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and there would be 34 categories, even though there would not necessarily be specific limits for all of them; or the same specific limits in the various bilateral agreements. Ernst said that he would also expect the provisions for swing, carryover and anticipation to be similar in all agreements. He would promise that, in this regard at least, Hong Kong would not be treated worse than the developing countries. Jones intervened to point out that Hong Kong was a developing country. Ernst said that this was an old argument. As Hong Kong did not possess the raw materials provided for in the preamble to the C.T.A. as far as textiles was concerned, at least, she was not an L.D.C. Jones replied that it was clear that raw materials were only one of the factors to be taken into account in this regard. There was, for instance, also a mention of "technical skills" and these criteria were in any case only examples. It remained the Hong Kong view that it was a developing country. Ernst responded that he took note of this position but that if it was the Hong Kong wish to thrash it out it would be impossible to go further on the matter in hand. Dorward suggested that the matter be left for the present and the "Model Agreement" be taken as a check list for discussion in order that the E.E.C. offers could be measured against the provisions of the C.T.A.
5.
Ernst then made some introductory remarks in this context, saying that while the Commission would be conducting the negotiations regarding limits, coverage and flexibility provisions, and while he was confident it would be possible to fix some general lines of administration, it would still be up to individual Member States to agree the details with export countries. He was hopeful that France, under pressure from its Common Market partners, would now agree to re-examine its import control procedures. He envisaged a uniform system of counterpart import licensing which he described rather loosely as "import control by double checking". He was challenged on this and conceded that, despite the E.E.C.'s concern that the established channels of trade not be disrupted, he did not envisage any problems as regards Hong Kong. He later elaborated to explain that the main concern lay with the Japanese who had established a number of import firms in Europe and who were capable of diverting the existing channels so that most trade in cotton textiles was restricted to Japanese firms. Dorward made it quite clear to him that in Hong Kong's view export control meant precis ely that and no secondary control on the import end was tolerable other than a purely automatic system destined to keep a check on third country trade. If the E.E.C. insisted on some sort of undertaking on Hong Kong's part to protect existing channels of trade, Dorward said that it could at best only be a "best endeavours" undertaking such as was incorporated in the present German bilateral agreement. Ernst said that the normal procedure for a Community agreement would be export control with double checking at the import end. They would not wish to change Hong Kong's actual systems with the Benelux and Germany and hinted that the French might be persuaded to abolish their 50/50 system in favour of at least "Hong Kong administration" as it is at present practised. Dorward pointed out that from Hong Kong's point of view export control across the board was of fundamental importance and that this principle was enshrined in Article 3 of the C.T.A.
6.
Discussion then turned to a review of the principal articles of the Model Agreement, starting with Article 3 which refers to ceilings. Dorward made the preliminary point that, in arriving at agreed limits, the principles of Article 3 of the C.T.A. would have to be respected. That is to say there could be no justification for the extension of restraint to areas of presently
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