7
iv
V
vi
introduction of carry-over;
compensation in the form of "hardship yardago" to mop up orders placed in anticipation of the removal of q.r. by (a) non-quota holders or (b) in excess of present category/quota ceilings;
improvements in the "swing" arrangements (ie "upswing" rather than "domowing") and abandonment of Group V since this was no longer viable. Hong Kong would also like a privato undertaking from IIG that steps would be taken to present further erosion of the UK market by EFTA countries, especially Fortugal.
Mr Ridley's first roaction to these suggested points for discussion was that if published as an agenda, they would have the appearance of a significant re-shaping of the agreement with Hong Kong as it now stood. If all or some points were accepted, HG would have to extend the same facilities to other restricted suppliers (eg Pakistan) on the equity principle. (Pakistan had already reactod sharply to the proposed continuation of quotas, saying that this would maintain the advantage of the two bilateral agreement countries over those within the global quota). "Trapping up" an agreement in a public form of words with a confidential exchange of letters covering the actual details of a new arrangement would not work because the trade would have to be told with a consequent leakage to other restricted suppliers.
8 As a matter of sheer mechanics it would be impossible to consider decalage of the tariff as a viable item for the agenda. There was simply not enough time to re-write the tariff schedule and meet printing deadlines before 1.1.72. Mr Haddon-Cave accepted this, and agreed that it would be withdrawn; novertheless, from the Govenor's point of view, it would have been of great benefit presentationally to have been able to got this concession.
9
Mr Ridley felt that Hong Kong's request for carry-over might be more appropriate had we envisaged prolonging the agreement after 1972. Mr Ho suggested that even if it were agreed for 1972 only, EG could appear to be giving something away which we should have to agree anyway given the forward order situation. Mr Haddon-Cave said that it must be assumed that quotas would continue in 1973, harmonised or otherwise to the Community's regime; as the Community allowed 10% carry-over, HG would be expected to do likewise.
4
10 Mr Ridley agreed to consider all these points, but without commitment. The meeting was then adjourned until Tuesday 7 December at 11 30am.
CT Division
December 1971
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