TNAG-0999-FCO40-1230-Appointments-of-senior-officials-in-Hong-Kong-1981 — Page 74

CONFIDENTIAL

MULTI-FIBRE ARRANGEMENT : ESSENTIAL FACTS

1.

The Multi-fibre Arrangement (MFA) provides a framework

for regulating international trade in textiles.

Originally

negotiated in 1974 as a 'temporary' arrangement; extended 1977

by Protocol permitting 'reasonable departures' from 1974

provisions; due for renewal again at end of 1981.

Complemented

by a series of bilateral agreements including one between EC

and Hong Kong which expires at end of 1982.

2. Hong Kong is dominant supplier of low cost textiles.

Quotas are greater than for other suppliers.

3. In 1978, EC used 'reasonable departures' Protocol to cut back

Hong Kong's quotas to below the 1977 level. There will be pressure

within EC to repeat these cutbacks. However, reaction from

Hong Kong would be very hostile. Low-cost suppliers claim

UK job losses due mainly to higher productivity and developed

country imports.

4.

Strong pressure in developed countries for some tightening

of restraints on MFA suppliers. Prime Minister has spoken of need

for 'tough' successor. Developing countries want liberalization

but acknowledge that they need some form of framework arrangement

guaranteeing them even very limited access to developed markets.

Governor and senior officials have discussed the MFA with UK

Ministers and officials.

(Not for use)

5.

DOT are lead Department in Whitehall. At a meeting of OD(E)

on 6 April Ministers endorsed DOT view that while trying to keep

Hong Kong down to very low or even nil growth rates UK should

resist pressure within EC to impose a new round of cut-backs on

the Territory. Present indications are that this will, in the

last resort, be acceptable to Hong Kong.