiating mandate was agreed by UK Ministers, but we have no control over the rather robust negotiating techniques employed by the principal EEC negotiator Mr Tran Van Thinh. At the moment, the negotiations have reached an impasse, but we hope they will be resumed shortly.

/(ii)

CONFIDENTIAL