CONFIDENTIAL
SELECTIVE AGREEMENT ON THE BASIS OF DEMONSTRATED FACTS CONCERNING DAMAGE TO BRITISH INDUSTRY. WE VERY MUCH HOPED THAT IF THE COMMUNITY HAD TO PROCEED IT WOULD PROCEED SIMILARLY, HANEMANN SAID THAT THE GERMANS WOULD BE CONCERNED TO BE AS LIBERAL AS POSSIBLE
5. ELSON REHEARSED THE GERMAN POSITION IN THE GATT PREPARATORY NEGOTIATIONS. THEY WANTED A GENERALLY APPLICABLE INTERPRETATION OF
ARTICLE XIX WHICH WOULD (A) LAY DOWN CLEAR CRITERIA FOR THE APPLICA- TION OF THE ARTICLE (D) PROVIDE FOR A STRONGER MECHANISM OF CONTROL AND SUPERVISION, AND (C) INTRODUCE AN ARBITRATION PROCEDURE. THEY HOPED THAT THIS COULD BE DEALT WITH AT THE BEGINNING OF THE NEGOTIATIONS RATHER THAN THAT THERE SHOULD BE INDIVIDUAL SECTORAL
AGREEMENTS, IF THERE WERE AN AGREEMENT UPON EG TEXTILES,
THEN THERE WOULD IMMEDIATELY BE CLAIMS FOR SIMILAR AGREEMENTS FROM, E.G. THE ELECTRONIC AND CERAMIC INDUSTRIES: MOREOVER, IF A TEXTILE AGREEMENT WERE ACHIEVED NEAR THE OUTSET THEN HOBODY WOULD GET AROUND TO THE GENERAL INTERPRETATION OF ARTICLE XIX VWHICH THE GERMANS WISHED. 6. STATHAM ENQUIRED HOW THE COMMUNITY POSITION ON HONG KONG WAS RECONCILABLE WITH THE GERMANS' OWL VISH FOR CLEAR CRITERIA (SEE (A) ABOVE) WAS IT NOT THE CASE THAT THE AGREEMENT WITH HONG KONG
MIGHT SET A BAD PATTERN ?
7. ELSON SAID THAT THERE WAS UNDOUBTEDLY A SITUATION OF MARKET DISTURBANCE' WHICH HAD TO BE SOLVED SOMEHOW. OF COURSE IT WAS NOT THE INTENTION FORMALLY TO DELIBERALISE BUT TO ACHIEVE AN AGREEMENT ON SELF-RESTRAINT. AT THE MOMENT, THE GERMANS WERE THE
ONLY ENTIRELY LIBERAL MEMBER OF THE COMMUNITY VIS-A-VIS HONG KONG. THE ITALIANS, FRENCH AND BELGIANS WERE NOT HAPPY WITH THE COMMISSION'S PROPOSALS ON THE GROUNDS THAT THEY DID NOT COVER THE
WHOLE RANGE OF PRODUCTS, THE GERMANS WANTED THE AGREEMENT LIMITED TO SENSITIVE COMMODITIES, THEY AGREED WITH US ON THE
PRINCIPLE THAT MARKET DISTURBANCES AND DAMAGE SHOULD EXIST BEFORE RESTRAINT SHOULD APPLY: BUT THEY CONSIDERED THAT IN MANY PRODUCTS THE RAPID INCREASE IN IMPORTS FROM HONG KONG ALREADY CONSTITUTED DI STURDANCE AND NOT LESS THAN THE THREAT OF DAMAGE. (ELSON UNDERTOOK TO LET US HAVE DETAILS ON MONDAY OF THOSE COMMODITIES IN
WHICH THERE HAD BEEN MAJOR INCREASES RECENTLY, AND WHICH THE GERMANS HENCE REGARDED AS SENSITIVE). STATHAM SUGGESTED THAT EVEN A LARGE PERCENTAGE INCREASE DID NOT ALWAYS MEAN THERE WAS DAMAGE OR EVEN DISTURBANCE, DEPENDING ON THE QUANTITIES INVOLVED. HE THOUGHT THAT WHERE A REAL CASE OF DAMAGE COULD BE MADE, HONG KONG WOULD NOT BE LIKELY TO PROVE UNREASONABLE.
2. CONFIDENTIAL
/8. ELSON REPEATED
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