CONFIDENTIAL
MULTI-FIBRE ARRANGEMENT (MFA): ESSENTIAL FACTS
1.
A multilateral framework agreement regulating international trade
in textiles. Originally negotiated in 1974 as a 'temporary' arrange-
ment; extended 1977 by Protocol which permitted 'reasonable departures'
from 1974 provisions; due for renewal again at the end of this year.
Complemented by a series of bilateral agreements between importing
and exporting countries. EC agreements including agreement with
Hong Kong do not expire until end-1982.
2. Hong Kong dominant low cost supplier of textiles world-wide. Hong
Kong quotas much greater than any other supplier's.
3. In 1978 EC used 'reasonable departures' Protocol to cut back quotas
for Hong Kong (and South Korea) below previous year's level. There
ww
will be pressure within EC to repeat the exercise this time round. But
it would provoke a very hostile reaction by Hong Kong. Hong Kong already
pointing to drop in UK low-cost imports last year (while imports from
US, largely unrestrained, rose sharply);
in UK industry.
also to productivity gains
4. At time of recession most developed countries. in fact likely to
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favour some tightening of restraints on MFA suppliers (Germans main
exception). In UK Prime Minister has spoken publicly of need for
'tough' successor. Developing countries naturally want liberalisation.
But immediate return to GATT rules would deprive them of guarantee
of market access which each enjoys individually under MFA and expose
them to safeguard action which automatically affects all suppliers.
They have acknowledged publicly this would not be in their interest.
5. Governor discussed MFA with Sir K Joseph, Mr Biffen and Mr Parkinson
on recent visit to London (9-13 March). DOT lead department in
Whitehall.
&. (Not for use) Mr Biffen has recommended to colleagues that while
trying to keep Hong Kong down to very low or even nil growth rates UK
CONFIDENTIAL
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