Reference
CONFIDENTIAL
AEETING WITH MR BILL DORWARD, HK DIRECTOR OF TRADE, INDUSTRY AND CUSTOMS: 4 SEPTEMBER 1980
Present:
Mr Parkinson
Mr March Mrs Gingell Mr Morrison Mr Bailey
Mr Dorward
+ senior officials of the TICD
CODE 18-7
$5 8/73
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Referring to the impending renegotiation of the MFA, Mr Parkinson noted that there was bound to be pressure in the UK and, he believed, in other developed countries for the inclusion of a recession clause although he himself doubted whether a workable and negotiable formula could be devised, Mr Dorward said that the concept of a recession clause had been rejected in the first MFA negotiations as illogical, unworkable and unnegotiable. Such a clause would confuse access rights with actual trade. Moreover, if cutbacks were applied to quotas during a recession. they could not take effect immediately, and the result would inevitably be that textile imports, far from synchronising with the cycles of the domestic economy, would be completely out of phase with them. The alternative approach of making annual assessments of the likely state of the market and allocating quotas accordingly relied heavily on subjective judgment and was therefore inequitable particularly as the judgment would itself inevitably depend heavily on the view of the domestic industry. Neither had there been a recession clause in MFA2: the "reasonable departures" protocol rendered one unnecessary. Mr Dorward added that HK and other MFA signatories were in general very suspicious of clauses which could be invoked unilaterally: he quoted as an example the principle of "member state breakdown" which had originally been introduced on a "strictly temporary" basis. This suspicion was increased because in no sense were the producers and the importers equal parties in the negotiations; HK, for instance, had to rely heavily on the UK to protect its interests. With this in mind the HK authorities attached great importance to demonstrating that HK exporters followed the MFA rules. Mr Parkinson acknowledged that this was so, but added that there were still widespread though unfounded accusations in the UK of dishonesty. Mr Dorward emphasised that HK exporters meticulously observed the MFA rules though naturally they also exploited them to best advantage. Mr Parkinson commented that the recent prosecution in HK of fraudulent traders had helped to convince the UK industry of HK's good record in this field. Mr Bailey said that more publicity for such cases could do much for HK's image. Mr Dorward said that part of the problem lay in HM Customs' reluctance to publicise details because of the practice of "compounding" - charging an offender multiple duty rather than prosecuting him. He added that it was important to separate the question of origin fraud clearly recognised as illegal from the renegotiation of the MFA, which was concerned with legal trade. He then asked what prospect Mr Parkinson saw for a radical redistribution of quotas in MFA3. Mr Parkinson said that there was a widespread feeling in the context of the GSP as well as the MFA that certain countries ought to be excluded entirely or treated more sternly: Brazil, with its highly protectionist policies, a notable example. Mr Dorward argued that there was no real parallel between excluding a country from the GSP (which involved taking away con- cessionary treatment considered to be no longer justified) and reducing or removing quotas under the MFA (which involved strengthening existing restrictions on that country's trading rights). Mr Parkinson suggested that it could be argued that quotas actually protected HK exports to the UK:
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