TNAG-0630-FCO40-778-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1988 — Page 112

CONFIDENTIAL

LORD GORONWY-ROBERTS SAID THAT THE PROPOSED REDUCTIONS IN IMPORTS

OF THE 8 ITEMS VARIED WIDELY FROM SUPPLIER TO SUPPLIER. IN SOME

CASES HONG KONG WAS BEING ASKED TO MAKE A SUBSTANTIALLY GREATER

CUT THAN OTHER 'DOMINANT SUPPLIERS SUCH AS TAJWAN. IN OTHERS

CASES THE OPPOSITE WAS TRUE. HONG KONG MIGHT ASK THE COMMISSION

HOW THEY HAD CALCULATED THE REDUCTIONS. ON THE FACE OF IT,

A COUNTRY LIKE SOUTH KOREA WAS BETTER PLACED TO BEAR THE BRUNT OF

REDUCTIONS THAN HONG KONG, WHICH HAD NO NATURAL RESOURCES,

C

SIR M MACLEHOSE SAID THAT HE WAS PUZZLED BY THE FIGURE OF ONLY 0.8%

AS THE LIKLEY REDUCTION IN GDP, MR JUDD SUGGESTED THAT OFFICIALS

OF BOTH SIDES MIGHT GET ROUND A TABLE AFTERWARDS TO SORT THIS OUT.

THERE SEEMED TO BE DISCREPANCE IS BETWEEN OUR CALCULATIONS AND

THOSE OF THE HONG KONG AUTHORITIES. HE ASSURED THE GOVERNOR

THAT THE UK WOULD DO WHAT IT REASONABLY COULD TO HELP HONG KONG’S

CASE HE WAS WELL AWARE OF THE POSSIBLE IMPLICATIONS OF SEEMING

TO BE INDIFFERENT TO HONG KONG'S PROBLEMS, AS FOR THE CHINA LIGHT

AND POWER CONTRACT. BUT HE HOPED THAT THE STRENGTH OF FEELING

OF OTHER MEMBER STATES - PARTICULARLY FRANCE WAS FULLY

UNDERSTOOD IN HONG KONG, SIRNM MACLEHOSE SAID THAT HONG KONG'S

ECONOMIC EXPANSION HAD BEEN BASED ON TEXTILES. A DECLINE IN THE

INDUSTRY MIGHT LEAD TO EMIGRATION. IT WAS WIDELY BELIEVED IN

HONG KONG THAT THE UK AND FRANCE WERE THE JOINT HAWKS IN THE

COMMUNITY ON TEXTILES. HE DID NOT KNOW HOW TO CONVINCE

PEOPLE OTHERWISE. AS THE MINISTER STATE HAD POINTED OUT, THERE

WERE IMPLICATIONS FOR UK EXPORTS TO HONG KONG. LORD GORONWY-ROBERTS

SAID THAT HE HOPED THE GOVERNOR WOULD MAKE THIS POINT TO MR DELL,

WE FULLY UNDERSTOOD THE POLITICAL DIFFICULTIES WHICH THE

COMMISSION'S PROPOSALS CREATED FOR THE HONG KONG AUTHORITIES.

BUT THERE WAS A WORLD-WIDE PROBLEM IN THE TEXTILE SECTOR.

WHATEVER THE ACTUAL REDUCTION IN GDP BROUGHT ABOUT BY THE

PROPOSALS, THE FACT THAT HONG KONG NEVERTHELESS EXPECTED AN

INCREASE OF 6% IN GDP WAS PROOF OF ITS ECONOMIC HEALTH, HONG KONG

COULD NOT EXPECT TOO MUCH SYMPATHY FROM A COMMUNITY STILL MORE

OR LESS IN A STATE OF RECESSION.

MR JUDD AND LORD GORONWY-ROBERTS HAD TO LEAVE AT THIS POINT.

DISCUSSIONS CONTINUED AT OFFICIAL LEVEL.

OWEN

FILES

HKGD

3 CONFIDENTTAL