CONFIDENTIAL
9.
The main Mediterranean suppliers (Portugal, Spain, Greece, Turkey, Cyprus, Malta, Tunisia, Algeria, Morocco) all have preferentia agreements with the EEC which entitle them to unrestricted access to the Community market for industrial goods. For this reason it was not possible to negotiate formal greements with them under the GATT MFA. Instead the Community has sought, and, except in the case of Turkey, reached voluntary restraint understandings with the countries concerned. The achievement of these understandings, for which the UK pressed hard, took longer and required more concessions than the MFA agreements with the other low-cost suppliers, such as Hong Kong, which did not have a contractual preferential relationship with the Community. Meanwhile the Mediterranean
countries concerned were able to step up their exports.
10.
Now that agreements have been reached with the Mediterranean suppliers the rate of increase in their exports will decelerate
sharply. It is unrealistic, however, to expect any decrease in their market share; indeed after Spanish and Portuguese accession, in particular, this share is likely to rise.
11. Hong Kong does not expect the UK to restrict access from other EEC Member States. The nub of Hong Kong's argument here is that if UK industry is to be wiped out it is better for UK consumers
for Hong Kong rather than the FRG or Italy to capture the market. We do not, however, accept the premise that the UK industry is necessarily incapable of responding to the challenge from within Community, although we would readily acknowledge that for the foreseeable future there is no prospect of it being able to compete on equal terms with Hong Kong.
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