TNAG-0625-FCO40-773-Trade-missions-to-UK-from-Hong-Kong-1977 — Page 17

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CONFIDENTIAL

UK/HONG KONG TRADE

1. UK trade with Hong Kong is substantially in deficit and this trend has increased rapidly over recent years. The figures are as follows:

1970

1975

1976

£ million

UK imports (cif) 128 UK exports

307

439

100

157

204

UK Exports to Hong Kong

2. The UK's share of Hong Kong's market has declined from 11% ten years ago to under 5% in 1976. We and the Governor of Hong Kong have been concerned for some time about this state of affairs and when the Permanent Secretary at the DOT visited Hong Kong in October 1976 it was agreed that a study group should be established in Hong Kong to consider the reasons for the UK's poor export performance and to look into areas where this might be improved. As a result, arrange- ments have been made to send three buying missions to the UK this year. (The first two are the delegation of ship owners and a group from the Hong Kong General Chamber of Commerce, both of which are in this country at the present time.) The Hong Kong Government and, it now seems, the Hong Kong business establishment, are alive to the need to ensure that the UK's political links with Hong Kong are backed by strong commercial links. It is in Hong Kong's own interest that there should be an increase in the UK's exports to Hong Kong since this would make it marginally less difficult for HMG to withstand domestic pressures for fresh restrictions on Hong Kong's imports into the UK.

Hong Kong's Exports to the UK

3. The UK is now Hong Kong's third largest export market, having taken 10% of her total exports in 1976. Hong Kong's exports of textiles and clothing to the UK account for nearly 70% of her sales in this country. The vast majority of Hong Kong's textiles and clothing exports are now restricted by the 1975 EEC/Hong Kong textiles agreement, concluded under the GATT Multi-Fibre Arrangement (MFA). The MFA is due for renegotiation this year. Hong Kong would like to see the MFA renewed in its present form but the Community wants a renegotiation of the MFA in view of the severe difficulties currently facing the British and other European textile industries. The Community has, however, still to agree its negotiating position.

CONFIDENTIAL