CONFIDENTIAL
5. I BELIEVE YOUR OBJECTIVE AND OURS REMAINS THE CONCLUSION OF
LUSION
A TOLERABLE AND WORKABLE AGREEMENT. IN MY VIEW, THE QUICKEST WAY TO DO THIS WOULD BE FOR THE COMMISSION FIRST TO PROVIDE US WITH A REVISED REQUEST OF HONG KONG, WHICH SHOULD BE IN THE FORM OF A CLEAR INDICATION OF THE EXTENT TO WHICH THE E.E.C WOULD BE PREPARED TO GO TO CLOSE THE GAP BETWEEN US. (I SHOULD ADD THAT WE HAVE LEARNT WHAT ARE THE COMMISSION'S PROPOSED LIMITS FOR THE SUPPLYING COUNTRIES AND THE ''RESERVES'' AVAILABLE FOR NEGOTIATED DISTRIBUTION, AND IT IS CLEAR THAT THESE LEAVE A GOOD DEAL OF ROOM FOR MOVEMENT BY THE COMMISSION.) IN SUGGESTING THIS, I AM SUGGESTING THAT THE COMMUNITY SHOULD DO NO MORE THAN WE HAVE ALREADY DONE. A FIRM ASSURANCE ON EXPORT CONTROL AND A
WILLINGNESS AT LEAST TO RECONSIDER THE COMMUNITY'S CATEGORISATION PROPOSALS (OR ADEQUATE TRANSITIONAL ARRANGEMENTS) WOULD GIVE US A REASONABLE BACKGROUND AGAINST WHICH TO CONSIDER THEIR PROPOSALS
ON LIMITS. WITHOUT THESE TWO POINTS ANY LIMITS HAVE NO TRUE
MEANING SINCE THERE IS NO CERTAINTY THAT THEY CAN BE USED.
6. I HOPE YOU WILL FEEL ABLE TO TRY TO PERSUADE THE COMMISSION
TO RESUME ON THIS BASIS. IN ANY CASE, I SEE MERIT IN AN EARLY RESUMPTION OF TALKS BECAUSE THERE ARE MANY OTHER ELEMENTS IN AN
AGREEMENT WHICH STILL NEED TO BE DISCUSSED. I BELIEVE THAT THIS
ASPECT OF THE NEGOTIATIONS CAN BE CONTINUED IN PARALLEL WITH CONSIDERATION OF THE TWO MAJOR STUMBLING BLOCKS, NAMELY, LIMITS AND CATEGORISATION. ON THE LATTER POINT, UNOFFICIAL MEMBERS . OF THE TEXTILES ADVISORY BOARD CONTINUE TO EXPRESS THE GREATEST CONCERN OVER THE DISLOCATION WHICH THE NEW SYSTEM WILL HAVE FOR. THE TRADE. ONE ASPECT OF THIS WHICH I PERSONALLY HAD NOT BEFORE FULLY APPRECIATED WAS THE VERY GREAT LOSS OF FLEXIBILITY IN THE NEW SYSTEM OF CATEGORISATION AS COMPARED WITH THE PRESENT ONE. THIS LOSS COULD NOT BE COMPENSATED FOR IN ANY MEANINGFUL WAY EXCEPT BY COMBINING CATEGORIES.
7. 1 MUST ADD THAT WE CANNOT ACCEPT THAT FURTHER CUTBACKS ARE ESSENTIAL, IN THESE NEGOTIATIONS. WE HAVE DIFFICULTIES WITH BOTH THE PRINCIPLE AND THE PRACTICALITIES. I WILL NOT FURTHER
LENGTHEN THIS TELEGRAM WITH THESE ARGUMENTS BUT SAY ONLY THAT
EVEN IF WE AGREED WITH THE LINE IN PARAS 6-7 OF YOUR TELNO.868, WE WOULD SAY THAT THE PROPER PLACE TO PROPOSE THE INTRODUCTION
2 CONEL CONFIDENTIAL
/OF THIS