TNAG-0629-FCO40-777-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1988 — Page 102

CONFIDENTIAL W

8

(Annex 3)

T

3.

3.1

Consequences for other bilateral agreements

A new

Mr. Tran's proposals also have implications

for Hong Kong's textiles and clothing exports to other markets. The most significant of these is the USA which

in 1976 accounted for HK$5,135 million or 30% of Hong

Kong's total exports of textiles and clothing. bilateral agreement under the MFA was recently concluded

extending the restraints for 5 years from 1st January

1978. This new agreement provides for no overall growth

in the first year, 1978, and an overall growth of 6%

per year from the second year onwards. It also contains flexibility provisions which are on overall terms more generous than the minimum provided for in the MFA.

3.2

These provisions could be placed in jeopardy

if Hong Kong were to conclude an agreement with the

EEC the terms of which were substantially worse than

those in the new US/HK agreement. The reason for this

is that, in a side letter (copy at Annex 3) to their

Agreement, the Americans noted they might seek consultations if they considered that measures entered

into by Hong Kong with a third country placed them in

an inequitable position.

3.3

In 1976, Hong Kong's exports of clothing

to Sweden were worth $548 million and to Norway

$218 million. The bulk of these exports are subject

to restraint in two bilateral agreements concluded

under the MFA, both of which expire at the end of 1977.

/Sweden