TNAG-0139-FCO40-175-Effect-of-EEC-common-commercial-policy-on-Hong-Kong-exports-1969 — Page 178

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common import policy. She would not accept that everything should be liberalised and all her restrictions disappear. The position was likely to be that the Commission would recommend liberalisation of a number of the items restricted by France, that on others there would be surveillance but that on a small number of items French quotas would need to be replaced by Community quotas. Mr. Jones said that this was all very well from the point of view of the Community; but had they considered sufficiently their position in the G.A.T.T. in this regard? These would not just be residual restrictions but new restrictions imposed completely contrary to the G.A.T.T., without any justification for balance of payments reasons (indeed rather the opposite in the case of Germany and Italy). Rather they would be imposed for obviously protectionist reasons and even then only to satisfy protectionist sentiment in France, which was more psychological than real. Mr. Ernst conceded this but said that it was legalistic thinking that did not pay sufficient regard to the realities involved in the establishment of a Community position. Mr. Jones, in turn, conceded that what he had said might be considered to be legalistic. G.A.T.T. was after all a contractual arrangement. But it was a fact that the rules of G.A.T.T. were Hong Kong's best protection against unjustifiable restrictions being placed on her trade. The people of Hong Kong had just as much right to earn their living as any other. Furthermore, Hong Kong had from the

She had beginning had the G.A.T.T. applied to her by the United Kingdom. also been entitled, as a dependent territory, to have 0.E.E.C. liberalisation measures extended to her in the 1950s. All the member states of the

Now the other Community, except France, had honoured these obligations. member states were to be asked to accommodate France's illegality. Finally, Mr. Jones recalled that Hong Kong was not in the same position as Japan. All member states of the Community had at some time invoked Article XXXV of the G.A.T.T. against Japan and had reached agreement with the Japanese on conditions for its disinvocation. Restrictions against Japan were therefore, in this regard, less 'illegal' than restrictions against Hong Kong.

5.

Mr. Jones went on to ask Mr. Ernst what would be the position as regards Article 115 of the Treaty of Rome after the end of the tran- sitional period. Mr. Ernst said that the Article would still apply but member states could not invoke it unilaterally and measures taken under it would be under the control of the Commission and would need to be 'in conformity with the Treaty'. Mr. Jones explained that he had asked this question because he could foresee technical difficulties even if quotas were applied in all member states on certain items previously only restricted in France. Quite apart from the fact that the quotas would be discriminatory against Hong Kong, and perhaps a few other countries, (which made them even He assumed there more contrary to the G.A.T.T.) how would they be divided? would be no cut back, in which case it could well happen that, say, Germany's

With the quota would be 1,000, Benelux 300, Italy 100 and France 20. establishment of free circulation the French would still complain that more of the 1,400 would find its way into France from other member states

The unless the Commission authorised the continued use of Article 115. position would be even worse from a French point of view if full Community quotas were established. Mr. Ernst conceded that this was a problem and that it would have to be dealt with as it arose. He envisaged as a start allocating, say, 90 per cent of the quotas to member states and leaving 10 per cent as a Community reserve, with perhaps some residual use of Article 115. The Community quota would then be gradually increased and the

Mr. Jones member states' quotas cut down with a phasing out of Article 115. replied that this might be all right in theory but that he would like to know what the French would think of it. He thought that a better and more pragmatic way of proceeding would be to increase the French quotas step by step over a few years,

to improve the allocation of licenses and then to liberalise. He would point out that Hong Kong's total exports to the whole Community were only about a half of her exports to the United Kingdom

Most of her exports to the U.K. were duty free and yet the British economy could live with the position. The only quotas were on cotton

alone.

/textiles

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