TNAG-0631-FCO40-779-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1977 — Page 194

GR 450

MMEDIATE

CYPHER CAT A

CONFIDENTAL

247

FM HONG KONG 180952Z

CONFIDENTIAL

BACZIVLU

1901

TO IMMEDIATE F C O TELNO 1843 OF 18 OCTOBER 1977

INFO PRIORITY BRUSSELS (FOR BURGESS) ROUTINE OSLO,

UKREP GENEVA (FOR TSAO), WASHINGTON (FOR CROWSON), HONG KONG

GOVERNMENT OFFICE LONDON.

TEXTILES.

A NORWEGIAN OFFICIAL HAS TOLD MILLS (LEADING THE HK TEAM IN BRUSSELS) THAT WHEN OUR CURRENT BILATERAL AGREEMENT EXPIRES ON 31 DECEMBER 1977 NORWAY WILL BE SEEKING A COMPREHENSIVE AGREEMENT COVERING QUOTE A NUMBER OF YEARS UNQUOTE, WITH SUBSTANTIAL CUTBACKS ON HK'S QUOTAS QUOTE FAR GREATER THAN THOSE WHICH THE SEC IS SEEKING UNQUOTE. AN ALTERNATIVE TO SUCH AN AGREEMENT WOULD

BE ARTICLE XIX ACTION QUOTE IMPLEMENTED THE SAME WAY AS THE EEC UNQUOTE, POSSIBLY WITH AGREED COUNTRY QUOTAS WHICH, IN THE CASE OF HK AND KOREA, WOULD BE SUBSTANTIALLY LOWER THAN CURRENT PERFORMANCE. QUOTE THERE WOULD BE NO FORMAL REQUEST UNDER THE MFA BECAUSE THE MFA WOULD NOT NECESSARILY EXIST ON 1 JANUARY 1978

UNQUOTE.

2. THIS UNDERLINES THE DANGER, OF A DAMAGING EEC PRECEDENT BEING FOLLOWED BY OTHERS. THE NORWEGIANS HAVE BEEN THE FIRST TO PROVE

We know THE POINT. OUR AGREEMENT WITH SWEDEN ALSO EXPIRES AT 31 DECEMBER

it will

Still

AND WE ARE EXPECTING TO HEAR FROM THEM SOON, IT IS VERY LIKELY THAT THEIR IMMINENT MESSAGE WILL BE IN SIMILAR VEIN (THE NORDIC GROUP TENDS TO ACT IN CONCERT). THE CANADIANS HAVE JUST SOUGHT CONSULTATIONS WITH HK ON A WIDE RANGE OF TEXTILE AND CLOTHING PRODUCTS, AND THERE ARE STRONG INDICATIONS THAT THEY WILL BE SEEKING LIMITS WELL BELOW THE LEVELS OF ACTUAL TRADE BEFORE TOOK THEIR CURRENT ARTICLE XIX ACTION. REPORTS FROM THE US CONTINUE TO STRESS THE STRONG PROTECTIONIST PRESSURES (NOT ONLY FROM THE TEXTILE INDUSTRY) AND DISSATISFACTION WITH THE MFA IN CONGRESS, INDUSTRY AND ORGANISED LABOUR WHICH WILL MAKE IT VERY DIFFICULT FOR THE ADMINISTRATION TO RESIST DEMANDS THAT IT ADOPT A MORE RESTRICTIVE ATTITUDE IF THE EEC GETS ITS WAY. THIS COULD SOON SPREAD BEYOND TEXTILES.

mukkely

THEY

CONFIDENTIAL

13.04

OUR ACOTE