TNAG-0631-FCO40-779-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1977 — Page 181

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MR HELLINGS CRE1

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TEXTILES POLICY:

Mr Thompson Hong Kong Dept

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PS/Secretary of State PS/PUSS(T)

PS/Secretary

Mr Steele

Mr Gray

Mr Ridley

Mr Wilks BOTB

Mr Lightman CRE4 Mr Abramson CRE1 Miss Lowne CT - Mr Ashwood CRE4

IMPLICATIONS FOR EXPORTS TO HONG KONG

I think I should report fairly widely that at a meeting yesterday afternoon of the BOTB Area Advisory Group for Hong Kong the industrialists present expressed unanimous concern about the implications of our present stance on textiles for British exports to Hong Kong. Their argument was similar to that used by the Governor when he called recently on the Secretary of State, that we run the risk of losing the goodwill which senior Hong Kong industrialists, Chinese and others, have for Britain and which (as it did in the case of the Mass Transit contracts last year) can tip business in Britain's direction even though we may not be fully competitive. I believe that this goodwill, which has been nurtured carefully over the last year or two by Sir Peter Thornton and others, does exist and has helped to bring about the narrowing of the trade gap with Hong Kong which has taken place this year.

2 What particularly upsets Hong Kong, is the apparent decision of the Community, supported by Britain despite her responsibility for Hong Kong as the metropolitan power, to give more favourable treatment to India and Pakistan than to Hong Kong. As my colleagues know, I have long argued that this is against our interests, and that we shall gain little credit with India and Pakistan.

3

At the meeting yesterday I tried to explain the reasons for our policy on textiles, and pointed out that in the public debate the voice of the British exporter has gone unheard. I also think that, whatever may happen on textiles, it will still be in Hong Kong's interest as well as our own that she should have a stronger two-way trading relationship with Britain; and that the Governor for one realises this. Nevertheless there is a danger of an emotional reaction on the part of the Hong Kong businessmen if they think that Hong Kong has been unfai ly treated, and that Britain has neglected her colonial responsibilities.

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