TNAG-0345-FCO40-381-UK-and-Hong-Kong-talks-on-cotton-textiles-1972 — Page 35

VI

SIXTH SESSION:

VI

IDENTIAL

FRIDAY 14 JANUARY 1972 3.15 p.m. (MILLBANK TOWER)

COMPROMISE REACHED ON THE MODIFIED ALIGNMENT PROPOSAL AND ITS FINAL REJECTION BY THE HONG KONG SIDE

A

THE UK OFFER

In order to meet Hong Kong's objectives of maximising the size of categories in Group IV and the opportunities for flexibility while maintaining our own of keeping imports within the levels for 1971 plus

the UK side put forward the following compromise:

7%

2.

(i)

CATEGORY RESTRAINT LEVELS ON "SPLIT-DIFFERENCE" FORMULA

Taking a) 1972 category ceilings as shown in Hong Kong's · tables 1 and 2 (column g) ie applying where appropriate the "creeping swing" factor

and b) 1971 performance figures increase by 1% as shown in (column e)

we should split the difference between the two and add it to the performance figures in column (e) to make the new category restraint levels for 1972.

(ii) SWING ARRANGEMENTS

(1) 10% cross-swing between categories in Group IV, based

on receiving category

(2) 10% upswing from Group IV basket into the receiving

category (except for towels, bedlinen including sheets and gloves)

(3)

(iii) OTHER

the total addition to any made-ups category not exceeding 10% of that category7

4m sq yds upswing from Group III to Group IV (this later became 4.64m sq yds see paragraph 3 below).

(1) merger of categories 3 and 10 in Groups II and III agreed and (2) increase category 9 (corduroy) ceiling to 1m sq yds.

(See Annex

for full definition of category ceilings.) In the discussion which followed, Hong Kong again tried to get gloves, towels and bedlinen included in the basket category with a trigger point system as a safeguard. (They explained that under their agreement with the US, the trigger point system required consultations within 21 days during which licensing was suspended; if consultations were not sought within that time limit, licensing was resumed; if consultations took place and no agreement was reached in 45 days, the importing country could unilaterally impose a specific limit.) The UK side however declined to accept this suggestion on the grounds that the Lancashire industry would not be convinced of its efficacy.

CCFIDENTIAL