TNAG-0631-FCO40-779-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1977 — Page 196

CONFIDENTIAL

HKK. 121/6.6/1

1800

ва

2x

Not

246

FM WASHINGTON 171940Z

CONFIDENTIAL NEUTRAL]

No

TO PRIORITY FCO TELNO 4501 OF 17 OCT 77

INFO PRIORITY UKREP BRUSSELS, ROUTINE UKMIS GENEVA

MIP T. FOLLOWING IS TEXT.

QUOTE

1. THE

UNITED STATES IS DISTRESSED TO LEARN THAT THE UNITED KINGDOM IS BLOCKING THE COMMISSION'S MANDATE FOR THE BILATERAL TEXTILE NEG- OTIATIONS NOW UNDERWAY IN BRUSSELS WITH A NUMBER OF LDC SUPPLIER COUNTRIES.

2. ALL MFA PARTICIPANTS RECOGNIZE THAT THE COMMUNITY CONTINUED

PARTICIPATION IN THE MFA DEPENDS HEAVILY ON THE SUCCESSFUL OUTCOME

OF THESE NEGOTIATIONS.

3. IF THE UNITED KINGDOM CONTINUES TO BLOCK THE MANDATE, IT WILL IN ALL LIKELIHOOD LEAD TO A BREAKDOWN OF THE COMMUNITY'S BILATERAL NEGOTIATIONS AND, ULTIMATELY, TO A BREAKDOWN OF THE MFA, A MATTER OF SERIOUS CONCERN TO THE UNITED STATES.

4. NOT ONLY WOULD A BREAKDOWN OF THE MFA BE OF SERIOUS CONCERN TO THE UNITED STATES, BUT SUCH A BREAKDOWN WOULD INEVITABLY LEAD TO WIDESPREAD, PROTECTIONIST MEASURES BY ALL IMPORTING COUNTRIES.

5. SUCH A BREAKDOWN WOULD ALSO MOST SERIOUSLY AND UNFAVORABLY IMPACT UPON THE DEVELOPING, EXPORTING COUNTRIES. FOR EXAMPLE, APPROXIMATELY 50 PERCENT OF HONG KONG'S EXPORT EARNINGS ARE DERIVED FROM TEXTILE EXPORTS, 35-40 PERCENT FOR KOREA, AND THE STATISTICS ARE NOT DISSIMILAR FOR OTHER DEVELOPING COUNTRIES.

6. TO SEVERELY LIMIT LDC EXPORTS OF TEXTILS WOULD SERIOUSLY LIMIT THE LDCS' ABILITY TO REPAY DEBTS, ALREADY A MAJOR PROBLEM FOR DEVELOPING COUNTRIES AND A MATTER OF DEEP CONCERN TO OUR TWO

COUNTRIES.

}

CONFIDENTIAL

MY. THE UNITED