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CONFIDENTIAL
b.
the implications of these changes for our quota arrangements on cotton textiles with other low-cost
countries and to discussion with both the K
textile industry and the European Commission.
The modifications will not give Hong Kong a bigger quota, either in aggregate or on specific producte.
But it will allow them to make better use of
some of the quotas than they have done hitherto by allowing greater flexibility in transferring unused yardage from one category to another, principally in the garment sector. We are also redefining most of the garment quota headings to bring them closer into line with those in Hong Kong's Agreement with the EEC.
!
0. Hong Kong have pressed hard for an undertaking
that we will give them licences over and above the quota to allow for contracts entered into before 8 December 1971 by exporters:wic do not enjoy big enough quota allocations under the Hong Kong Government's present allocation system. I have reminded Hong Kong our request to all supplying countries at the time of our quota decision to treat pre-existing contracts as a first call on the 1972 quotas. (If Hong Kong does this it is unlikely that many orders could not be accommodated.) I have, nevertheless, said that if HiG decide
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that
in principle we can allow any excess licensing for pre-existing orders, we will give sympathetio consideration to Hong Kong's claims.
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