TNAG-0630-FCO40-778-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1988 — Page 113

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Deverify

TO PRIORITY F C O TELEGRAM NUMBER 5652 OF 27 SEPTEMBER.

CALL BY GOVERNOR OF HONG KONG ON COMMISSIONER HAFERKAMP: 27 SEPTEMBER

YOUR TELNO 1774

1. SINCE IT PROVED IMPOSSIBLE IN THE EVENT FOR ME TO ACCOMPANY

SIR M MACLEHOSE, COUNSELLOR EXTERNAL TRADE ESCORTED HIM WITH DORWORD

AND BURGESS FOR AN HOUR LONG MEETING WITH COMMISSIONER HAFERKAMP

LAST THIS AFTERNOON.

2. THE GOVERNOR AND HIS PARTY MADE THE FOLLOWING MAIN POINTS:

(1) THE FIGURES PROPOSED BY TRAN IN HIS TALKS IN HONG KONG WOULD

MEAN AN IMMEDIATE EXPORT LOSS OF 60 MILLION POUNDS STERLING WITH

A POTENTIAL LOSS OF 130 MILLION POUNDS STERLING: WOULD LEAD TO A

FALL IN THE LABOUR FORCE OF 2 PER CENT: AND A 1.5 PER CENT

REDUCTION IN THE GROWTH OF G D P. THE SCANDINAVIAN COUNTRIES

AND THE USA WOULD DEMAND SIMILAR CUTBACKS IN ACCESS TO THEIR

MARKETS (THE AMERICANS HAD ALREADY SUGGESTED THAT THEY WOULD

INVOKE THE SIDE LETTER TO THEIR, RECENT AGREEMENT WITH HONG KONG), WITH THE RESULT THAT THE ADVERSE CONSEQUENCES OF THE

COMMISSION'S PROPOSALS WOULD BE MULTIPLIED TWO-FOLD.

(11) THE HONG KONG ECONOMY WAS ADMITTEDLY RESILIENT, BUT IT WAS TOTALLY DEPENDENT ON EXTERNAL DEMAND. GIVEN THE POOR PROSPECTS

FOR ECONOMIC GROWTH IN 1978, ESPECIALLY IN THE USA, THERE WOULD BE LITTLE SCOPE FOR HONG KONG INDUSTRY TO SEEK COMPENSATION

ELSEWHERE FOR LOSSES SUFFERED IN THE COMMUNITY MARKET. THIS COULD

HAVE SERIOUS SOCIAL IMPLICATIONS.

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