CONFIDERAÏAL
into the agreement.
On many sensitive itens, British growth will
be as low as half a per cent.
4.
Difficulties have already arisen. The Community position is that the Hong Kong Government is committed to use its "best endeavours" to keep textile exports in 1975 as near as possible to the levels for 1975 specified in the agreement. The problem is that the agreement was concluded only in July. In many cases sendings in the first 6 months of the year were extremely high. Hong Kong maintains that it is only committed to keep its sendir in the last 5 months of the year (the period since the de facto application of the agreement) to the relevant proportion of the 1975 levels specified in the agreement. This proportion works out at 45.8. They are therefore ignoring the fact that the 45.8¡ added to what was sent before the agreement came into force may bring Hong Kong's exports in many categories to well above the levels specified for 1975 in the agreement. What is more, they have put their interpretation into practice by issuing 45.8 of the 1975 levels to their exporters as their quota for the period in question.
5.
This has led to serious difficulties in several Member States of the Community. On certain sensitive categories Hong Kong's exports to Britain have already reached almost 140 of the 1975 levels. The Community requested consultations with Hong Kong under Article 6.2 of the textiles agreement to try and resolve these difficulties. The first round took place in Hong Kong on 17/18 November. Discussions at that time were only about the UZ market, but other Member States are involved. No conclusion was
reached at this round and it was agreed that discussions would
resume about all hember States in Brussels on 15 December.
6.
At the November consultations in Hong Kong the Community made an offer to Hong Kong which involved a free gift to cover some of Hong Kong's over-shipments and requested Hong Hong to anticipate the rest of the over-shipments against the 1976 quotas. Hong Kong rejected this offer.
CONFIDENTIAL
17.