TNAG-0752-FCO40-956-Future-of-Hong-Kong-1979 — Page 142

CONFIDENTIAL

Textiles

3. Turning to the problem of textiles Dr Owen said that he hoped

they could talk frankly:

Britain had had great difficulty with the Multi Fibre Arrangement

The Community had been bound to a negotiating position but the

Commission was now showing signs of relaxation not only with

Portugal; which by herself would have presented little difficulty,

but with other countries also. Britain was insisting that the

there were very great problems and

Community keep to the agreed mandate;

question of principle involved.

there was an important

Britain was aware of the Portuguese

sensitivity on this matter and bilateral talks had been held.

But actual negotiations were for the Commission

could find some adjustments it would help.

if Portugal

4. Dr. Sa Machado said he understood the British difficulties.

But the textile industry in Portugal employed 30% of the active

population, mainly in the north of the country where the Communists

had not made significant inroads.

The inability of the Communists

to extend their influence from the south of the country was the

reason for the success in establishing and retaining democracy

The Communists were trying to improve their image in the north

and were taking advantage of the situation in the textile industry.

It was a real political issue and, even if they understood the

Eritish problems, they dared to ask for special understanding,

1

CONFIDENTIAL

/Dr Owen