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3 GENEVA TEL. NO. 6 TO F.C.O.
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7. AT END OF DISCUSSION ERNST RAISED QUESTION OF CCP IN RELATION TO HONG KONG. HE SAID THERE WERE THREE PROBLEMS, NAMELY:
(A) COTTONS,
(B) NON-COTTONS, AND
) FRENCH RESTRICTIONS ON OTHER PRODUCTS. COTTONS WERE BEING COVERED AND NON-COTTONS SHOULD BE HELD OVER UNTIL OUTCOME OF US PRESSURES WERE KNOWN. IF AMERICANS OBTAINED ANYTHING LIKE COMPREHENSIVE RESTRAINT ARRANGEMENTS WITH ASIAN SUPPLIERS COMMUNITY WOULD BE FORCED TO MOVE AS WELL. BUT THEY DID NOT WISH TO DO SO AND COMMISSION AIM WAS RATHER TO GET RID OF PRESENT RESIDUAL RESTRICTIONS.
8. ON (C) ERNST RENEWED HIS PROPOSALS FOR DISCUSSIONS WITH HONG KONG WHICH HE ENVISAGED TAKING PLACE ONCE THEY HAD DEALT WITH JAPAN (EXPLORATORY NEGOTIATIONS MID-FEBRUARY IN TOKYO) AND HAD SETTLED COTTON TEXTILES WITH HONG KONG. COMMISSION'S AIM WAS TO LIBERALISE MOST OF FRENCH RESTRICTED ITEMS BUT SOMETHING WOULD NEED TO BE DONE ON A VERY FEW TO SAVE FRENCH FACE. UMBRELLAS IN PARTICULAR WERE SERIOUS PROBLEM IN WHOLE COMMUNITY. OVER 58% OF CONSUMPTION CAME FROM JAPAN AND HONG KONG.
9. WE SAID HONG KONG WOULD NOT REFUSE ANY REASONABLE REQUEST FOR DISCUSSIONS HAVING REGARD TO ARTICLE XXII OF GATT BUT COULD
HOLD OUT NO HOPE OF AGREEING TO VOLUNTARY RESTRAINT OUTSIDE TEXTILES FIELD IN VIEW OF PRECEDENTS INVOLVED. ERNST REPLIED THAT CONSULTATIONS WOULD NEVERTHELESS BE USEFUL AND HE HINTED THAT COMMISSION MIGHT EVENTUALLY CONSIDER SOLUTIONS QUOTE WITHIN NORMAL GATT PROCEDURES UNQUOTE 1.E. BY USING ARTICLE XIX.
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/10. ERNST SAID
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