f
MR GOLDSMITH (CRE:1)
c.c. Mr Stewart
Mr Toms
Mr Ingram
(Mintech:)
CRE:2
Mr Carter/ Mr Whitehead
}
FCO
CRE:3)
Miss Elliott CRE:1)
HONG KONG/EEC TALKS ON COTTON TEXTILES
Mr Sellers of the Hong Kong Government Office has given me the following brief picture of how these talks, which ended on Tuesday afternoon, have gone.
2. As anticipated Ernst said that he had no mandate and the talks must therefore be clearly informal, with more substantial talks to follow, perhaps in mid-March.
3.
Ernst indicated that the Commission have in mind an Article 4 far arrangement covering all cotton textiles, on similar lines to the arrangement which they have with India. (The implication of this seemed to be at least that the French Article 2 arrangements would be dropped).
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Ernst said that the Community were taking as their starting point the concept of a "total tolerable Community intake", under which there would be sub-quotas for individual countries. Moreover their general idea was to freeze the present pattern of trade.
5. Ernst spoke of taking as a basis the average of the last 3 years trade. But the Hong Kong team think they were successful in persuading him to take 1969 as the base year. Apparently Ernst had been mistakenly alarmed by the high figures for the first 6 months of 1969, not fully appreciating that Hong Kong's exports apparently regularly show an upsurge in the first part of the year. 6.
It was apparently agreed in principle that some measure of anticipation and carry-over should be accepted. Ernst was less receptive to the idea of swing, which he had not fully understood, but he was apparently more receptive to it when it was explained to him.
7.
More general points which emerged from the discussions were: (i) The EEC are evidently thinking closely about a British
entry, and the consequences for Hong Kong's relations with the EEC. They indicated (not entirely clearly) that Hong Kong fabric exports to the United Kingdom should not con- stitute much of a problem, nor should the garment situation prove intolerable once the fabric question had been dealt with,
(11)
On non-cotton textiles they gave an indication that if the Japanese give way to the United States, the EEC would have to follow a similar course to the United States.
(iii) Erast worked in some threats to Hong Kong on non-cotton textile items, if Hong Kong did not take a reasonable attitude on certain sensitive items,
(iv) Ernst, Wellenstein and Deniau set off for Japan in mid-
February.
D I DUNNETT (CRE:1) 28 January 1970
RECEIVED IN
REGISTRY No.51
29 JAN 1970
HKK6/6