TNAG-0631-FCO40-779-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1977 — Page 95

CONFIDENTIAL

299

GR 530

PRIORITY

CYPHER/CAT A

FM HONG KONG 020957Z

CONFIDENTIAL

TO PRIORITY F.C.O TELNO.1082 OF 2 NOVEMBER,

اعا

HKK 121/616

RELEVANC

3

INFO BRUSSELS (FOR BURGESS), UKREP BRUSSELS, WASHINGTON (FOR CROWSON), UKMIS GENEVA (FOR TSAO), HONG KONG GOVERNMENT OFFICE

LONDON.

FOR STEWART (HKGD) FROM HADDON-CAVE.

E.E.C TEXTILES.

295 383

1. WE ARE VERY WORRIED AT THE COURSE OF THE CURRENT NEGOTIATIONS

IN BRUSSELS, NOT LEAST BECAUSE OF THE WAY IN WHICH THE COMMUNITY NEGOTIATORS ARE CONDUCTING THEMSELVES. AS MILLS SAID AT THE CLOSE OF THE LAST FORMAL SESSION ON 28 OCTOBER, WE HAVE REACHED A POSITION WHERE WE HAVE BEEN CALLED FOR NEGOTIATIONS WITH A VIEW TO

AGREEING RESTRAINTS ON EXPORTS OF PRODUCTS WHICH WE CANNOT DEFINE

TO LIMITS WHICH WE CANNOT DETERMINE. WHATEVER THE OUTCOME OF THE

NEGOTIATIONS, THIS SITUATION THREATENS TO CAUSE SERIOUS DAMAGE TO MANUFACTURERS, EXPORTERS AND WORKERS HERE AND IMPORTERS, WHOLESALERS, RETAILERS AND CONSUMERS THROUGHOUT THE E.E.C.

2. BUT WE ARE POSITIVELY STARTLED BY THE COMMUNITY'S PROPOSALS

FOR COTTON FABRICS. THE LIMIT FOR THE COMMUNITY PROPOSED BY TRAN IS 13,000 TONNES. APPLYING THE CONVERSION FACTOR IN THE CURRENT HONG KONG/E.E.C BILATERAL AGREEMENT THIS WOULD PRODUCE A FIGURE OF 77.7 MN SQ YDS EQUIVALENT.

3. IT IS A MATTER OF RECORD THAT WHEN THE HONG KONG INDUSTRY

REACHED AN AGREEMENT WITH THE LANCASHIRE INDUSTRY IN 1959, IN

ORDER TO ALLOW THE LATTER TIME TO 'ADJUST', THE LIMIT AGREED FOR.

COTTON FABRICS FOR THE U.K ALONE WAS 118 MN SQ YDS.

4. IT IS EQUALLY A MATTER OF FACT THAT ABOUT 75 PERCENT OF

HONG KONG EXPORTS OF COTTON FABRIC TO THE E.E.C GOES TO THE UNITED KINGDOM. IT FOLLOWS, THEREFORE, THAT THERE IS STRONG PRIMA FACIE EVIDENCE THAT THE PROPOSED CUT BACK WHICH IS 33

/PERCENT DOWN ON

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