CONFIDENTIAL
MULTI-FIBRE ARRANGEMENT (MFA): ESSENTIAL FACTS
1. The MFA is a multilateral framework agreement regulating inter-
national textile trade which allows developed importing countries a
measure of protection against disruptive surges of low-cost imports,
but in return guarantees developing countries steadily increasing access
to developed country markets. It is complemented by a series of
bilateral agreements, including one between the EC and Hong Kong.
2. The original (1974) MFA prescribed a minimum 6% growth rate in
developed country imports. The(1978) extension protocol permitted
'reasonable departures' from this norm. The EC made use of this pro-
vision to insist in negotiation with Hong Kong on quotas for 1978-1982
on a initial reduction for some categories of product below 1976
levels of trade. But Hong Kong remains our largest single supplier of
textiles and imports from Hong Kong have in practice continued to grow
at around 6% per year overall.
3.
Hong Kong has been well organised and honest in implementing its
side of the EC- Hong Kong bilateral agreement. During 1978 and 1979 a
number of cases of origin fraud were discovered. Goods from Hong Kong
were being imported into the Community under false certificates of
origin. The Hong Kong authorities cooperated fully in investigating
these cases and took appropriate preventative action.
4. In textiles, as in other fields, the UK has discharged its oblig-
ations to Hong Kong. Were it not for the previous administration's
influence on the EC mandate for the 1978 negotiations, Hong Kong might
have suffered even sharper cut-backs at that time. And last year, in
response to a request from the Hong Kong Government, Mr Blaker summoned
the US Minister for Economic Affairs and Commercial Affairs to express
HMG's concern about an American attempt to renegotiate the US-
Hong Kong bilateral textile agreement.
In the event
CONFIDENTIAL
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