TNAG-0345-FCO40-381-UK-and-Hong-Kong-talks-on-cotton-textiles-1972 — Page 130

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CONFIDENTIAL

5. On 12 January, Mr Haddon-Cave gave two positions which he said could cope with the need to modernise the UK-Hong Kong Agreement. One position was based on alignment with the EEC Restraint Agreement pattern; the other simply to reflect current trading patterns. (The two positions followed the same pattern of A Shifts within the Agreement

B Categorisation

C Flexibility).

ALIGNMENT WITH THE EEC

A

Combine Groups 3, 4 and 5. (This would mean an increase in the group limit of 34 million square yards); there would be a consequential involving the removal of the categories appropriate to the EEC 1 Category.

B (i)

(ii)

Remove all specific limits on fixed price goods (in the EEC Group 2 these were in the basket) and, to meet any doubts we might have, operate either a reporting system (as Hong Kong had with the EEC) or a trigger point system.

Category 9 would go to Group 4.

C As with the EEC system, a 10 per cent swing between groups

based on the donor group; a 10 per cent swing between categories based on the receiving category.

6.

In commenting on this approach, Mr Haddon-Cave said that Hong Kong would be prepared to continue constraint on grey and piece goods, ie as if their exports had hit the trigger points.

MODERNISATION FOR ITS OWN SAKE

A (i) Group 5 to Group 4.

(ii) Group 2 to Group 4.

With a total figure of 23,973,726 square yards (this was based on the sum of the 1971 specific limits for Group 4 together with the 1971 performance for Category 22 minus the Group 4 limit. In other words, the current flexibility expressed in straight yardage terms.

B (i) Group 4

Current specific limits plus a 15 per cent increase.

(ii) Group 3

(a) Category 9 to be increased to 1 million square yards. (b) Combine Categories 11 and 11a

(c) Combine Categories 3 and 10 (these already had a

combined limit).

(a) Grey goods would be in the basket.

CONFIDENTIAL

/(e)