TNAG-0938-FCO40-1157-Visit-of-John-Nott--Secretary-of-State-for-Trade--to-Hong-Ko-1980 — Page 156

CONFIDENTIAL #Z

3

HK/EEC Textiles Agreement (1978-82)

3.

機

Mr. Nicholl recalled that it was stated in the 1977 negotiations that the object of asking some developing country suppliers, including Hong Kong, to accept cut-backs on their quotas was to create better access to the EC market for the

However, UK import statistics for poorer developing countries. 1978 and the first nine months of 1979 showed that the 'gap' left by the cutbacks on Hong Kong and others had not been filled by the He asked Mr. Nott if action had been poorer developing countries. taken to give better access to poorer developing countries and if not, whether they would make restitution of the cut-backs to Hong Kong. Mr. Nott accepted that the cut-backs had not necessarily gone in the direction originally intended and replied that it was equally true that imports into the U.K. from countries which were

however, the shift in that not parties to the MFA had risen. direction was not substantial and the decline of Hong Kong's share was slight. Mr. Nott went on to comment on the bilateral trade

He cited the example of the Japanese relations between countries. complaint against the U.K. for buying more Italian and German cars than Japanese ones. his answer to that was the U.K. was exporting

In other words, more spare parts to the EC than to Japan. reciprocity counted. Mr. Nicholl said he would accept the point

Mr. Nott said that while he believed for cars but not for textiles. in free trade, he could not disregard the fact that a large number of textiles jobs in the U.K. were being lost.

4.

Mr. Lin said Hong Kong was grateful for HMG's intervention in connection with the recently concluded round of HK/US textiles consultation. He asked whether Mr. Nott had any views on the EEC/HK textile agreement. Mr. Nott said the U.K. would not seek any change to the HK/EEC Textiles Agreement before it expired. He asked if Hong Kong manufacturers would change their product lines in clothing so as to reduce the concentration in lines in which European manufacturers had to compete. Mr. Tang said that Hong Kong had tried but was stopped by the Community with the imposition of cut-backs.

5.

Mr. Nott

Mr. Cheng said that the bilateral agreement negotiated in 1979 was intended to provide the Community's textile industry with a five-year breathing space to re-structure itself in order to

he asked compete effectively with developing country suppliers. what steps the U.K. Government had taken in this direction. replied that the U.K. Government had not worked out a restructuring programme for its textile industry, but some £30 million had been

Unlike the U., there had not budgetted for assisting this industry.

Mr. Cheng said that

been much updating in technology in the U.K. in other words, employment created by 'cut-back' on quota was absorbed by other countries, not the U.K. He asked whether in future negotia- tions the U.K. would repeat the demands which it made of exporting countries in 1977. Mr. Nott said that it was not realistic and would be pre-mature to answer the question. The question of future textile policy was still under discussion in his own Department.

/Hong Kong as a Market