TNAG-0630-FCO40-778-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1988 — Page 130

Background

The Governor's visit arises out of discussions between the Commission's textile

negotiator, Mr Tran van Thinh, and Hong Kong officials in August in which Mr Tran

indicated that the EEC would offer Hong Kong quotas for 1978 which would be below

1976 levels of trade for a number of products. The main points of concern to

Hong Kong are summarised in the Governor's letter to the FCO of 3 September

(copy at Annex 1).

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Brief (a) The MFA

(i) Products subject to Global Ceilings

2 The Commission has now produced its detailed proposals for the eight products

which will be subject to global ceilings (details for other products are still

awaited). These are fully in line with the indications which Mr Tran gave in

Hong Kong, In particular there are cut-backs for Hong Kong on actual trade levels

in 1976 for six of the eight products (details at Annex 2).

3 Exports of the eight products account for about 60% of Hong Kong textile

exports to the EEC, and 11-12% of total Hong Kong exports of all products to all

sources. Not surprisingly, therefore, the Governor has argued that the Commission's

proposals would have a very severe effect on the Hong Kong economy. Textiles

account for 20-25% of Hong Kong exports and employ a similar proportion of her

total labour force. According to the Governor's calculations the Commission's

proposals for the eight products represent a cut-back of 14% on 1976 exports

of these products and would increase unemployment by about 10,000 (or 2) on

1976 levels.

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