TNAG-0845-FCO40-1055-Visits-of-Foreign-and-Commonwealth-officials-to-Hong-Kong-1979 — Page 100

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CONFIDENTIAL

The purpose of these reductions was to leave room for quotas permitting a modest increase in trade from poorer developing countries trying to establish themselves on the UK market.

6. The Hong Kong argument (which has been developed in a paper by the Hong Kong Goernment Office in London) is that it is other developed suppliers and not UK industry or poorer developing countries which have benefited from Hong Kong's reductions. They point out that during 1976-8 UK textile imports from other sources increased

as follows:

7.

Developing countries (other than Hong Kong): Mediterranean suppliers

EEC Member States

44%

66%

80%

It is difficult to determine exactly how Hong Kong's "share" of the UK market has been redistributed in practice and it would

be rash to jump to conclusions on long term patterns on the basis of only one full year's operation of the EEC/Hong Kong agreement. That said, the 44% growth rate for other developing countries suggests that one element in the Hong Kong case that these countries

have not benefited is overstated.

8.

Alloy

It cannot be denied, however, that the other Hong Kong

argument

S

that UK industry has benefited little is largely true.

There have been two reasons for this:

a) the difficulty of restricting access from Mediterranean

low-cost suppliers

b) the weakness of UK industry in meeting (high-cost)

competition from within the Community.

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CONFIDENTIAL

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