RESTRICTED
IN MALLY WITH THEM THE POSSIBILITY OF AN AGREEMENT THAT AN INHER
STOY COULD BE INTRODUCED ON THE 1977 QUOTA LEVELS IN EXCHANGE FOR
LIMITED ''SWING'' BETWEEN CERTAIN PRODUCTS IN GROUP 1. THIS PROBLEM
HAS BEEN LEFT FOR LATER DISCUSSIONS ON THE FIGURES. THE COMMISSION
REPORTED THAT THEY ARE NEAR AGREEMENT WITH HONG KONG ON ALL THE MAIN
POINTS OF THE DRAFT AGREEMENT BUT HONG KONG ARE NOT PREPARED TO
CONCLUDE AGREEMENT UNTIL THEY HAVE SEEN THE BREAKDOWN OF QUOTA FIG-
URES BETWEEN MEMBER STATES.
TUNISIA
6. THE TUNISIANS HAVE REQUESTED THE EXCLUSION OF DENIM CLOTH FROM THE
LIMITATIONS PROPOSED FOR COTTON FABRIC ON THE GROUNDS THAT TUNISIA
IS NOT A LOW COST SUPPLIER OF THIS PRODUCT: PRICES ARE SIMILAR
TO THOSE OF OTHER EXPORTERS E.G. THE US AND JAPAN. AT THE ARTICLE
113 COMMITTEE MEETING, MOST MEMBER STATES WERE OPPOSED TO THIS CON-
CESSION ON THE GROUNDS THAT TO EXEMPT ONE PRODUCT OF A GENERALLY
LOW COST SUPPLIER WOULD CONSTITUTE A DANGEROUS PRECEDENT. THE
COMMISSION SAID THAT IT WOULD TAKE ITS RESPONSIBILITY ON DENIM. IF
THEY COULD NOT REACH AN AGREEMENT ON QUANTITATIVE LIMITATIONS ON
OTHER CLOTH, THEY WOULD REFER THE DOSSIER TO THE COUNCIL.
MALAYSIA
7. THE COMMISSION HAVE RREPORTED THAT SUBJECT TO INTERNAL READJUST-
MENT OF MEMBER STATES' SHARES OF QUOTA LEVELS FOR T-SHIRTS,
AGREEMENT WITH MALAYSIA ON THE ECONOMIC CONTENT COULD BE REACHED
TODAY,
HUNGARY
8. IN THE COMMISSION'S VIEW, HUNGARY IS NOW PREPARED TO ACCEPT A
PRICE CLAUSE FOR PRODUCTS SUBJECT TO QUANTITATIVE RESTRAINT BUT ARE
INSISTING THAT THE CLAUSE SHOULD REFER TO PARA 5 OF HUNGARY'S PROT-
OCOL OF ACCESSION TO GATT. ON RECIPROCITY THEY ARE ONLY PREPARED TO
AGREE TO A 'BEST ENDEAVOURS' CLAUSE. THEY REMAIN FIRMLY OPPOSED TO
A TERRITORIAL APPLICABILITY CLAUSE. THEY HAVE ALSO NOW HARDENED THEIR
ATTITUDE TO THE FIGURES PROPOSED BY THE COMMUNITY. THE COMMISSION
THINK THAT THERE IS A REAL POSSIBILITY THAT THEY MIGHT HAVE TO BREAK OFF NEGOTIATIONS WITH HUNGARY, IF THE HUNGARIANS DO NOT AGREE
TO A FINAL IMPROVED OFFER TO BE MADE TO THEM TODAY. IN THE ARTICLE
113 COMMITTEE, MOST MEMBER STATES THOUGHT THAT THE COMMISSION SHOULD
· 3-
RESTRICTED
/ STALL ON