0003230
G.F. 323
CONFIDENTIAL
- 2 -
3.
Hong Kong had responded immediately to the Benelux Note of 17th May, but had been disappointed that the Benelux Governments had found it necessary to impose temporary import restrictions. He felt that in view of the shipping time between Hong Kong and Europe, these restrictions were not really warranted and placed Hong Kong at an initial negotiating disadvantage. Nevertheless, it was the aim of the Hong Kong side to reach an agreement with the Benelux and to commit such an agreement to writing before the departure of the Benelux delegation.
4.
He regretted that Mr. Haddon-Cave would have to leave for London at the week-end. Mr. Miller would then take over the leader- ship of the Hong Kong side.
5.
He explained the position of the Cotton Advisory Board and the fact that any agreement reached would be subject to the approval of the Hong Kong Government and would then be notified to Her Majesty's Government for formal consent. But for all practical purposes any agreement reached would be capable of immediate implementation.
6.
He emphasised Hong Kong's concern to avoid interference with the continuity of the trade, and it was for this reason he attached importance to the principle of export control. Nevertheless, he was aware of the Benelux wish to maintain their re-export trade and traditional trade channels. He did not consider these aims were incompatible.
7.
Although the negotiations were, confined to the products mentioned in the Benelux request under Article 3 of the Long Term Arrangements and to the future of the Hong Kong undertaking on shirts, he would be happy to consider them in the context of the Community's emerging policy on cotton textiles.
8.
He had prepared a draft programme as a basis for discussion and suggested that the first item of business should be to adopt an agenda which was intended as a check list rather than as a rigid framework. He had also included provision for a sub-committee to consider statistics and for a drafting committee.
9.
Mr. Verhagen thanked Mr. Sorby for the reception given to the Benelux delegation. Ho recognised the importance of the trading links between the Benelux and Hong Kong and the part which cotton textiles played in this trade. He was equally aware of the importance of the cotton textiles trade generally to Hong Kong and of Hong Kong's need to find expanding markets. The Benelux also were facing acute difficulties in the cotton and rayon sectors of their textile industries, difficulties which were causing concern to his Minister.
10.
He recognized that Mr. Sorby had adopted a realistic approach, bearing in mind Hong Kong's G.A.T.T. rights, the need for access to world markets and the United Kingdom's application to join the European Economic Community. He felt sure that both sides would reach agreement. The Benelux side, on their part, were entering the discussions with an open mind.
11.
When the Benelux presented their aide-memoire on 17th May, they had assumed that the correct procedure was to do so in London. They had then reported that they had imposed temporary import restrictions in accordance with the procedures of the Long Term Arrangements, in view of the sharp rise in imports from Hong Kong at low prices. He could not agree with Mr. Sorby that these import restrictions placed Hong Kong at a disadvantage.
/12.
CONFIDENTIAL
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