0003230
G.F. 323
CONFIDENTIAL
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12.
At this point it was time to break for lunch and Ernst closed by saying that he was at that stage prepared neither to accept the higher base figure nor the % growth proposed by Hong Kong as a minimum offer position.
13.
Lunch, which Ernst hosted, was a mainly social occasion, but in the course of it he accepted a hint that it would be helpful from both points of view if the existing German/Hong Kong restraint agreement could be extended on the same terms for a further three months, i.e. to the end of 1970, thus bringing the timing into line with the Benelux restraint. This would relieve the time pressure for renegotiation and would also help to avoid any possible dislocation in the trade. Erast was in fact so taken with this proposition that he instructed Ravenna to look in to the possibility of extending to the end of the year all existing bilateral cotton textiles agreements between the E.B.C. and third countries which were due to expire before the end of 1970.
14.
Following lunch, Ernst had to keep a prior appointment and we did not re-assemble until about 4.30 p.m. Before Ernst's return there was a somewhat inconclusive discussion with Ravenna on the general E.E.C. textile trading situation, in the course of which he claimed that E.E.C. imports of cotton textiles in 1968 were 14% of apparent consumption. Jones noted that the U.K. figure was over 50%. Ravenna revealed that as far as he was concerned, at any rate, there was an element of social conscience in the suggested favouritism towards the lesser developed countries such as India and Pakistan. Despite the fact that their trade was in a different sector from that of Hong Kong, in that they supplied mainly piecegoods rather than garments, he argued that the justifi- cation for showing less favour to Hong Kong in the garments sector was that increased E.E.C. imports of garments would diminish the demand of the E. E. C. garment industry for imported piecegoods from "developing" countries. He expressed some surprise that, during the morning session with Ernst, Hong Kong had made such a strong case for what appeared to be a very small increase in the growth rate offered. He said that he thought that the E.E. C. could be pushed to 4% but was extremely doubtful that they would accept 5%. Dorward replied that if it seemed Hong Kong was being petty in this regard (which in fact it was not for reasons of important principle and precedent) it was surely a fortiori the case that the E.B.C. resistance to an additional 1% growth was petty in the extreme. this time, and still prior to Ernst's return, Ravenna was emphatic that it was not the Commission's intention, nor was it within their instructions, to offer to Japan a growth rate higher than that which they were offering to Hong Kong. This was contrary to information which had been received in Brussels telegram No. 46 where the German Counsellor in their Permanent Representation was reported as saying that the mandate from the Council authorised an offer of 6% and possibly even up to 8% for Japan; and only 3% for Hong Kong.
15.
At
When Ernst returned, discussion was brought back to the order of the day which was the "Model Agreement". Article 4 of the Model Agreement refers to swing and is couched in the same language as is employed in the current Hong Kong/Benelux agreement. It precludes swing between Group 1 (fabrics, grey and bleached) and Group 2 (other cotton textiles); it also provides only for down swing into baskets without permitting swing between specific category limits. Ernst indicated that this was not a sacred text and that the reason for the refusal of swing between Groups 1 and 2 was that on the whole the Model agreement had been used in deal- ings with supplying countries whose exports mainly fell into Group 1 and where swing into Group 2 could have been unduly disruptive.
CONFIDENTIAL
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