TNAG-0044-FCO40-80-Exports-to-the-Benelux-countries-aide-memoires-1967 — Page 124

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25.

Mr. Haddon-Cave recognised this point. His understanding was that the E.E.C. had been working towards this policy for the past eighteen months and that the extension of the L.T.A. had acted as a catalyst. The Community probably had now a co-ordinated, if not a common, textiles policy and had developed a concept of the total tolerable intake. He recalled that he had been warned by Mr. de Schmidt that Community members reserved the right to introduce Article 3 restrictions, within the framework of such a concept, possibly even when there was no case of market disruption. He wondered whether the present call by the Benelux Governments had been caused by Hong Kong's exports having reached some notional limit within the total tolerable intake fixed by the Community.

26.

Mr. Verhagen replied that the present call had no relation to notional limits in the E.E.C. context, but was the result of genuine difficulties faced by Benelux industries. There was an important point to bear in mind in connection with the possibility of individual Community members having recourse to Article 3 restrictions within the total tolerable intake. There was a possibility of concentration in a few particular lines if there was only one limit in respect of all cotton textile products and it might be necessary to resort to Article 3 restrictions in respect of such lines. But, if the Benelux entered into an article 4 agreement with Hong Kong, they would no longer have to use Article 3.

27.

Mr. Haddon-Cave commented that, theoretically, if the common commercial policy did not materialise, and the Benelux were obliged to seek further Article 3 restraints, Hong Kong could question the need for continued restraint if performance had been modest. Mr. Verhagen conceded this point.

28.

Mr. Haddon-Cave pointed out that Article 4 covered wider implications than Article 3, and tended to render considerations of market disruption relatively less important. On the other hand, the Benelux might find it necessary to use Article 3 to avoid imports exceeding the total tolerable intake even if there was no particular concentration and no evidence of market disruption. Mr. Verhagen replied that the situation at the moment was such that discussion could only be on a speculative basis.

29.

Mr. Haddon-Cave summed up that the Benelux side seemed to relate the possibility of an Article 4 agreement between the Benelux and Hong Kong to the outcome of further E.E.C. discussions which were tending towards Article 4 arrangements. He did not see how an agreement between the Benelux and Hong Kong would necessarily depend on the outcome of the Community's discussions. Clearly there was a close connection, but any inconsistencies between such an agreement and Community policy could be covered by the "E.E.C. clause".

30.

Mr. Verhagen agreed and gave an assurance that the proposed short-term extension was not designed to disrupt trade. suggested that it would be useful if, at the Second Working Session, the Mr. Haddon-Cave Benelux side could indicate generally their intentions regarding the other items on which restraint had been requested, before he responded on the proposed extension of the shirts agreement.

31.

Second Working Session: 3.00 p.m.. Thursday.

6th July, 1967

Mr. Verhagen related the Benelux classification numbers, for the items under discussion to the Hong Kong numbers as follows

/Nightwear

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