TNAG-0629-FCO40-777-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1988 — Page 41

(especially 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

The

complained 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, in which I know that you are particularly interested. Governor also expressed his fear that the tough terms the Community proposes will cause the Americans to seek to

renegotiate their recently concluded bilateral textik

agreement with Hong Kong.

4.

I believe that the Governor may have overstated the likely effect on Hong Kong's economy of cuts of the order

suggested to him by the Commission. Such cuts should not, as the Governor suggest, really bring into question the implementation of Hong Kong's social reforms, to which I attach a great deal of importance. His fears about the repercussions

}

with the US are exaggerated because the US will recognise that any downward revision of their agreement with Hong Kong

could lead to a further downward revision of the EEC's

agreement and risk a serious spiral of further protectionism which the US, with the MTNs in mind, will be most concerned

to avoid. Nevertheless, we have a duty to protect the interests of Hong Kong, in view of its dependent status, and, where these conflict with British interests, at least to try

for reasonable treatment for Hong Kong.

5.

I recognise that it will be hard for us to press in the Community for better treatment to be granted to Hong Kong. There is little sympathy for her there and a general belief that she has done too well out of textile trade with the