CONFIDENTIAL
-2-
1969 PERFORMANCE WITH ONLY TOKEN GROWTH AT BEST.
TOTAL WOULD
BE BROKEN DOWN BETWEEN MEMDER STATES ON BASIS OF EXISTING TRADE
BUT CATEGORISATION WOULD BE UNIFORM. WHEN ASKED WHETHER THIS
IMPLIED THAT EXPORT CONTROL WOULD BE CONCEDED BY FRANCE HE HEDGED
AND SAID THAT DETAILS OF ADMINISTRATION WOULD STILL NEED TO BE
NEGOTIATED WITH INDIVIDUA MEMBER STATES,
4. WE CHALLENGED THAT THIS BASIS WOULD NOT OFFER QUOTE INCREASED
EXPORT OPPORTUNITIES AND MORE FLEXIBLE CONDITIONS UNQUOTE TO
HONG KONG AS PROMISED IN CTC CONCLUSIONS BUT WOULD RATHER EXTEND
AREA OF RESTRICTION BY INCLUDING PRESENT LIBERALISED TRADE WITHOUT
EVIDENCE OF MARKET DISRUPTION. ERNST REPLIED THAT EEC
WAS ALREADY TAKING MORE FROM HONG KONG THAN FROM ANY OTHER EXPORTING
COUNTRY AND THAT THIS WAS A SOURCE OF DIFFICULTY FOR THEM WITH
OTHER LDCS.
FURTHER QUESTIONING REVEALED, HOWEVER, THAT HE WAS SERIOUSLY OVER-ESTIMATING 1969 TRADE BY WORKING FROM EXTRA- POLATED IMPORT FIGURES FOR FIRST NINE MONTHS WHICH SHOWED A 28%
INCREASE OVER 1968. WHEN WE SHOWED FROM HONG KONG EXPORT FIGURES
FOR WHOLE YEAR THAT GROWTH WAS MORE LIKE 5-6% HE CONCEDED THAT
COMMISSION WOULD NEED TO THINK AGAIN.
50
WE ALSO HAD LONG DISCUSSION ON SWING BETWEEN SPECIFIC CATEGORIES. DESPITE SEVERAL PREVIOUS EXPLANATIONS, COMMISSION HAD APPARENTLY NOT YET TAKEN ON BOARD THAT LIMIT WAS ON QUOTE SWING
IN UNQUOTE AND THEY MAY REVISE THEIR THINKING ON THIS IN
RELATION TO PROVISIONS OF MODEL AGREEMENT. ERNST'S OWN THINKING
SEEMED TO BE MOVING IN DIRECTION OF 5% CARRYOVER AND ANTICIPATION AND PERHAPS, AS A RESULT OF OUR EXPLANATION, 5% SWING.
6. IN REPLY WE SAID WE COULD GIVE NO INDICATION OF WHETHER HONG
KONG WOULD BE PREPARED TO CONSIDER NEGOTIATION ON ABOVE BASIS. IT WAS AGREED THAT FURTHER CONSULTATIONS WOULD BE HELD IN MARCH BY WHICH TIME COMMISSION WOULD HAVE RECEIVED SOME MANDATE FROM COUNCIL. WE MADE IT CLEAR THAT HONG KONG WOULD REGARD THESE AS THE SUBSTANTIVE CONSULTATIONS ENVISAGED IN THE CTC CONCLUSIONS BUT NOT AS THE PRELIMINARY TO A FORMAL ARTICLE 4 NEGOTIATION.
17. AT END OF
CONFIDENTIAL