TNAG-0139-FCO40-175-Effect-of-EEC-common-commercial-policy-on-Hong-Kong-exports-1969 — Page 177

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G.F. 323

CONFIDENTIAL

Notes on the Discussions with Mr. W. Ernst, Director in the E.E.C. Commission' S Directorate General for External Trade, 2nd 3rd June, 1969

Two meetings were held with Mr. Ernst in D.D.C.R.'s office, one on the afternoon of Monday, 2nd June and the other on the morning of Tuesday, 3rd June. The meetings were informal and no records were taken during the proceedings. Both sides stressed that they spoke without commitment to their authorities. The following officers of the department were present

Mr. Jones

Mr. Ho

(D.D.C.R.) (A.E.)

Mr.

Roberts

(S.T.E.)

Mr. F. Yeung

(T.O.E.(1))

Mr.

Mills

(A.R.)

>

Mr. Lim

Mr. K. Yeung

(S.T.R.) ) (for UNCTAD Preferences only) (T.O.R.(1)))

Community Quotas and Import Surveillance Scheme

2.

Mr. Ernst explained that the three most important issues now facing the E.E.C., (or at least his Directorate General) were (i) U.K. entry; (ii) preferences for 1.d.c.s; (iii) Commor. Commercial Policy. With regard to the third issue, owing to the ending of the transitional period on 31st December 1969, rapid progress was required and was being made and it was expected that by the end of the year there would be a Common Import Policy. He briefly explained the three regulations passed by the Council in December 1968, viz. (i) a common liberalisation list; (ii) common management procedures for import quotas; (iii) special procedure (surveillance system). He said that the Commission's intention was to be as liberal as possible but that, as there were differing degrees of existing liberalisation among member states, it would be necessary, in order to reach a modus vivendi and to protect vital Community interests, to establish Community quotas for a certain number of sensitive items. The surveillance procedure, he explained, would constitute a kind of holding action i.e. to give a breathing space for member states to examine developments in order to determine whether items placed under surveillance could be completely liberalised or needed to be put under quota.

3.

Mr. Jones asked Mr. Ernst how he would reconcile the establishment of quotas and surveillance systems with Articles XI, XIII and XIX of G.A.T.T. Mr. Ernst vaguely referred to the Community extending existing national import restrictions and not trying to establish new ones. Mr. Jones said that, apart from cotton textiles, the only quantitative restrictions in the E.E.C. against Hong Kong exports were imposed by France. In the case of cotton textiles Hong Kong had Article 4 agreements under the CTA with Germany and the Benelux countries covering most cotton textile exports. These were under export control. France still invoked Article 2 against Hong Kong and maintained import restrictions. Germans had now notified Hong Kong that the export restraint agreement for certain items of woollen knitwear could be discontinued and the trade re-liberalised. Hong Kong had recently raised in the G.A.T.T. the question of the illegality of the French restrictions and the Hong Kong Government (and HMG) could be expected to object should the Community take steps to extend import restrictions on Hong Kong on any items to cover the whole Community and not just France.

The

4.

Mr. Ernst confirmed that, as far as Hong Kong was concerned, and apart from cotton textiles, the items at present under examination were those in respect of which France maintained restrictions against Hong Kong. He said that Hong Kong would have to recognise Community difficulties. The fact had to be faced that France was a member of the Community and her views had to be taken into account in formulating a

CONFIDENTIAL

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