TNAG-0627-FCO40-775-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1977 — Page 232

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Agenda Item 2

The MFA

especially the TSB

1. Renewal of the MFA

The MFA expires in December 1977. The GATT Textiles Committee met in December 1976 to make a review of the MFA and to consider whether it should be extended, modified or discontinued. The EEC as signatory to the MFA is seeking the renewal of the MFA subject to modifications designed to cope with the problems of cumulative disruption especially during periods of recession.

The textile and clothing industries in the UK (and elsewhere in Europe) are pressing the view that the recession has revealed serious flaws in the MFA and that nothing less than a full-scale renegotiation is necessary given the wide product range that has become subject to high import penetration over the past few years. In particular, the industries are worried by the continuing build up of imports from many sources ("cumulative disruption") for which the MFA does not provide a satisfactory safeguard.

Hong Kong's interest lies in the renewal of the MFA in order to preserve its large access to the markets of the developed countries (esp. USA and EEC) and to defend its position against new and cheaper suppliers. Because the Hong Kong textiles industry is now so large and efficient that it can no longer be termed "developing" it occupies an equivocal position in the world of the less developed countries, which may be said to be "developing" in textile terms. Hong Kong has a voice in the deliberations of the TSB.

Line to take

MPA Renewal

The Community view (expressed firmly at the December 1976 meeting of the GATT Textiles Committee) is that the MFA has not prevented market disruption. We are therefore seeking changes in the MFA designed to give greater protection. (The Canadian GATT Article XIX action on clothing is relevant to the consideration of the changes in the MFA that we see as necessary.

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