66.
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Mr. Chairman, I will now give a response to your proposals on these 8 products.
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Cotton yarn. For the reasons already given, Hong Kong cannot accept that there, is a case for a separate quota for this product but is prepared to place it in a basket in a comprehensive agreement, and to operate an Export Authoris ation system and a consultation clause.
68.
Cotton woven fabrics and discontinuous synthetic woven fabrics. The 1978 limit you have proposed representa a cutback of 32.3% on 1976 imports and 22.3% on 1976 exports forcotton fabrics. The limit you have propos ed for dis continuous synthetic fabrics represents an increase of 49.8% on 1976 imports and 24% on 1976 exports. Hoever, since under the current agreement fabrics are categorised by the state of finish and not by fibre, we have had to consider cotton and (discontinuous synthetic woven fabrics together in calculating the percentage cutback your proposals represent in terms of the 1977 restaint limits in the current greement. . We have calculated that the combined cutback on
the 1977 restraint limits for categorie a 1 and 2 in the current agreement represented by your proposals on fabrics amounts to 40%. There is no provision in the MFA for any such cutbacks. You have not given any justification for your proposals and Hong Kong cannot accept that they are "reasonable departures" from the provisions of the MFA. It is Hong Kong's v dar, that the basis for the nego iation ? of a future limit oncexisting restraint should be the existing restraint level. Your propaals on the limits for the se two fabric items are therefore not acceptable, but Hong Kong is prepared to accept the continuous of restraint. on these
two items.
69.
Knit shirts and T-shirts. This is one of theproducts on which we have doubts as to whether a continuation of the existing restraint is justified under Article 4 of the MFA. However, in view of Hong Kong's extremelyhigh quota utilisa- tion rate in 1976, we are prepared to accept the continuation of restraint on the grounds that this is a "reasonable departur· from the MFA. This is, however, cub je ot to a condition which I
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but when T come to woven blongas a little later on.
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