TNAG-0300-FCO40-336-Entitlement-of-Hong-Kong-to-generalized-tariffs-preferences--1971 — Page 99

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CONFIDENTIAL

BACKGROUND

3. This is explained in paragraphs 2 to 4 of AE(71)35.

On 1 January 1972 we shall be introducing our Generalised

Preference Scheme, from which textiles are excluded entirely,

and at the same time changing our import policy on cotton

textiles from one based on quota restrictions to one based on

a tariff. The Community GPS scheme, to which we have to

adapt, incorporates duty-free quotas for textiles as a whole,

though with special and more restrictive arrangements for cottons

involving overall limits. We are therefore faced on cotton

textiles with the awkward prospect of changing back to

quantitative restrictions within a year or two of abandoning them

in favour of a tariff. We have amongst other things to decide

whether, when we re-adopt quantitative restrictions, we shall

also wish our quotas to be duty-free.

ARGUMENT

TIMING OF ADAPTATION

4.

We can accept the argument in the paper that adaptation

should be delayed until 1 January 1974, since the Community's

Generalised Preference Scheme is expressed in terms of the

Common External Tariff, to which we shall only start to move

on that date. We have reason to suppose that this date for

adaptation will be acceptable to the Community, provided

always that we do not raise too many difficulties in other fields,

which might make them less forthcoming.

COTTON TEXTILES

5. We have to decide whether we can accept, as the

Community expects us to do, inclusion from the date of our

CONFIDENTIAL

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