TNAG-0629-FCO40-777-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1988 — Page 13

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applied to the poorest developing producers (especially

1

India and Pakistan) and some room be left for newcomers

and small suppliers without risking overstepping the

global ceilings.

3.

Nevertheless, the Governor of Hong Kong has expressed

serious anxiety about the Commission proposals, asking us

to help Hong Kong secure better terms and implying that

there could be repercussions for the China Light and Power

deal. The Governor also fears that tough terms from the

Community will lead the Americans and possibly others like

Norway, Sweden and Canada to claim similar treatment.

this, the Governor has warned, could add up to an abrupt

shock to employment in Hong-Kong, the economy there,

confidence and attitudes to the UK - who, he says, would be

held responsible for the EEC's action.

All

4. I believe the Governor may have overrated the likely

effect on Hong Kong of cuts of the order suggested by the

1

Commission. These should not bring into question the

implementation of Hong Kong's social reforms, to which I

attach a great deal of importance. Also, his worries about

the US could well be exaggerated because the US would

doubtless recognise that any downward revision of their

agreement with Hong Kong could lead to a further downward

revision of the EEC's agreement and thus to a serious spiral

of further protectionism which the US, with the MTNS in mind

will be concerned to avoid.

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15.