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EXCESS OVER THE GLOBAL CEILINGS AND FOR DETAILS OF HOW THESE WOULD BE DIVIDED BETWEEN MEMBER STATES. RECALLING THE HANDLOOM DIFFICULTIES EARLIER IN THE YEAR GRAY EMPHASISED THAT IT WOULD BE DIFFICULT FOR US TO ACCEPT A COMPLETE RESTORATION OF 1976 IMPORT LEVELS IN
1978.
3. IN REPLY DAVIGNON BEGAN WITH A GENERAL REVIEW OF THE NEGOTIATIONS. IN HIS VIEW THEY HAD DEMONSTRATED THE POWER AND CREDIBILITY OF THE OF THE COMMUNITY IN PURSUING A CLEAR POLICY.. IN PARTICULAR THE COMMISSION NEGOTIATORS HAD BEEN ABLE TO CONVINCE THE SUPPLYING COUNTRIES THAT THE THREAT TO REDUCE EEC'S OFFERS WOULD BE CARRIED OUT IF THERE WAS NO AGREEMENT. THIS HAD MADE IT POSSIBLE TO KEEP WITHIN THE GROUP I CEILINGS FOR SIX OF THE EIGHT PRODUCTS WITH LESS DIFFICULTY THAN HE HAD EXPECTED. COTTON YARN AND COTTON CLOTH WERE SPECIAL CASES AND IT HAD BEEN NECESSARY TO ENVISAGE EXCESSES OVER THE MADE CEILINGS TO MAKE AGREEMENT POSSIBLE WITH INDIA, PAKISTAN AND BRAZIL. THERE WAS, HOWEVER, NO DOUBT THAT THEY WOULD SIGN AGREEMENTS ON THE TERMS NOW PROPOSED. THERE WAS SOME SLIGHT UNCERTAINTY OVER EGYPT BUT HE FELT SURE THAT THEY WOULD ALSO AGREE. HE REGARDED THE INFORMAL UNDERSTANDING WITH BRAZIL A3 THE TURNING POINT IN THE NEGOTIATIONS SINCE THIS HAD PAVED THE WAY FOR AGREEMENT WITH PAKISTAN AND INDIA BY BREAKING UP THE UNITED OPPOSITION WHICH HAD BEEN FORMING IN GENEVA.
4. TURNING TO POINTS OF DETAIL DAVIGNON SAID THAT THE COMMISSION'S REPORT COULD HAVE POINTED OUT THE EXTREME WEAKNESS OF THE U.K.'S ECONOMIC CASE ON COTTON YARN. HOWEVER HE FULLY UNDERSTOOD OUR POLITICAL DIFFICULTIES AND HAD THEREFORE INSTRUCTED HIS STAFF TO MAKE A SPECIAL EFFORT TO HELP THE U.K. ON COTTON CLOTH HE ACKNOWLEDGED THAT THE U.K. HAD ALWAYS LICENSED TEMPORARY IMPORTS OUTSIDE QUOTAS BUT OTHER MEMBER STATES HAD NOT DONE THIS. IF OUR PROCESSING INDUSTRY SUBSEQUENTLY HAD PROBLEMS WE MIGHT CONSIDER LICENSING ADDITIONAL QUANTITIES ABOVE THE QUOTA FOR RE-EXPORT. HE THOUGHT IT ESSENTIAL NOT TO RE-OPEN THE ALLOCATION OF THE OVERALL INCREASES AMONG MEMBER STATES AT THE COUNCIL BUT THERE WAS SUFFICIENT FLEXIBILITY WITHIN THE OVERALL LIMITS TO ACCOMMODATE OUR DESIRE TO HELP PAKISTAN AND INDIA AT THE EXPENSE OF BRAZIL. SIMILAR FLEXIBILITY WOULD ALSO BE POSSIBLE IN ALLOCATING THE INCREASE IN INDIAN SHIRTS AND BLOUSES AND THE COMMISSION REPRESENTATIVES WOULD NOT STAND IN THE WAY OF THIS IN DISCUSSIONS
NEXT WEEK AT EXPERT LEVEL.
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