TNAG-1156-FCO40-1436-Visits-by-FCO-Ministers-to-Hong-Kong-1982 — Page 108

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Mr. Lin said that when the current agreement was negotiated in 1977, severe cutbacks on quotas were inflicted on Hong Kong and the memory of that was still vivid in the minds of the Hong Kong industry. He asked if Mr. Atkins could give an assurance that no further cutbacks would be inflicted in Hong Kong during the forthcoming negotiations. Mr. Atkins replied that one would have to bear in mind the fact that the textile industry in the EEC was going through a difficult period and the unemployment levels had reached historic heights. Miss Dunn said that while Hong Kong did not underestimate the problems faced by the EEC, a point which did not seem to have registered in Europe was that these problems were not caused by imports from Hong Kong. The Chairman added that the effect of the 1977 cutbacks was still being felt, for they had established a lower base upon which subsequent annual limits had been calculated.

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Mr. Stephen Cheong stressed the importance of the textile industry in Hong Kong. It accounted for 40% of Hong Kong's domestic exports and 40% of employment in the manufacturing industries. He said that there was a prevailing sense of frustration brought on by the increasingly protectionist outlook in the major importing countries. Hong Kong had been restraining its exports of textiles since the beginning of the 1960s and quotas now appeared to be a permanent fixture.

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Mr. Atkins said he appreciated the frustration that Hong Kong must feel. The problems would not last forever and he asked Hong Kong to bear with the situation for a while longer. The Chairman said that the sense of frustration was heightened by the attitude of the EEC in the discussions leading to the renewal of the MFA: if the situation was indeed temporary, why should temporary solutions be inscribed permanently in the MFA. Mr. Stephen Lau added that while the situation in Europe was bad, the situation faced by the Hong Kong textile industry was not much better. In the previous 12 months, the spinning and weaving sector had lost a total of 35,000 jobs.

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Mr. Tang said there should be some way for Hong Kong to express its frustration more visibly and forcefully. He pointed out that Hong Kong was an importer. of the first order in such items as yarns, fabrics, perfume and brandy, and had awarded a large number of public works contracts to EEC firms. Bearing in mind the success which Indonesia had in its dispute with the UK, he considered that if Hong Kong were pushed too hard, it should perhaps respond in kind. He stressed, however, that in expressing Such sentiments he was rather less concerned with the textile issue than with recent action taken by France against imports of watches from Hong Kong. Mr. Atkins said that while he understood the thrust in such thinking, he cautioned that Hong Kong must bear in mind its wider interests before embarking on such a course of action. The Governor added that while he could see the merit of some kind of response to the French action on watches, Hong Kong must choose its targets carefully.

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