ΤΙ
T/KI
2
CONFIDENTIAL
THIRD SESSION: WEDNESDAY 12 JANUARY 1972 3pm (47 PARLIAMENT STREET)
DEVELOPMENT OF HONG KONG'S PROPOSALS FOR MODIFICATION OF THE QUOTA ARRANGELIENT
Hong Kong's officials and trade advisers have now had time to consider in more detail what they termed HIG's "modest" response to their suggestions for modernisation. They agreed
i
ii
that the incorporation of Group V in the Group IV limit was
logical and a move towards the EEC system. But the introduction of the glove "stop" effectively nullified its usefulness;
the merger of categories 16,17 and 20 was helpful because it amounted to 100% swing between the merged categories, but it lacked logicality in trade terms, and it was inconsistent with the EEC system;
iii the de-restraint of handkerchiefs was frankly meaningless (because
Hong Kong did not use the category) and it too was inconsistent with
EEC.
Bearing in mind HMG's continued emphasis on the fact that there had as yet been no discussion with the Commission on the alignment question, and our arguments that a radical exercise to this end at the present time might prove to be abortive in the long term, Hong Kong wished to develop further their two suggestions for modernisation of the present arrangement.
3 (1) THE "ALIGNENT" PROPOSAL
This was designed to ease our approach to alignment in 1973 and thereafter, without causing damaging uncertainty to the trade in both Hong Kong and the UK during the late summer of 1972 (when orders would be booked for the year ahead). (a) Shifts within the aggregate
Hong Kong proposed that the existing Groups III (finished cloth), IV (made-ups and garments) and V ("newly-restrained" items) should be combined. The total effect of this would be an increase in the Group limit of the combined group of 34m sq yds. At the same time, Hong Kong suggested that any categories within this new Group which should properly be included in the EEC's Group I (that is, any bleached cotton fabrics) should be removed.
(b) Categorisation
(i) All specific limits on finished piece goods should be abolished because in the EEC system they are in the Group II basket. Hong Kong would be prepared to accept an EA system (as in the case of the ECC) instead of category limits, or if this was felt to be inadequate, a trigger point system.
(ii) The nine specific categories in the present Group IV should be converted into the six categories operating in the EEC system. (HIG would recognise that this suggestion meant that Hong Kong was surrendering the merger of categories 16,17 20 and the decategorisation of hankerchiefs).
CONFIDENTIAL