TNAG-1157-FCO40-1437-Visits-by-FCO-Ministers-to-Hong-Kong-1982 — Page 84

CONFIDENTIAL

BRIEF NO.5 : MULTI-FIBRE ARRANGEMENT

ANNEX A

HONG KONG/UK US TEXTILES AND CLOTHING TRADE

1.

Hong Kong frequently claims that it is the US, not

themselves, who are the real "low-cost suppliers". As a

developed country the US, although party to the MFA, has no

bilateral agreement with the EC, and therefore has quota-free

access to EC markets. The EC can however take preventive action

under GATT Article XIX, as indeed it did in 1980 to restrict

synthetic fibre imports into the UK. US imports were for a time

cheaper but the dollar's strength has again reversed this.

Moreover UK imports from the US have declined since 1980

(complete figures not available, but in 1980 UK imports from the

US were about £216 million, and in the first half of 1982 about

£75 million, not allowing for inflation).

2.

It is also true that our imports of textiles and clothing

from other developed countries exceed those from low cost

sources and that these have grown faster proportionally, in

recent years than those from low cost sources. But trade in

textiles and clothing with developed countries is broadly

in balance, whereas imports from MFA suppliers in 1981 were

approximately £950 million against exports (in 1980) of only

£150 million.

3.

The US textile agreement with Hong Kong, which was

initialled on 21 March covers textiles and clothing exports to

the US until the end of 1987. It is in general less restrictive

than the arrangements which are being sought by the Community

and does not include cut-backs. However the Americans have a

much lower overall level of imports from low-cost suppliers than

the Community, reflecting the fact that in the past they have

generally been able to enforce controls more effectively and at an earlier stage. Hong Kong is worried that the fairly tough

agreement initialled with the EC may encourage the US to seek further restrictions. For this reason they initially sought

a backdating provision, which might have enabled them to present the package to the US as based on the depressed levels of actual

trade in 1980-81. But in the end they withdrew the request settling instead for an element of carry-over from 1982 (the

last year of the old agreement) to 1983 (the first year of the

new agreement).

CONFIDENTIAL