CONFIDENTIAL
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persist in establishing a common policy on these lines we
are likely to be faced at the end of the day with a demand
that we should conform to it. This would involve extension
of restraint on Hong Kong's exports of some products to the
United Kingdom. If this were to happen Hong Kong would find
that the common external tariff was applied to her exports
to the United Kingdom, that restrictions on her exports to
the United Kingdom were imposed as part of the common
commercial policy and probably that she was either excluded
outright from benefits under the generalised arrangements or
else were granted only token benefits under these arrangements.
45 In the case of cotton textiles there are restraint
arrangements under the LTA at present between Hong Kong on
the one hand and Benelux and the Federal Republic on the
other. France maintains stringent restrictions on Hong
Kong's exports of cotton textiles under the dubious claim
that they are sanctioned by Article 2 of the LTA. There is
no restraint arrangement with Italy but there are no imports
from Hong Kong either. Negotiations have already begun
aimed at replacing these arrangements with a single agreement
negotiated by the Commission. But this would be a change in
form only. The administration of the quota levels would
still be in the hands of the individual governments of the
Six. whatever the rules of the Community are, there seems
to be no free circulation of imports of imported Hong Kong
textiles within the Community.
CONFIDENTIAL
/46.