(a)
By negotiating under Article 4 she could still insist on selective
restraints in accordance with the MFA's provisions, but would be
entitled to more liberal terms than under Article 3.
we also believe from various statements by the Commission that once
the Hong Kong/EEC textile agreement is signed up, the EEC would
be more disposed to reconsider Hong Kong's inclusion (or at least
partial inclusion) in the textile GSP, if not for 1975 then for
1976. The Commission are genuinely embarrased over their inability
to find any Hong Kong textile products which they could recommend
for inclusion in the 1975 GSP, and we and Hong Kong should work
upon their uneasy conscience. We should be more likely to make
progress in this way than by trying to use strong arm methods.
Note on MFA Articles 3 and 4
4. Article 3 lays down the terms under which restrictions can be negotiated on
a product-by-product, country by country basis where imports of these goods
are causing, or actually threatening, market disruption as defined in Annex A
of the Arrangement. Quota base levels must be calculated in accordance with
Annex B. Annex B also states that quotas must increase annually by not less
than 6%, Although a lower positive growth rate is permissible in exceptional
cases of particularly sensitive products.
5. If however the two sides fail to reach agreement within 60 days, the
importing country has the right under Article 3 to impose import controls
unilaterally, at the same time reporting its action to the Textile
Surveillance Body.
6. Article 4 deals with agreements negoitated "on mutually acceptable terms".
Although such agreements are explicitly intended to eliminate real risks of
market disruption as defined in Annex A, the inference is that the product-
by-product examination of the case for restraint will be less rigorous.
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