CONFIDENTIAL
But it is possible that the MFN clause in Article I of the GATT would apply to concessions made to Hong Kong. This would depend on the status of Hong Kong within the GATT in the light of Articles XXIV:1 and XXVI:5 of the GATT.
I have seen no papers on this. Annex A to GATT may limit my obligations under Article I.
Article I does not apply to quotas. These are in general forbidden by Article XI, but in fact continued under the LTA. There is nothing in the LTA to prevent our increasing Hong Kong's quota, or making any adjustments to it which do not amount to making it more restrictive. Article 2(4) of the LTA does, however, say that we must administer restrictions "in an equitable manner and with due regard to the special needs and situation of the less developed countries". (This may be contrasted with the more stringent provisions of Article XIII:1 of GATT which presumably are superseded in respect of cotton textiles.)"
"11.
Miss Statham in DTI says that the UK accepted the GATT (provisional application) on behalf of Hong Kong under A XXVI:5(a); and that this meant that, because of A XXIV:1, the Article I MFN clause would apply to concessions made to Hong Kong (except in so far as Annexe A permits preferences). This was the strict
legal position, but in practice she felt that any opposition to such a concession would not be based on the legalities.
2. This accords with my view of the law.
3. Miss Statham was also of the view that A I would apply to quotas, but agreed that discrimination over quotas is dealt with more specifically under A XIII and the LTA. (See my earlier minute today.)"
20 December 1971
Sam Man
HEJ Hale
Commodities Department
CONFIDENTIAL
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