TNAG-0762-FCO40-966-Effect-of-GATT-Multi-Fibre-Arrangement-(MFA)-on-Hong-Kong-ex-1978 — Page 181

RESTRICTED BY BAG

HKK bi

FROM THE DIRECTOR

TRADE INDUSTRY AND CUSTOMS DEPARTMENT

Lea

HONG KONG

Pl.com fr

INDEX

Na Quantit

/

letme

can you have a copy

In Quedit the speed peas

In Reason to study on the

Jeles plane!

рые

27 January 1978

быг

W

Dear John,

Thank you for your letter of 16 January. Though I shall see you again before you get this letter I thought I should reply.

I gladly accept the assurances in your paras. 2 and 3, though I assure you that it wasn't flippancy but the utter irrelevance of the comparison that bothered me. Flippancy and frivolity I find essential in dealing with weighty matters, particularly when they are as far from the real world as, in our view, the EEC's textile policy is.

I too certainly hope that the negotiations are over, at least for the next year or two. I naturally hope that, when the effects of these excessive restrictions show up in the retail market, EEC Governments will realise that they went too far and propose relaxation.

Your telegram 31 exploded the canard but did you explode the source of it, - Mr. Beck? Perhaps not (and perhaps just as well) since our telegram 1 to Geneva was repeated to you only for information. What we have heard from Mills about his meeting with Beck on 20 January confirms that Beck should never have said he had instructions to seek to adjust the sub-limits. But he certainly did say it. One wonders why.

The agreement is seen here as much less of a disaster than had been feared because:

(a)

(b)

(c)

the terms of it are much less damaging than the arrangements originally demanded by the Community; there has been a natural decline in textile exports to the EEC in 1977;

the quotas available for 1978 will cover trade at the current depressed level, i.e. they will not force a further decline on us.

The bad effects of this agreement lie in the future. It deprives the industry here of the growth opportunities for the future that it was entitled to (as compensation for discriminatory restrictions) so that it will not be able to respond to a revival in demand, if and when it comes.

I have no doubt that the Boxall has sent you a copy of my speech to the HKGCC--organised lunch but just in case he didn't, I enclose another.

You

eve

J.A.B. Stewart, Esq., 0.B.E., Foreign and Commonwealth Office.

Dano

(D.H. Jordan)