0083230
G.F. 323
CONFIDENTIAL
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policies by the Member States towards Hong Kong are Hong Kong's right by virtue of the G.A.T.T. If Hong Kong shows an over-sensitive attitude to the Community on the common policy issue, it might well give the erroneous and dangerous impression that liberality is negotiable.
The Common Commercial Policy Abnormal trading practices
15.
g
Although Hong Kong exports can in no sense be described as "abnormal" (dumped or subject to overt or covert subsidies), importing countries sometimes attempt to apply this label in order to justify restrictive measures. It is, therefore, worth looking briefly at proposed D.E.C. rules governing abnormal trading practices.
16.
The need for a Community response to abnormal trading practices also arise out of the transition towards the free movement of imports from third countries within the Common Market. In November 1963, the Commission submitted to the Council "a proposal for a regulation establishing common principles and a Community procedure to safeguard E.E.C. trade against abnormal practices on the part of non- member countries". The proposal suggested practices should be regarded as "abnormal" if they were
(i) incompatible with international obligations (e.g. the G.A.T.T.); or (ii) liable to distort competition on the markets of destination
to the disadvantage of the Hember States or to cause disturbance within the Community; or (iii) liable to constitute an unjustifiable obstacle in trade with
the Community.
The second criterion seems particularly dangerous for Hong Kong but for the fact that the proposals also require any action taken against abnormal imports "to take duc account of the provisions of the General Agreement which may be applicable to the said practices".
17.
The proposal provides that a Member State wishing to safeguard itself against abnormal practices must request consultation with the Commission to establish the nature of the practices "and in particular whether they constitute a case of dumping or of export bonuses or subsidies" and their effect in the Common Market or on the Community's overseas markets, and to consider appropriate counter measures.
Up to the end of the transitional period, Member States may take action individually. But if more than one Member State is involved, the Commission may, if urgent action is necessary, decide the measures to be adopted; otherwise, they should refer suggestions to the Council.
18.
So far, the Council have taken no decision on this initiative which was followed on 6th May, 1965 by a "proposal for a Council regulation on protection against dumping or the payment of bounties or subsidies by countries not members of the E.E.C.". This proposal appears to follow the provisions of Article VI (anti-dumping and countervailing duties) of the G.A.T.T. although the requirement that the dumped goods must threaten domestic industry could, perhaps, be a little more firmly tied to the definition of dumping. The procedure advocated is that com- plaints of dumping should be considered by a committee of representatives of the Member States presided over by a member of the Commission. Final decision on the committee's recommendations should rest with the Council.
19.
Again, the Council have yet to pass a resolution on these proposals which, since they do not deviate from G.A.T.T. requirements, are unobjectionable as far as Hong Kong is concerned.
/The
CONFIDENTIAL
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