TNAG-0939-FCO40-1158-Visit-of-John-Nott--Secretary-of-State-for-Trade--to-Hong-Ko-1981 — Page 33

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CÓNFIDENTIA Reference

THESE MINUTES HAVE BEEN MIDE CONFIDENTIAL IN HONG KONG GOVT'S VERSION. ONLY

MEETING WITH HK TEXTILE ADVISORY BOARD: 4 SEPTEMBER 1980

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Present:

Mr Parkinson Mr March

Mrs Gingell Mr Morrison Mr Bailey

Mr Dorward

Mr Nicholl

Mr Cheong

Mr Lam

Mr Tang

Mr Chan

Miss Wong

THEREFORE GIVEN

AN INTERNAL CIRCULATION

Dept of Trade Version)

Mr Dorward explained that the TAB was a body of unofficial members which had the task of advising the TICD on textile matters. Mr Parkinson said that he saw this meeting as an opportunity to discuss more general issues than had been discussed earlier in the mission. He explained that the UK industry was going through a very difficult time, and was very efficient in bringing its difficulties to the attention of Government and the public. Recently the industry had put forward proposals about the contents of "MFA3", including clawback on existing quotas, a recession clause, and rigid global ceilings. The Government had made clear that it intended to adhere to existing bilateral agreements, and had stressed that, given the changing conditions in the industry, it was too early to establish a detailed negotiating mandate. But there would inevitably be strong pressure on the Government to adopt a very restrictive pose in the forthcoming negotiations. He was therefore interested in hearing the TAB's views on how the existing MFA was working, and what form the successor arrangement should take. Mr Nicholl said that the existing arrangement had clearly not been entirely effective; for instance, the cutback in HK's quota at the last renegotiation had not been redistributed to other ldcs but had been taken by developed countries, whose textile exports were not subject to control. Mr Parkinson pointed out that the UK had no powers to restrict imports from the rest of the EC. Mr Nicholl retorted that a number of other countries notably the US, the Mediterranean associates and the state trading countries had all benefitted at HK's expense. Mr Parkinson said that the EC had in fact made arrangements to control imports from the Mediterranean associates. He accepted that US exports to the UK were increasing; this reflected a concerted export drive in the US, the two countries' shared language and measurements, and the strong pound.

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Mr Cheong said that when MFA2 had been negotiated HK had been extremely concerned about the "reasonable departures" protocol; and it had subsequently become clear that the protocol was not working properly, and was being applied without reasonable justification. Mr Nicholl added that he regarded the concept of "globalisation" as pernicious especially as it was only incompletely applied. Mr Lam said that he was concerned at proposals that quota growth rates in MFA3 should reflect market growth rates. Mr Parkinson said that the existing MFA had been negotiated on the basis that the market would continue to grow, and that the ldcs should be allowed to take advantage of part of that growth. Mr Nicholl pointed out that in some cases the growth allowed was less than 1% pa. Mr Parkinson acknowledged this, but remarked that even in those cases some growth was allowed; and it was only realistic to expect considerable pressure to restrain the growth rates in MFA3. Mr Dorward said

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