TNAG-0386-FCO40-432-Exports-of-non-cotton-textiles-from-Hong-Kong-to-the-EEC-1973 — Page 31

CONFIDENTIAL

d.

and the Commission themselves continue to want a

proper negotiating mandate; and we could find ourselves wanting to extend restraints to new products (perhaps some knitted goods) if the world and UK markets should weaken again. Several bargaining possibilities may exist. We shall remain under pressure to harmonise restrictions on goods where national conditions do not justify them. We could try tobuy some free circulation (at least in the products in question) in return, though at some cost to our (and maybe the GATT's) stand on selectivity and strict criteria for new quotas. Beyond this a great many technical elements are involved, including product coverage, reference periods, growth rates, swing, roll-in with cotton quotas (Hong Kong is bound to press for this), conversion factors, treatment of Taiwan and South Korea and possibly Japan etc. We could add free circulation. Finally we could offer to tear up our polyester-cotton arrangements in exchange for a harmonised Community system embodying some free circulation. It is arguable that such a deal could mark the beginning of a common market for textiles and also be better for the exporting countries than a continuation of the present diversity. But

what quantifiable compensating advantage can be devised for the French, who would find themselves importing increased quantities of garments from Hong Kong of precisely the type they consider most sensitive?

and

Other low-cost suppliers. Yugoslavia, Brazil and Macao are all causing problems for the Community, solutions are being developed. There will be other cases. Because of the small quantities involved, proposals for genuine Community quotas might not meet with such fierce opposition as they would in relation to the major suppliers. It would be possible for textiles from (say) Brazil to be limited to an agreed or imposed figure for the whole Community and to

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