4. As for timing, there are in our view good reasons for intervening with the least possible further delay. There seems to be general recognition that once the complex process of consultation and internal adjustment between member countries of the Community is complete it is virtually impossible to change Community decisions. This indicates that we ought to make our point before the Council has taken any decisions on the proposals now tabled. The Commission's proposals are expressed to come into force on
1 January, 1970 and Christofas has indicated in his letter the pressures that might lead to early progress on this aspect of Community policy. Furthermore we think that it would be preferable, both in Hong Kong's interests and our own, to make any representa- tions to the Community before negotiations for our own entry commence. Inevitably these negotiations will be complicated to some extent by the need for adjustments in favour of our dependent territories, but if we can get some of these adjustments out of the way first that might be to the advantage of all concerned.
5.
Representations should, we think, be made to the Commission, not to the Community member states. This is after all a question of the Community's common commercial policy. A more scattered approach to individual members would complicate matters unnecessarily, without making a concerted favourable reaction more likely.
6. As to the content of our representations, we expect that you would agree that the extended quota restrictions introduced by these Community measures infringe the GATT and we feel that any representations must be centred on this point. We are aware, however, that in discussions in Hong Kong in June Ernst alluded to the possibility that the Community might seek to justify their action under an interpretation of Article XIX of the GATT and, according to the record (paragraph 4), answered Derek Jones expression of disbelief that this was possible by a statement to the effect that "it was legalistic thinking that did not pay sufficient regard to the realities involved in the establishment of a Community position". If the Commission pursued this tack in answering our representations there would seem to be only two possible courses open to us :-
(a)
to threaten to arraign the Community in GATT. This could do our own cause no good, and I feel fairly sure that Hong Kong would not consider its interests best served by this action;
(b) to seek consultations under Article XXII and then leave Hong Kong to make the best deal that it can in the ensuing bilateral discussions.
Alternatively the Commission, without arguing the GATT aspects, might offer discussions with a view to some amelioration; we could then again leave Hong Kong to seek the best possible settlement.
/7.
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