TNAG-1042-FCO40-1292-Possible-Royal-Commission-on-Hong-Kong-and-its-future-House--1981 — Page 26

CONFIDENTIAL

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MULTI-FIBRE ARRANGEMENT

3. The Multi-Fibre Arrangement is a multilateral framework agreement

regulating international textile trade. It allows developed importing

countries some protection against disruptive surges of low-cost

imports, but in return guarantees developing countries steadily

increasing access to developed markets. It is complemented by a

series of bilateral agreements, including one between the European

Community and Hong Kong.

4.

•

The original (1974) Multi-Fibre Arrangement prescribed a minimum

6% growth rate in developed country imports. The (1978) extension

protocol permitted reasonable departures' from this norm. The

European Community made use of this provision to negotiate a more

restrictive Bilateral Agreement with Hong Kong on quotas for

1978-1982. Were it not for the United Kingdom's influence on the

European Community mandate for the 1978 negotiations, Hong Kong

might have suffered even sharper cut-backs.

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.

5. Hong Kong has been well organised and honest in implementing

its side of the European Community-Hong Kong Bilateral Agreeement.

During 1978 and 1979 a number of cases of origin fraud were

discovered. The Hong Kong authorities cooperated fully in

investigating these cases and took appropriate preventive action.

6. The present Multi-Fibre Arrangement expires on 31 December 1981

and preliminary manoeuvring is taking place on its successor. The

developing producers, including Hong Kong, point out that the original

/Multi-

CONFIDENTIAL