SB
CONFIDENTIAL
DEPARTMENT OF TRADE AND INDUSTRY
INTERNATIONAL TRADE POLICY DIVISION
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Telex 8811074/5 Answer Back DTHQ G
33
DJ Plumbly Esq
Counsellor (Commercial)
British Embassy
Washington DC
USA
MAK 040/2
RECEIVED IN REGISTRY
22 JAN 1986
DESK OFFICER
INDEX
PA
CHINA: GATT MEMBERSHIP
REGISTRY
Action Take
Your reference
Our reference
January 1986
Date
hr Warren FCO
We spoke. Grateful
any
comments on
сс ти спиливать
this draft, by Robert Madelin
3pm 20. i, please.
16.
Thank you for your teleletter of 3 January, which I have discussed with David Warren as well as with our China experts here. This is a timely report on a subject which will certainly come to the surface in Geneva in the next few months.
2. It is clear that we broadly agree with USTR about Chinese accession, in par- ticular on the need for a tough market disruption clause. The Protocols of Accession to GATT of the East European Contracting Parties (copy of that for Poland enclosed) provide a 'useful precedent. They envisage a three-tier mechanism for safeguard action: agreement on access levels with the East European country follow- ing bilateral consultation; failing agreement, adjudication by GATT; finally, the right to implement safeguard action unilaterally if the East Europeans are unwilling to accept a GATT verdict against them. Following such action, the East Europeans may take GATT-legitimate retaliatory action in respect of equivalent trade, but there is no provision for the usual negotiation of compensation. in GATT Article XIX, injured parties can in critical circumstances act before consulting. This is what we believe Cecilia Klein had in mind.
3.
As
The question remains whether the same provisions will suffice for China, with its greater growth potential. China is already set to be developed countries' biggest source of low-cost textiles and will in general present a much bigger problem than the East Europeans do, particularly if large exports of light industrial goods materialise. We would therefore envisage a stronger safeguard clause which, as well as being uncompensated and selective, had no provision for retaliation and no test of injury.
4.
We would, of course also want the right (as in the East European GATT Protocols) to maintain our existing QR's on Chinese gloves, hats, shoes, radios, TV's pottery and textiles for as long as HMG deemed desirable.
5.
The Community has reached no firm conclusions on how it should respond to an eventual Chinese application. But there is general agreement that special terms will be needed, and we envisage no difficulty in securing Community agree- ment to a tough line in negotiations, as long as the US set a firm example
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