180
C
Annual growth. It was rightly pointed out that this cannot be considered in isolation from the base period, but we would probably do well to continue to support the figure of 5%, and this is likely to be adopted, even if the French do not willingly withdraw their suggestion of a nil growth rate.
d Flexibility. This was probably referred back to capitals because of the Chairman's unfamiliarity with the relatively uncontroversial nature of the Commissions proposal to include in the mandate the normal provisions for swing, carry-over and anticipation. But there is the other form of flexibility, so far
not mentioned in these deliberations, to which we know Hongkong attaches the greatest importance: roll-in between cotton and non-cotton items. Should we suggest that the mandate include some provision for dealing with any demands for roll-in which Hongkong may make, or should we allow the Commission's negotiators to discover for themselves the dialectical delights of the one-market concept and all that?
3 The duration of the restraints to be negotiated is no longer in dispute: they are to last until the end of 1974. In this connection, the French won acceptance (just before lunch on 22 February) for the idea that seemed to them so logically inescapable that they could not understand how anyone could wish to argue about it, namely that the existing HK/EEC cotton agreement must therefore be extended to the same date. This point should be apparent in the redraft of the directives. We and the Danes asked for clarification of how this left our cotton agreements with Hongkong. The Commission provided no answer. In terms of negotiating realism, this French twist seems to me liable to lead to trouble. Once again, I am not sure whether we should say anything on this point or not.
4 The mandate still includes a (laboriously redrafted) safeguard clause, to the effect that everything not included in the restraint agreement will be free, but subject to some Regulation 1025 type procedure which Hongkong must accept. This could, in the end, give as much trouble as all the rest put together.. Do we have any views?
5 I have been in touch with Mr Goodfellow about our special responsibility for Hongkong. My conviction is that UK and Hongkång interests in this matter co-incide. We wish to ensure that any new restraint agreements are selective, limited and justifiable in terms of the shrt of international agreement which we would like to see come into being. We shall continue to press this line with our partners. Hongkong, apart from the natural wishes it may have for no restraints at all, accepts the principles underlying the line that we are taking. In this situation, I do not see any need for special championship of Hongkong's interests as such in the Brussels meetings or for lobbying on Hongkong's behalf in European capitals. Indeed, I think either of these things might well impair our already thin credibility as loyal members of the Community on textile matters, without doing Hongkong any good. The negotiation of textile Agreements is, as I understand it, delegated to the Government of the Colony, so our advice to Hongkong should be limited to heading off potentially dangerous situations if we can do so, while Hongkong remains free to make whatever approaches it likes to the Community, and to obtain the best deal it can.
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