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provided "built-in flexibility", and cited as an example the grouping of women's, girls' and infants' nightwear into one category. The introduction of additional flexibility would mean that some of the agreed maxima could be exceeded, albeit compensated for by shortfalls from other limits. This could cause serious difficulties to the more sensitive Benelux industries and he would find it hard to explain why one industry should be faced with more imports just because the market for another was depressed. Mr. Miller found it difficult to accept the argument that some flexibility had already been provided as each of the categories to be subject to restraint covered one product and one position only in the Benelux tariff classifications. The Hong Kong side had accepted the provisional categorisation and restraint limits in anticipation of at least the minimum flexibility provided by Article 3. He appreciated that the Benelux side had found it difficult to accept a merger of men's and women's nightwear into one category as originally proposed by Mr. Haddon-Cave, as this would mean 100 per cent flexibility between two sets of items produced by different industries. But flexibility limited to a mere 5 per cent seemed to him an entirely different matter.
71.
Mr. Verhagen said that the restraint levels which had now been agreed represented the maximum intake for each product which the Benelux Governments felt able to permit, and that any increase in these levels would not only be unacceptable but would also go beyond his negotiating authority. He questioned the validity of Mr. Miller's reference to the language of Article 3 as he doubted whether the Hong Kong interpretation was the only one possible or was even logical. Nor could he accept the precedents quoted.
72.
Mr. Miller said he had raised the question of flexibility as a matter of principle,not of precedent. He was not suggesting that the actual terms of agreements with other countries were necessarily relevant to an agreement with the Benelux. But 5 per cent swing was clearly laid down in the Long Term Arrangement and Hong Kong had, therefore, never concluded any restraint agreement without flexibility provisions geared in some way to this minimum. He regretted that he was not in a position to agree now to any less liberal provisions. The Hong Kong side had not imagined that any difficulty could arise on this point and he would have to seek further instructions.
73.
He accordingly proposed, and Mr. Verhagen agreed, that discussion on this question should be left in abeyance for the time being.
74.
Turning to item 9 on the agenda, exchange of statistics, Mr. Miller apologised for the use of the word "exchange" in an agenda relating to a unilateral undertaking. Hong Kong would supply the Benelux Governments with fortnightly returns of export licences issued. He explained the administrative and practical differences between export licences for shipment of restrained products and export authorisations. He undertook to continue to provide copies of export licences for items under restraint to the Benelux Governments through the Department's Brussels Office. He understood that the Department was now receiving Benelux trade statistics on a monthly basis and confirmed that this met Hong Kong's requirements in this regard.
75.
Mr. Miller then tabled a first rough draft of a tentative "Memorandum of Undertaking", on the points provisionally agreed together with a draft of a covering letter in case this was also needed. He explained that the drafts were in no way intended to be definitive but were provided simply to expedite discussion; the
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