TNAG-0940-FCO40-1159-Visits-by-Foreign-and-Commonwealth-Ministers-and-officials-t-1980 — Page 40

CONFIDENTIAL

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(a) the routine administration of Hong Kong's representation at the

negotiations;

(b) the need to clarify the positions of Hong Kong and HMG to each

other;

(c) an examination of Hong Kong's claims about the effect a stricter

MFA will have on her economy;

Both Hong Kong

In 1977, Derek

(d) the need to moderate statements on both sides.

and DOT/DOI tended to overstate their cases in 1977;

(e) providing BTC with details of the negotiations.

March was often called on to answer criticism about HMG's policies

(despite having no responsibility for doing so). He will need to

be kept fully up-to-date with proceedings.

8.

A DOT Paper on the MFA is attached.

The US/Hong Kong Textiles Arrangement

9.

The US/Hong Kong arrangement came into effect for five years from

January 1978. However, in early 1979, due to political pressure from

domestic textile interests, the US Government asked Hong Kong to

renegotiate parts of the agreement. Hong Kong was prepared to make

concessions within the limits of the MFA. The US wanted action to be

taken against 'surges' (a disruptive growth in imports caused by the

carry-over of unused access rights from one year to the next) and a

review of import growth rates.

10.

This attempt to hold an annual review of the agreement was not in

keeping with the MFA. Therefore, HMG supported Hong Kong's case.

Hong Kong was, however, forced to agree because the USA threatened to

completely cancel the Bilateral Agreement.

11. If, as is likely, the US wishes to review the Bilateral again in

CONFIDENTIAL

/1981