0003230
G.F. 323
CONFIDENTIAL
3.
exercise of restraint on a substantial section of Hong Kong exports, such a statement to be supported by statistics giving the relevant Community imports, production and consumption in respect of each sector of the trade for which restraint was being requested. To ease the burden on the Commission, Dorward said that his side would accept as part of the basic documentation the data on consumption and imports produced to Hong Kong at the end of 1969 by the German and Benelux Governments.
8.
Ernst thanked Dorward for his helpful statement and said that the Commission fully understood Hong Kong's position and would certainly try to help by putting its request in a more acceptable form as soon as possible. He made a plea for pragmatism, however, and said he hoped that he would be in a position to make an offer which both sides would be able to interpret as satisfying their basic needs and also conforming to the basic principles of the C.T.A. Before going on to describe this offer, he gave an undertaking that the Commission would produce the statement requested by Hong Kong at the earliest possible date, probably about mid- September.
9.
Dorward reiterated that, while he was ready to listen to a positive offer by the Commission, he could not respond until he had seen the factual justification requested. By way of illustration of the kind of material he had in mind, he passed over to Ernst an exercise done by the Hong Kong side on the statistics submitted by the E.E.C. to the G.A.T.T. Cotton Textiles Committee. The statistics, which referred to the year 1968, were for cotton yarn and fabrics. Dorward said he proposed to comment on the tables at a later stage.
10.
Ernst complimented the Hong Kong side on the thorough job which they had done, but expressed his doubts that the Commission could match it due to time limitations and the scarceness of basic material. He suggested, however, that the provision of this material might become somewhat academic once the Hong Kong side had heard his proposition regarding limits. Dorvard replied that there was nothing academic about Hong Kong's determination to respect the principles of the C.T.A.; particularly, in this context, as regards coverage. If Ernst wished to make it, however, he was ready to listen to the Commission's proposition.
11.
Ernst said that the Commission's proposals in regard to the form and implementation of an agreement were already in the hands of the Hong Kong side. As regards the proposals in respect of overall limits and group and category limits, he said that the offer he was about to make was a generous one in his opinion; but he had to stress that it was a precise offer. That is to say, it represented the maximum which he had been authorised to offer by the Member States of the Community. He did not intend to scale it down for the purpose of subsequent negotiation. And any change could only be achieved by reference back to the Council of Ministers. He hoped, therefore, that the Hong Kong side could see its way to reacting positively.
12.
Dorward said he could not predict what his reaction to the E.E.C. offer would be but stressed that its acceptability or otherwise would be determined not merely by the limits suggested. He was well aware of the peculiar difficulty faced by the Commission in obtaining an agreed mandate from Member States; he hoped that the Commission for their part recognised also the peculiar difficulties of Hong Kong. In his opinion, the correct approach to
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