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not be doctrinally possible for Hong Kong to agree any arrangements this time that last for more than a year until 30th September, 1970. We will need to be firm over this but there seems to be no reason why the Canadians should not agree.
Next, it seems to the Department that, in these circumstances, there could be considerable advantage in preserving the present access rights Hong Kong has in the Canadian market for use in possible future negotiations in circumstances where the international rules may be somewhat different from what they are now. This would point, for instance, to Hong Kong not pressing at this stage for the removal of restraints on cotton fabrics, despite our relatively poor performance under the current Article 4 agreement.
7.
The Department believes that the opportunity should also be taken, within the limits of Hong Kong's doctrinal position on non-cotton textiles, to place Hong Kong in as favourable a position as possible against the possibility of restraints being extended more generally in this field in the future, either through a broadening of the coverage of the C.T.A. or through some other means. If this were to happen the major strategic aim of Hong Kong would be to obtain roll- in of any new non-cotton restraints with existing cotton restraints, so as to obtain the maximum flexibility in the utilisation of quota. From a practical point of view it would probably be desirable to attempt at this stage to roll in existing non-cotton restraints with Canada with the equi- valent cotton items, as this would (a) achieve greater flexi- bility straight away and (b) set a useful precedent. However, given the present delicate position over the American requests and in view of the uncertainty involved in this field, these advantages would still be outweighed by the disadvantages involved in compromising Hong Kong's position on the wider issue. What would probably be advantageous, though, would be to attempt as far as possible to secure standardisation of the differing swing and other flexibility provisions of the various present arrangements in order to facilitate roll- in between cotton and other fibres at a later stage should. this become desirable.
8.
It would also appear, at this point of the game when the future is so uncertain, that it would be better this year for the Hong Kong team to attempt to secure growth on limits, especially in the case of non-cottons, even at the expense of increased swing and other flexibility provisions,
In this in order to build up performance and entitlement. connection, it should be noted that the present swing pro- visions are reasonably generous (12% for apparel, 10% for, fabrics, 10% for non-cottons, but none for towels). Provided towels can be brought more into line with the rest these figures should prove reasonable to start with should they need to be applied to rolled-in levels at a later stage.
9.
Against the background of these general considerations, Members are now asked to consider the specific matters set out in the following paragraphs.
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