T/BI
CONFIDENTIAL
(c) Flexibility ("Swing")
Hong Kong proposed that flexibility arrangements should be on the same basis as those of the EEC agreements ie 10% swing between groups based on the donor group, and 10% swing between specific categories based on the receiving categories (unlimited "upswing" with limited "inswing"). In making this proposal, Hong Kong were surrendering their present facility in the UK arrangement for unlimited "downswing" from Groups IV, III into II, or from IV toI, III to II etc. Furthermore, Hong Kong would be prepared to concede continued restraint on greycloth with the retentions of the present categorisation (ie they would continue as if imports had already hit the relevant trigger points as in the C extra-agreement system for grey goods).
4 (2) THE "MODERNISATION" (OF THE PRESENT CATEGORY SYSTEM) PROPOSAL
(a) Shifts within the aggregate
(i) Group V would be combined with Group IV
(ii) A conversion of the present flexibility facility into yardage terms viz:
transfer 23, 939, 726 sq yds out of Group II (grey cloth) into Group IV (made-ups)
The sum of 1971 specific linits in Group IV plus 1971 performance in category 22 (n.e.s.) minus the Group IV limit.
(b) Categorisation
(i) Group IV
Hong Kong proposed an increase in the present specific limits of 15 (this had been agreed under the categorisation system operating before 1966, whenever performance exceeded a certain pre-determined level).
(ii) Group III
Category 2 (corduroy): an increase in the specific limit from 274, 857 sq yds to 1m sq yds.
Categories 11 and 12a (poplins and shirtings): a merger of the two categories on the grounds that it was ridiculous to differentiate between them purely in width.
(iii) Groups II and III
Hong Kong suggested the combination of categories 3 and 10 (yarn-dyed grey goods and yarn-dyed finished foods, both including denim). They already had a combined limit; if the categories themselves were combined, Hong Kong would have the facility to count all shipments of the combined denim category against the greycloth group, hence allowing a degree of yardage "shift" into the finished cloth group.
(iv) Group II
Hong Kong proposed an increase of 15% in the specific limits for greycloth categories 4,5,6 and 7 (for the same reasons as given under (b) (i) above).
(v)
Group I
A merger of the two yarn categories in this Group.
IDENTIAL
2
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