XN000022-1985-02-07 — Page 2

THURSDAY, FEBRUARY 7, 1985

U.S. ORIGIN RULES TALKS ADJOURNED

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CONSULTATIONS IN WASHINGTON BETWEEN HONG KONG AND UNITED STATES TRADE OFFICIALS ON THE U.S. ORIGIN REGULATIONS HAVE BEEN ADJOURNED FOLLOWING TALKS ON MONDAY, TUESDAY AND WEDNESDAY, A TRADE DEPARTMENT SPOKESMAN ANNOUNCED TODAY.

MR HAMISH MACLEOD, THE DIRECTOR OF TRADE WHO LED THE HONG KONG DELEGATION, SAID THE TALKS HAD FOCUSED ON THE FINDINGS OF THE TEXTILES SURVEILLANCE BODY (TSB) CONCERNING THE ADVERSE EFFECTS OF THE REGULATIONS ON HONG KONG'S TRADE UNDER THE BILATERAL TEXTILES AGREEMENT.

HE SAID THAT HE HAD STRESSED TO THE AMERICAN DELEGATION THAT THE REGULATIONS WERE CONTINUING TO CAUSE SERIOUS DISRUPTION TO THE KNITWEAR TRADE UNDER THE AGREEMENT.

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HE ADDED THAT HE HAD POINTED OUT POSSIBLE SIDE-EFFECTS OF THE NEW RULES WHICH WOULD BE UNWELCOME TO THE U.S. FOR EXAMPLE, IT WAS CLEAR THAT THE NEW RULES, IF UNCHANGED, WOULD IN FUTURE PERMIT HONG KONG TO EXPORT SWEATERS FREE OF QUOTA IF CERTAIN KNITTING PROCESSES WERE CARRIED OUT IN THE EEC OR OTHER QUOTA FREE COUNTRIES. IN SUM, THE REGULATIONS COULD LEAD TO A PROLIFERATION OF JUST THE SORT OF PROBLEMS WHICH THEY WERE SUPPOSEDLY DESIGNED TO PREVENT.

MR MACLEOD CONFIRMED THAT, IN THE ABSENCE OF ANY U.S. PROPOSALS, HONG KONG HAD PUT TWO PROPOSALS ON THE TABLE. THESE PROPOSALS ADDRESSED THE IMMEDIATE PROBLEMS OF UNCERTAINTY FACING HONG KONG MANUFACTURERS AND EXPORTERS, AND SUGGESTED A SOLUTION TO THE OVERALL PROBLEM OF THE REGULATIONS IN THE CONTEXT OF THE CURRENT U.S. REVIEW.

HE SAID THAT THE U.S. HAD BEEN UNABLE TO GIVE A SUBSTANTIVE RESPONSE TO THE PROPOSALS DURING THE PRESENT ROUND OF CONSULTATIONS, HE HAD RESPONDED THAT THE ABSENCE OF ANY U.S. ATTEMPT TO ADDRESS THE TSB FINDINGS AND TO DISCUSS POSSIBLE SOLUTIONS WAS UNREASONABLE AND UNHELPFUL AND COULD NOT BE REGARDED AS AN ADEQUATE RESPONSE TO THE TSB RECOMMENDATIONS.

NEVERTHELESS, IN VIEW OF THE U.S. POSITION, IT HAD BEEN AGREED THAT THE TALKS SHOULD BE ADJOURNED TO ENABLE THE UNITED STATES TO CONSIDER FURTHER AND TO RESPOND TO THE PROPOSALS.

COMMENTING ON THE TALKS, MR MACLEOD SAID, THE OUTCOME AT THIS STAGE IS STILL INCONCLUSIVE. THE U.S. MADE NO PROPOSALS DURING THE CONSULTATIONS, BUT I BELIEVE THAT THEY ARE NOW MORE AWARE OF THE RAMIFICATIONS OF THE REGULATIONS AND POSSIBLE ASSOCIATED PROBLEMS.

+WE HAVE BEEN ASSURED THAT THE UNITED STATES WILL GIVE FULL CONSIDERATION TO OUR PROPOSALS, AND WE HAVE ALSO BEEN ASSURED THAT FINAL DECISIONS SHOULD BE TAKEN IN THE NEXT FEW WEEKS.

/+WK MUST