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tton and into mmf, Hong Kong's ability to retain her advantage on a performance Asis in any subsequent agreements with the enlarged community would be greatly improved if multi-fibre restraints were agreed at an early stage.
୨ HONG KONG'S REACTION TO THE MULTI-FIBRE PROPOSAL
Mir Haddon-Cave said he had no authority to discuss non-cotton at the present time, and must regard any discussion of them as entirely separate and distinct from the cotton negotiations. He could not accept that HIG's multi-fibre proposal could be interpreted as a positive gesture towards ameliorating in either the short of the long term the effects on Hong Kong's trade of the decision to retain quotas. Naturally Hong Kong was ready to listen to any problems brought to her attention even by a trading partner with whom she was not in a GATT relationship, but she expected that adequate time for consultation would be allowed before any restrictive action was taken.
10 Hong Kong had picked up hints from the EEC Commission (Ernst) that the Community were concerned about the level of Trade in non-cottons; it was hoped that the "informal invitation to informal discussions" which Ernst extended to Hong Kong could be resisted pro tem, at least until the subject was raised on a formal basis with the full authority of the Commission.
11 Mr Haddon-Cave agreed that for some years Hong Kong had advocated an extension of the LTA to non-cottons, but he reminded HMG that his views had been received without sympathy in Whitehall and with horror in the USA. Hong Kong did not think however that a multi-lateral negotiation to re-design the LTA would be very successful, and he warned that Hong Kong would resist "to the death" any separate multi-lateral agreement on non-cottons. In his view, this type of action must be within GATT rules or on an ad-hoc, short-term, narrow coverage basis. (This was what he had tried to put across to the US in September without success; but at least Hong Kong had forced them to agree a confidential side-letter which gave some hope for 1973).
12
Finally, Mr Haddon-Cave said the UK's quota arrangements were fully in line with the LTA. While he agreed that the UK was not regarded as illiberal in its cotton textile trading policy, nevertheless-Hong Kong would prefer any future agreement on non-cottons to follow more closely LTA rules. But we ought first to settle the cotton problem, and then see to what extent the non-cotton trade needed to be examined. It there was a need for restraint, the categories thought to be at risk within the present cotton arrangement between Hong Kong and the UK could be extracted from that arrangement and put under a separate LTA Article 3 type of agreement.
13 Mr Ridley said he was surprised at the force of Hong Kong's reaction given their widely-known interest in the possibility of contained restraints which took advantage of past performance in cottons. He accepted that Hong Kong like the UK, had no negotiating authority to discuss the multi-fibre question, and that any future restraints on non-cottons must be based on disruption/injury criteria. He also appreciated that in the present negotiating context it would be presentationally difficult for the Hong Kong delegation to offer their advisers a solution to the present impasse which was geared to conceding further restraints in the non-cotton sector. However, given the underlying constraints placed on HG, he had to emphasise that any settlement of the cotton textile agreement was unlikely to go further than the changes proposed in his earlier statement.
14 Mr Haddon-Care said that if HG envisaged asking Hong Kong for consultations under
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