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textiles and these were generous (about 200 million square yards compared with sales of only about 90 million square yards in the whole Community). Apart from cotton textiles he could not see how any Hong Kong exports at current levels could be considered to be disruptive in the Community or
Mr.
Ernst that they were likely to be disruptive in the coming years. took note of this view but said that there could be some particularly sensitive areas where it did not apply.
6.
The meeting then turned to a consideration in somewhat more detail of the French quotas on Hong Kong. Mr. Jones explained that in almost every case these quotas were very small and yet in some instances applications for licenses were less than the quota level and in one or
In other cases, where two cases there had been no applications at all. items had been liberalised, there had been no upsurge in trade following liberalisation. He handed Mr. Ernst two tables of statistics showing (i) Hong Kong's exports to the different member states of the Community of items restricted to Hong Kong in France and (ii) French import quota utilisation.
7.
There was some discussion of these tables on Monday afternoon and Mr. Ernst also looked at them overnight and commented briefly on Tuesday morning. He said that he had found the information contained in the tables to be of considerable interest and that the Commission would undoubtedly find them useful. Among detailed ommments he indicated that the Commission might well eventually propose Community import quotas for rubber
He did not explain footwear, and perhaps also umbrellas, from Hong Kong. further how such quotas would be established and managed, but repeated his idea that an initial 'Community reserve' of 10% might be established with the percentage being increased in later years.
8.
Mr. Jones said that he had already fully explained Hong Kong's position on this question. Hong Kong would wait to see what emerged and would examine the position as a whole in the light of what he had said. This led Mr. Ernst to hint that, if Hong Kong could 'concede' on a small range of items (he did not make himself entirely clear what he meant by this but appeared to mean the acceptance of import restrictions or perhaps even export restraints in a few instances plus surveillance in a few others), the major part of her exports could remain liberalised in the Community as a whole, but again provided Hong Kong could accept that safeguards could be imposed in case of damage. Mr. Jones enquired what this implied. He explained that hitherto, outside the field of cotton textiles, Hong Kong had only agreed to restrain her exports of a very few items of non-cotton textiles to a few countries where, in terms of the G.A.T.T., an 'Article XIX type situation' was shown to exist involving serious injury to domestic
The criteria established producers caused by imports from Hong Kong.
He before this sort of situation could be accepted were very strict. instanced the only case involving the Community, woollen knitwear to Germany in 1966, and quoted the figures involved. Mr. Ernst replied that what he was implying was that, in the case of the Community, Hong Kong might accept a 'more flexible' interpretation of Article XIX. He tried to imply that, from the Commission's point of view, this would only be a 'formality' but argued that this would help with certain member states, particularly France, in obtaining their agreement to the liberalisation of a wider range of items than they might otherwise prefer. Mr. Jones said that his immediate reaction to these sort of ideas could not be other than unfavourable. Hong Kong had to consider the situation extremely carefully before she conceded restrictions on any item of trade. What he could say was that Hong Kong was always ready to consult with any of her trading partners about situations where they had difficulties, but he would have to emphasise the very strict criteria of market disruption involved before any concrete action to limit exports could even be considered. Furthermore, in the few cases where export limitation had up to now been conceded, these had been confined to textiles. Frankly he could not see the Community as a
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