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CONFIDENTIAL
of developments during the discussions. The attitudes of other countries (particularly the BBC having regard to the possibility of developments in regard to our application to Join the Community) will be important. There are, however, obvious dangers in such ex initiative and whilć ouK ojective would be to achieve a set of strictly observed criteria which would keep quantitative restrictions to a minimum, we might end up with something which mode it cooler för quantitative restrictions to be imposed. This adulabe unpolotable to us and could have very sexiona conséquences for Hong Kong. For this reason, I think that, before we commit ourselves, we should perhaps have another look at the idea of a Working Party when we have worked out much more clearly what the terms of reference might be, and what the outcome is likely to bo.
As you know, the Hong Kong Government have serious reservations about the implications for them of a policy of the sort proposed in the paper. I do not suggest that we must change this policy because of Hong Kong's objections. But I Tool that, from our own point of view as well as that of Hong Kong, there is real force in some of the arguments which the Hong Hong authorities have put fornard In casting doubtg on the likelihood that other countries will be ready to give up the Long Term Arrangement, or something very much izo it, in favour of a more strictly controlled set of criteria under the GATT which would make it more difficult to impose quota restrictions on imports. In these circumstances, I am glad to note that it is accepted that, panding further developments, wo shall have to accept that there may be some spread in the extent of voluntary restraint arrangements for some non-cotton textiles.
Pred Mulley
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