T/H
(iv)
Group I
CONFIDENTIAL
merger of the two yarn categories in this group.
(c)
Flexibility
Finally Hong Kong suggested that an "upswing" of 10% (tied to the donor group) and a "cross-swing" of 10% between categories (tied to the receiving category) should be agreed.
5 THE UK REACTIONS
Mr Ridley said he understood that both Hong Kong's proposals represented an attempt to arrive at a measure of amelioration which would be acceptable to TEXTAB, rather than a classic negotiating position. But both in substance and in appearance the proposals would have a significant effect on the UK market and on our other restricted suppliers, and we wished to examine them more carefully before giving our considered reaction.
6
Mr McEnery then raised two points with the Hong Kong side.
(i)
First proposal:
alignment
Yern
The
Ministers had decided that yarn should continue to be restrained. Hong Kong side replied that they were prepared to concede separate restraint arrangements for UK Group I as for UK Group II (see para 3(c) above).
(ii) Second proposal: Modernisation of existing categories
7
Shirts
A 15% increase in the specific limit for shirts taken with the overall transfer of 23m sq yds into Group IV would give Hong Kong much greater scope for expanding her trade in woven cotton shirts; and although the danger to the UK industry at the present time lay in the non-cotton sector, it would be very damaging to UK manufacturers if an increase of this magnitude were allowed. The Hong Kong side could not accept that the mmf argument was germane to this question, but agreed that if the UK wished shirts could be either dropped into the "basket" category or the specific increase could be modified.
THE UK'S PROPOSAL FOR A FUTURE ARRANGEMENT ON A MULTI-FIBRE BASIS
Mr Ridley said the UK had some further suggestions for modernising the coverage of the present UK/Hong Kong' arrangement which would improve Hong Kong's opportunities in the sectors where alignment with EEC was a possibility. He stressed that we had no Ministerial authority to make concrete proposals at this stage, nor had we consulted the Commission, but we were anxious to discover what Hong Kong's reactions were likely to be.
8
The UK believed it would be possible to increase substantially restraint limits for certain products in the made-ups sector, (eg shirts) if these could be agreed on a multi-fibre basis. Cur reasoning was based on the interest which Hong Kong had expressed about the possible extension of the LTA to cover non-cottons; on the efforts made by Hong Kong with the US negotiators to combine cotton limits with mmf; and on the fact that increasing growth in mixture and man-made fabrics made a mockery of restraints based on single-fibre/single construction both for this country and for the developed countries as a whole. This sort of proposition might meet some of the desiderata that Hong Kong was seeking to achieve, with perhaps one additional benefit: if the EEC as a structural entity was beginning the long-term shift away from using
COWDENTIAL
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