0003230
G.F. 323
CONFIDENTIAL
- 20
the Board recognised these difficulties, they had had to consider their position very carefully because the principle of flexibility was a matter of commercial as well as doctrinal importance in all markets. They feared that the exclusion of any flexibility provisions from an
undertaking given to the Benelux by Hong Kong could have dangerous repercussions for Hong Kong in possible future negotiations with inter alia other Member States of the E.E.C., and could even result in the subsequent downward adjustment of the rate of swing already secured in existing agreements. The Board had defined Hong Kong's priorities in any textiles negotiation in order of priority as
(a) export control;
(b)
flexibility;
(c) annual growth;
and (d) the absolute quantitative limits.
Having regard to these priorities, the Board had advised the Director that he should endeavour to secure the minimum flexibility of 5% across the board. If flexibility had to be limited to groups of similar products, then additional, say, 10 per cent swing rights, Should it according to the Canadian precedent, should be sought. become absolutely necessary in the interest of establishing the principle of flexibility, some downward revision of the previously
The Director had agreed quantitative limits might be negotiable. accepted the Board's advice.
93.
Mr. Verhagen reiterated the doctrinal difficulties the Benelux Governments found with flexibility, but felt that it was in the mutual interest of both sides to reach an early agreement. The domestic pressures in the Benelux, both political and industrial, were severe. He himself considered that the previously agreed restraint limits were reasonable in terms of the Long Term Arrangement
He had and represented substantial access rights for Hong Kong. realised that the maintenance of access rights and preservation of export control were matters of great importance to Hong Kong and had negotiated with this in view, He had great difficulty with
But if flexibility and felt that logic was on the Benelux side. the matter was left unresolved, the temporary import restrictions would have to be extended. It was not feasible for the Benelux delegation to seek new instructions in time from their three respective Governments and the Benelux Commission, but the delegation was prepared to reach an independent decision, subject to the final approval of their respective Governments, in an attempt to find
In coming to this a possible compromise between the two positions. decision, the Benelux side had been swayed mainly by the consideration of the precedent that would be set for future negotiations between Hong Kong and Member States of the E.E.C. if all flexibility were to be omitted from this undertaking.
94.
Mr. Miller
In response to Mr. Verhagen's question confirmed that he was instructed to seek 5 per cent flexibility across the board, and that to obtain this he had authority to agree This reduction could be to some reduction in the restraint limits. calculated on the basis of:
either (a)
the Benelux roll-back figures, which they considered as their maximum tolerable intake;
or (b) the arbitrary figures which had been agreed
between Mr. Verhagen and Mr. Haddon-Cave.
/He
CONFIDENTIAL