TNAG-0281-FCO40-317-Visit-of-the-Chancellor-of-the-Duchy-of-Lancaster-to-Hong-Ko-1970 — Page 84

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of the other Member States has restrictions directed specifically against

Hong Kong, although some (including Germany) do have a small number of items

restricted on a world-wide basis. The French quotas have been negotiated

bilaterally with Hong Kong year by year. It appears likely that the Community

may move to a common commercial policy in relation to Hong Kong by adopting

*

a common range of quantitative restrictions: this would involve France in

doua

giving up some of her present restrictions but would also involve other

members introducing new restrictions which would be contrary to their GATT

obligations. If this is done, new members of the Community are likely to be

asked to apply the same restrictions, since they will have a general obligat-

ion to adopt the Common Commercial Policy. In addition to such restrictions,

all Member States at present operate some quantitative restrictions on cotton

textiles from Hong Kong. This is, however, part of the wider textile problem

and is dealt with briefly in paragraphs 20-22 below.

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18.

Quantitative restrictions post a more serious threat to Hong Kong's

trade than the absence of preferential tariff treatment. We must therefore

do everything we can to discourage other developed countries from extending

the range of restrictions. So far as the EEC is concerned and so long as we

11.

are not members, we must resist the introduction by the Community of new

restrictions on Hong Kong goods which are not consistent with GATT rules.

We should point out to the Six that (particularly if Hong Kong is to be

liable in full to the CET) the imposition of already illegal quantitative

restrictions by the whole of the enlarged Community would be further in

conflict with the provision in Art XXIV of the GATT that the formation of a

customs union or free trade areas should not lead to the intensification of

existing barriers to trade.

Moreover, the EEC, by extending restrictions

without evidence of injury, would be following the protectionist course

from which they (and we) are seeking to dissuade the United States.

We are

bound to recognise, however, that. these arguments may not prevail. Hong Kong

cannot for the reasons given in paragraph 24 below effectively threaten

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