RESTRICTED
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Article XIX of the GATT provides for global quotas and, as I said in my letter of 12 June 1976, we believe that recourse to the MFA and to Article XIX are not optional alternatives but safe- guard opportunities designed to cover quite different situations. The MFA represents a derogation from the GATT rights of the
'exporting' countries but it's limited to particular products from particular sources. It seems to us pretty unreasonable to seek amendment to the MFA to permit 'global' restrictions at the same time as you are seeking to change Article XIX to permit selective action. This is really trying to get the best of both worlds.
Furthermore, can you really have 'global' quotas, even against all "low-cost" suppliers. As we understand it, you can't restrict imports from the EEC, from EFTA, from the Lomé countries, from EEC associates under the MFA (and we doubt whether anyone is going to seek restraint by the US) so that probably about half of your textile imports including a good deal of the "disruptive or potentially disruptive" would be outside the 'global' quota, It would be applied only to a limited number of 'exporting' countries, of which of course we would be one.
We are obviously concerned about particular aspects of your proposals but there is also a general point that I hope will concern you as much as us: we seem to be heading for an impasse in the Textiles Committee. The MFA is already weighted against the exporting countries. Their general attitude in the December meeting was that, though they did not like the MFA, they would reluctantly accept an extension, but they would be opposed to any change that would lead to more restrictive effects.
(a)
When one lists Mr. Meacher's proposals
a single quota to deal with all disruptive or potentially (!) disruptive imports of a sensitive product, unilaterally defined by the importing country as one where import penetration rates are very high, regardless of the importing country's level of exports of that product;
(b) growth rates varying in inverse proportion to the rate of import penetration and adjustable downwards so that exporting countries might find their exports and even their share of the market shrinking;
(c) variable reference periods, to permit greater cutbacks
than the rollback formula already permits;
(d) tying the reference period (as fixed by the importer
under (c)) to the start of negotiations (this can only relate to Article ↳ negotiations, where there is no market disruption and we are supposed to be negotiating only a mutually acceptable agreement to avoid real risks);
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/(e)
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