CONFIDENTIAL
duty quotas. It appears likely that this will apply to
cotton textiles (but only about 15 per cent of Hong Kong's
trade in non-cotton textiles), footwear, portable radios
and cutlery, thus accounting for the major part of her
trade. Nevertheless the automatic increases in the quotas
will enable other developing countries to make inroads
into Hong Kong's trade.
C. The Common Commercial Policy
15. The Community has not yet made much progress in establishing
a Common Commercial Policy as regards quotas, but they are
now working at it. They have established common
liberalisation lists, which is all to the good.
One way
in which the Commission are proposing to bring the
quantitative restrictions of the Six into line with each
other is by a sector approach. The Commission have so far
made proposals for a common system of quotas for the
ceramics, footwear, cutlery, ballbearings and umbrella
industries, but the Council have not yet reached a decision
on any of these proposals. France maintains a considerable
range of restrictions against Hong Kong exports in breach
of GATT, and we are not happy with the prospect that some
of these illegal restrictions should be adopted by other
Member States even if some of the other products are
liberalised by France.
16. As regards cotton textiles, the Commission is now entering
into negotiations with Hong Kong for a single list of
restrictions under the Long-Term Agreement for Cotton
Textiles.
/a.