|0003238
G.F. 323
CONFIDENTIAL
-7-
Encl. 2
goods. It seems unnecessary, therefore, to lengthen this paper by going into its ramifications.
Quantitative Restrictions and other Import Regulations
17.
This is by far the most important element of the common commercial policy from Hong Kong's point of view. The problem facing the E.3.C. in this field is that, although there is a common tariff, the individual Member States do not apply uniform policies on quantitative import restrictions and other limitations or controls affecting imports. In the post-war period import restrictions were widespread and they were far more important than tariffs in controlling trade. But in the course of the 1950s import restrictions were gradually eliminated between European countries through the operation of the 0.4.E.C. Code of Liberalisation. Following the achievement of convertibility for most European currencies at the end of the 50s this liberalisation was extended to the majority of other GATT countries and was widened as the balance of payments reasons for maintaining`. restrictions disappeared. The net result as at the present time is that, outside the field of cotton textiles, five of the six countries in the 3.3.C. (Germany, Italy and the Benelux countries) now maintain very few quantitative restrictions against imports of industrial products from most GATT countries. Hong Kong, which has the GATT applied to her and who also received the benefits of the 0.5.E.C. liberalisation programme through United Kingdon membership of that Organisation, has been in a specially favourable position in this regard. Apart from cotton textiles, dealt with under the terms of the GATT Cotton Textiles Arrangement (C.T.A.), there are at present no quantitative restrictions on Hong Kong exports in any of these five countries.
18.
But the position in France is different. Because they claimed balance of payments difficulties throughout most of the 50s the French were slower in carrying out their 0...C. liberalisation obligations than were the other countries. And since then they have kept more quantitative restrictions in force, contrary to the rules of the GATT. Furthermore, the French never fulfilled their obligations to extend the liberalisation they did carry out under the O.E.B.C. Code to Hong Kong as a dependent territory of a member country. have since retained quantitative restrictions on imports from Hong Kong on a significant range of items, most of which (e.g. a broad range of cotton and non-cotton textiles, garments and made-up goods) loom very large in Hong Konb's global exports. A list of French restrictions on Hong Kong is at Enclosure 2.
19.
They
Leaving aside the Communist countries as a special case it is also significant that even the Five maintain quantitative restrict- ions across a fairly wide range of items against imports from Japan and some low cost countries (e.g. Taiwan and South Korea), who are either outside GATT or only joined the GATT very recently, and that they also retain a few restrictions against certain GATT countries such as India and Pakistan. France, for the most part, maintains more severe restrictions against all these countries in addition to her restrictions on Hong Kong. The net result is that the countries of the E..C. all maintain different lists of quantitative restrict- ions applying to different third countries and at differing levels of severity in cach case.
20.
In this sort of situation it is clear that products in respect of which there are quantitative restrictions against important suppliers in any Member State of the E.J.C. cannot be placed in free circulation in the Community. Otherwise the products in question could be imported through another Member State which did not impose
/import
CONFIDENTIAL
...