BACKGROUND NOTE
CONFIDENTIAL
1. The GATT Multi-Fibre Arrangement, which regulates trade in
textiles, expires at the end of 1977. Under it the EEC had concluded bilateral agreements with its main textile suppliers and these too expire at the end of this year. Ministers have generally agreed that current arrangements do not provide adequate protection for British industry.
2. The Commission is currently negotiating, on behalf of the Community, new bilateral agreements with supplier countries. Only if the negotiations are satisfactory will the Community consider signing a renewal of the Multi-Fibre Arrangement. The Community has agreed an extremely tough negotiating mandate which provides for it to impose unilateral restrictions if the current negotiations prove unsatisfactory. Supplier countries
are aware of the alternatives.
3.
Negotiations with Hong Kong have been going on for some time and a number of serious problems have become evident during the talks. We are by no means sure, however, that Hong Kong will risk the danger of unilateral measures which would remove
control of the agreement from Hong Kong.
4.
Hong Kong is particularly concerned since approximately 50% of its exports and employment is concentrated in textiles. Exports to the EEC of the eight particularly sensitive items on which the greatest restrictions will fall account for 10% of all exports.
CONFIDENTIAL
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