TNAG-0629-FCO40-777-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1988 — Page 78

COREA MANNIAL

countries and between the Member States.

8.

I have ensured that the Department of Trade and the

Department of Industry are aware of the potential risk of conflict

with the Hong Kong Government.

10.

I recognise that the Hong Kong attitude towards the

Community is, in many ways, the key to the success of the current

Community approach. This approach involves the rapid negotiation

of a series of bilateral agreements with the Community's main textile

suppliers. Only after the results of these negotiations have been

evaluated will the Community decide whether or not to renew the MFA

before it expires at the end of this year. Ministers, again including

the Prime Minister, have firmly stated that the UK will only agree

to renewal of the MFA if the new bilaterals provide satisfactory

protection. If Hong Kong refused to negotiate or stalls for any

length of time, we run a severe risk of the approach breaking down.

Other suppliers will be unwilling to conclude until they see the

terms obtained by Hong Kong. It has been agreed within the

Community that it may have to take unilateral action in this case.

The Prime Minister has suggested that the UK might need to take

unilateral action. Both these courses would be undesirable from

the FCO point of view, the first because of its implications for

world trade, particularly the GATT MTNs, and the second for our

relations with our Community partners.

11.

I believe we should mention this risk to Mr Tran and the FCO

representative at the meeting with him on Friday will be instructed

to put the point in para 10 above to him.

îlnheel fishim

MRH Jenkins EID(E)

7 September 1977