TNAG-0633-FCO40-781-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1977 — Page 123

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TX1951

V CLAIR

FM HONGAID 031000

TO MULTI PRESS ADDRESSES

EEC/HONG KONG TEXTILE NEGOTIATIONS

STATEMENT BY THE ACTING GOVERNOR HONG KONG

TEXT AS FOLLOWS: -

QUOTE:

HKK 121/616

14 DE

NO I PA

THE ACTING DIRECTOR OF TRADE AND INDUSTRY AND CUSTOMS HAS ANNOUNCED THAT HONG KONG AND THE EEC INITIALLED AN AGREEMENT IN BRUSSELS LAST NIGHT RESTRAINING THE EXPORTS OF TEXTILES AND CLOTHING FROM HONG KONG FOR THE NEXT FIVE YEARS. FULL DETAILS WERE NOT IMMEDIATELY AVAILABLE BUT ARE EXPECTED SOON.

MR. DORWARD SAID THAT THIS WAS THE CULMINATION OF NEGOTIATONS BEGUN IN MID-OCTOBER AND RECESSED FOR ONLY A LITTLE OVER ONE WEEK IN EARLY NOVEMBER.

SOURCES CLOSE TO THE DEPARTMENT SAID THAT THE AGREEMENT IS THE MOST RESTRICTIVE HONG KONG HAS EVER ACCEPTED.

IT WAS IN THEORY NEGOTIATED UNDER THE TERMS OF THE GATT- MULTI FIBRE ARRANGEMENT (MFA). BUT, FROM AN EARLY STAGE, INDEED SOME MONTHS BEFORE THE NEGOTIATIONS PROPER BEGAN, THE EEC PUBLICLY MADE IT CLEAR THAT THEY HAD NO INTENTION OF ACKNOWLEDGING OBLIGATIONS UNDER THE MFA WHICH DID NOT SUIT THEIR INCREASINGLY PROTECTIONIST POLICIES.

THE SOURCES ADDED THAT THE COURSE OF THE NEGOTIATIONS "AS MARKED BY FREQUENT PUBLIC THREATS BY EEC NEGOTIATIONS AIMED ATINTIMIDATING HONG KONG AND OTHER EXPORTERS WHO SOUGHT NO MORE THAN THE IR FREELY NEGOTIATED RIGHTS UNDER THE MFA.

COMMENTING ON THE AGREEMENT THE ACTING GOVERNOR, SIR DENYS ROBERTSN SAID THE HAVE ACCEPTED THIS OUTCOME VERY RELUCTANTLY AND WITH MANY MISGIVINGS.?

1 SOME PROVISIONS OF THIS AGREEMENT, HE SAID, 'HAVE NOT BEEN WILLINGLY ACCEPTED BY HONG KONG, BUT WE WERE FACED WITH THE VERY REAL POSSIBILITY THAT THE COMMUNITY YOULD BE PREPARED TO IMPOSE IMPORT RESTRICTIONS ON US, REGARDLESS OF THE CONSEQUENCES'.

IN FOUR CATEGORIES WHICH ARE VERY IMPORTANT TO HONG KONG, THE COMMUNITY INSISTED ON SEVERE REDUCTIONS IN OUR QUOTASM SIG OFNYS EXPALINED THAT HONG KONG HAD OFFERED TO NEGOTIATE REDUCTIONS FROM OUR 1377 QUOTAS IN THESE PRODUCTS TO THE LEVEL OF THE COMMUNITY'S IMPORTS IN 1976, AN OFFER WHICH COMPLETELY MET THE COMMUNITY'S REQUIREMENT THAT SO-CALLED 'LOW-COST' IMPORTS SHOULD BE STABILISED AT 1976 LEVELS OF TRADE.

DESPITE THIS',SIR DENYS SAID, 'THE COMMUNITY

INSISTED THAT OUR ACCESS TO THE EEC MARKET FOR THESE FOUR PRODUCTS IN 1978 SHOULD BE CUT BACK MUCH FURTHER -BY 3.000 TONNS OF COTTON CLOTH, 7.8 MILLION PAIRS OF TROUSERS, 2 MILLION SHIRTS AND 5.7 MILLION BRIEFS.'

THE PURPOSE OF THESE CUTBACKS WAS, SO WE WERE TOLD, NOT TO PROTECT TH COOMMUNITY'S INDUSTRY, BUT TO LEAVE ROOM FOR NEW SUPPLIERS TO DEVELOP THEIR EXPORTS TO THE EEC OF TEXTILE PRODUCTS OVER THE NEXT FEW YEARS.

'BUT, SIR DENYS WENT ON, SINCE IT TAKES TIME TO CREATE MANUFACTURING CAPACITY AND TO BUILD UP TRADE, THE COMMUNITY'S PLANNED REDISTRIBTION OF TRADE AMONG THE DEVELOPING COUNTRIES AND TERRITORIES IS UNLIKELY TO WORK. INSTEAD

THE PRINCIPAL BENEFICIARIES ARE LIKELY TO BE OTHER DEVELOPED COUNTRIES WHOSE ACCESS TO THE COMMUNITY'S MARKET WILL REMAIN COMPLETELY UNRESTRAINED.'

'NEVERTHELESS', SIR DENYS CONCLUDED, 'THE COMMUNITY HAS INSISTED THERE SHOULD BE THIS REDISTRIBUTION OF TRADE -AND CONSEQUENTLY SEVERE CUTBACKS ON CURRENT. ACCESS RIGHTS FOR SOME- OF THOSE WHO HAVE NO MEANS OF RESISTING THEM, INCLUDING HONG KONG WHICH IS MORE DEPENDENT ON EXPORTS OF TEXTILES AND CLOTHING THAN ANYONE ELSE. HONG KONG'S INTERNATIONAL TRADING RELATIONS ARE GOVERNED BY GATT AND THE MULTI-FIBRE ARRANGEMENT.NEITHER OF THESE INSTRUMENTS PROVIDES ANY SANCTION FOR THIS COMMUNITY POLICY. ITS INJUSTICE IS MANIFEST. HOWEVER, WE HAVE INITIALLED THE AGREEMENT AND, IF IT IS SIGNED, WE WILL HONOUR IT.

SOURCES CLOSE TO TH TRADE INDUSTRY AND CUSTOMS DEPARTMENT SAID THAT IT IS NOW UP TO THE HONG KONG INDUSTRY TO SHOW ITS RESILIENCE AND VERSITILITY BY USING TO THE MAXIMUM THE DIMINISHED TRADING OPPORTUNITIES AFFORDED TO US IN THE COMING YEARS BY THE WORLD'S LARGEST ECONOMIC ENTITY, THE EEC. AND IT FOR THE OTHER DEVELOPED NATIONS, IN THEIR OWN INTERESTS AS WELL AS HONG KONGS, TO REFUSE TO FOLLOW THE EEC ON THE MUTUALLY DAMAGING SLIDE INTO PROTECTIONISM. THEY WILL HAVE AN OPPORTUNITY TO COMMIT THEMSELVES TO RESPECT FO THE RULE OF LAW IN INTERNATIONAL TRADE WHEN THE GATT TEXTILES COMMITTEE MEETS IN GENEVA NEXT WEEK. TO TAKE STOCK OF WAHT HAS HAPPENED AND CONTEMPLATE THE FUTURE. UNCUOTE.

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CORRECTIONS: ~

PARA 5 LINE LAST WORD FOR NEGOTIONS READ NEGOTIATORS REPEAT NEGOTIATORS AND PARA 6 LINE 2 FIRST WORD READ ROBERTS, REPEAT ROBERTS,

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