C P Haddon- Cave, Esq contd.
The new Group IV yardage might be transferred from one specific category, and from the n.0.3. category, to another, except to categories 13, 14A and 23, up to 10% of limit of the recipicnt category. (This arrangement would supersede the "swing" arrangement that was applicable within the old Group IV under the Heads of Agreement.)
You asked that the UK Government should agree that the Hong Kong Government should issue licences for export over and above the 1972 quotas in respect of contracts entered into before 8 December 1971 but for which the Hong Kong exporters concerned were not in possession of appropriate quota allocations. I recalled the UK Government's request in its communication of 1 December, 1971, that pre-existing orders should be regarded as a first charge against 1972 quotas; the UK Government therefore considered that the orders in question should be covered either by revised allocations of quotas by the liong Kong Government or by the purchase of quotas by the exporters concerned from other traders. I also explained that the UK Government faced a very difficult problem because of the high level of pre-existing orders in relation to the quotas of many other supplier countries. I undertook, nevertheless, that should an agreement on the extension of the Heads of Agreement, appropriately modified, for 1972 be reached and if the UK Govemment decided in principle to agree to licensing for such orders outside the quotas, the claime of Hong Kong would be given sympathetic consideration, including your request that any excess yardage should be made available to the Hong Kong Government for allocation.
PW RIDLEY
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