XN000022-1982-06-21 — Page 2

MONDAY, JUNE 21, 1982

THREE IMPORTANT POINTS STRESSED IN TALKS WITH EEC

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FOLLOWING A REPORT TO THE TEXTILES ADVISORY BOARD ON SATURDAY CORNING (JUNE 19) BY MR LAWRENCE MILLS, COMMISSIONER OF TRADE, FURTHER DETAILS WERE RELEASED TODAY (MONDAY), REGARDING THE CONSULTATIONS BETWEEN HONG KONG AND THE EUROPEAN ECONOMIC COMMUNITY ON THE FUTURE OF HONG KONG'S EXPORTS TO THE EEC WHEN THE CURRENT AGREEMENT EXPIRES AT THE END OF THIS YEAR.

THE NEGOTIATIONS BEGAN WITH AN OPENING STATEMENT BY HONG KONG IN WHICH HONG KONG EMPHASISED THREE MATTERS OF PARTICULAR IMPORTANCE TO THE HONG KONG POSITION BEFORE THE SUBSTANCE OF THE NEGOTIATION COULD BE TACKLED.

THESE WERE, FIRSTLY, THE GROUND RULES FOR THE NEGOTIATIONS- SECONDLY, THE IMPORTANCE WHICH HONG KONG ATTACHED TO THE PROTOCOL EXTENDING THE MFA, AND THIRDLY, THE INTERPRETATION OF THE LETTERS EXCHANGED BETWEEN DR KRENZLER, THE EEC'S CHIEF TEXTILES NEGOTIATOR, AND MR MILLS AT THE CONCLUSION OF THE MFA NEGOTIATIONS LAST YEAR.

ON THE FIRST POINT, THE TWO SIDES AGREED THAT THE NEGOTIATIONS SHOULD BE HELD UNDER ARTICLE 4 OF THE MFA AS EXTENDED BY THE PROTOCOL, HAVING REGARD TO THE EXCHANGE OF LETTERS BETWEEN DR KREN ZLER AND MR MILLS.

ON THE SECOND POINT, THE HONG KONG DELEGATION RECALLED THAT THE PROTOCOL OF EXTENSION DID NOT CONFER A RIGHT ON AN IMPORTING COUNTRY TO TAKE UNILATERAL ACTION WHERE TWO PARTIES FAILED TO AGREE ON ANY PARTICULAR ISSUE. HONG KONG MADE CLEAR THAT IT WAS NOT PREPARED TO AGREE THAT THE EEC SHOULD SECURE IN BILATERAL NEGOTIATIONS WITH HONG KONG WHAT IT HAD FAILED TO SECURE IN THE MULTILATERAL NEGOTIATION OF THE MFA.

THE EEC SIDE ARGUED THAT THERE WAS NOTHING TO PREVENT HONG KONG FOREGOING ITS RIGHTS UNDER THE PROTOCOL AND AGREEING THAT THE EEC COULD EXERCISE UNILATERAL RIGHTS WHERE THE TWO SIDES FAILED TO AGREE.

HONG KONG DREW A DISTINCTION BETWEEN WHAT THE PROTOCOL MIGHT ALLOW AND WHAT HONG KONG WAS PREPARED TO DO.

HONG KONG WAS PREPARED TO CONFER UNILATERAL RIGHTS IN ONE AREA ONLY, WHERE SUFFICIENT SAFEGUARDS EXISTED AGAINST CAPRICIOUS EXERCISE OF THE UNILATERAL POWERS OF THE EEC. THIS WAS IN CONNECTION WITH THE WELL-ESTABLISHED EXPORT AUTHORISATION SYSTEM WHICH HONG KONG HAS OPERATED FOR MANY YEARS WITH THE EEC, WITH THE UNITED STATES AND MANY OTHER IMPORTING COUNTRIES.

/THE DISTINORK