TNAG-0134-FCO40-170-Tariff-preferences-for-developing-countries-1969 — Page 75

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important breach of the principle of free trade. There is, after all, a considerable difference between measures to restrict the volume of imports from developing countries, such as the present U.S. proposals in the textile sector, and measures which merely limit the extent of a tariff concession. In any case, as you point out, the EEC will go ahead with their scheme whatever we do ourselves. Once experience of the actual operation of a preference scheme has been gained it may be possible to move toward a more liberal attitude.

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6.

The practical and administrative difficulties of a quota system stand out in your memorandum but I hope we can look into

I agree these carefully at the meeting you intend to arrange. with you that there is no need to follow the EEC scheme in every detail and that our aim should be to work out the arrangements for calculating quotas and applying them in practice which suit us best. I do not propose to comment in any detail at the moment on these aspects. One point that concerns me, however, is the suggestion that special provision might be made for the least advanced of the developing countries. I can see that it might be desirable to ensure that a quota was not monopolised by one particular supplier but it might be dangerous to be drawn into definitions of the "least developed" or the "more competitive" among developing countries. This raises the same problems as a definition of"developing countries" in general and is surely best avoided. We also knew well that some other donors would be only too happy to have a precedent for classifying Hong Kong as highly competitive. I suggest therefore that any restrictions on the amount of a quota to be taken up by one country should be related solely to the volume of trade which can at least be measured objectively. In this context it would be helpful to have more information on the likely practical effect of a provision that no country would in general be allowed to take up more than 50% of a quota. Could this mean that the duty-free quota for certain products would not be fully utilised, and if so, is this our aim? As far as the question of beneficiary countries is concerned, I do not see that the adoption of a duty-free quota system would make this problem either easier or more difficult to resolve.

7. Fihally, on the question of the evaluation of the OECD offers, there is the basic difficulty of comparing offers which have been drawn up on quite different principles. I agree with Slater, however, that even if we adopt the EEC system the

There is not only the question problem by no means disappears. of "burden sharing" within OECD but also the problem of evaluating the balance of advantage for developing members

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