TNAG-1038-FCO40-1288-Future-of-Hong-Kong-1981 — Page 170

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MULTI-FIBRE ARRANGEMENT

6.

The Multi-Fibre Arrangement (MFA) which regulates international

trade in low-cost textiles and clothing, is due for renewal at the

end of 1981. It is complemented by a series of bilateral agreements

between importers and exporters. The European Community/Hong Kong

Bilateral Agreement expires in December 1982.

7. Hong Kong is the major source of MFA textile imports into the

United Kingdom. In 1978, the European Community cut back Hong Kong's

(and South Korea's) quotas to below the previous year's level.

There is pressure within the European Community and in the

United Kingdom textiles industry to repeat this exercise in view

of the recession. This would provoke a very hostile reaction from

Hong Kong.

8. The Prime Minister has spoken of the need for a 'tough' successor

to the MFA. However, although no detailed decisions on the United

Kingdom position have been made, Ministers have agreed that it would

not be desirable to cut back Hong Kong's quotas again. There are

indications that the Territory would accept very limited or even

nil growth rates in quotas, and this will probably be sought by

the United Kingdom.

Hong Kong and General Department Foreign and Commonwealth Office

13 April 1981

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