TNAG-0627-FCO40-775-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1977 — Page 137

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the UK was pressing its Community partners to draw up negotiating

directives which reflected as far as possible the improvements the UK

wanted.

9.

In the following paragraphs we will attempt to show that there is nothing wrong with the provisions of the MFA and that the

improvements hich the UK is now seeking either are unnecessary

or will introduce an inbalance into the MFA which would make them

unacceptable to the exporting developing countries.

The Deficiencies of the MFA as seen by the UK

"... The MFA does not provide adequate protection for our domestic

industry during a recession. The importing countries receive a

guaranteed annual mowth rate of 6 per cent in good times and bad.

This means that the brunt of the recession is borne by the domestic

producer."

10.

Quota levels are very often confused with actual import

levels. The fact that quotas are increased by a fixed percentage cach year does not necessarily mean that imports will continue to

grow in a market which is in a recession. In the USA, for example, imports of textiles and clothing dropped in quantity by 14% in 1975 from 1974 and by '13% in 1975 from 1974. And this happened in spite

of the fact that the bilateral agreements which the USA negotiated in 1974 with Hong Kong, Taiwan, S. Korea and Japan (which supplied the bulk of US imports) provided for overall growth of at least 6%.

In the case of Hong Kong, our agreement with the US provides for an overall annual growth rate of 6.25% but in the agreement year

1 October 1974 30 September 1975, our exports to the US dropped in quantity by 45 from 1973/74. This shows that in a declining market imports can decrease in line with consumption and so the

generalisation that the brunt of a recession is borne by the domestic

producer is not always valid. In the UK, total imports of textiles and clothing in 1975 increased in sterling value by 9 as compared with 1974 but prices also in sterling increased by 24% and the effective exchange rate depreciation was 10. So the sterling value increase maskз a decline in quantity (measured in tons) of 12%. So, in the UK too imports shared in the decline brought about by the recession. But even if importe had increased, this could not have

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