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of overspill into the Irish market.
The Irish intervention precipitated a lengthy wangle between Kevers and the Chairman about future use of Article 115 of the Treaty (see para 4 of UKREP telegram no 3573). It became clear that the French were using discussion of the proposed German measures as a forum for attacking the Commission on this subject. There was no meeting of minds and the discussion finally ended with the Commission claiming that, as administrator of this Article, it had the last word. A proposition which France entirely rejected.
After further disection of the German figures there was a measure of agreement that the German quotas for wool and synthetic clothing from Taiwan and S Korea should be increased from DM 7.8m to DM 14m instead of DM 22.2m as originally proposed. The increases would be predominantly on woven items as against knitted. The Chairman urged that those countries still maintaining reservations (Belgium and Italy which wanted a declaration that the goods would not leave Germany) should lift them by the end of the week. The measure would then be regarded as approved without reference to Council.
Full liberalisation proposals (Annex 6 of German letter).
France and Italy wanted these proposals withdrawn. They were content to see quota increases but considered liberalisation to be too drastic and irreversible a step. Belgium would have been satisfied if restrictions were to be maintained on 3 or 4 key items. Denmark commented that all the items had long been liberalised in their country and no problems had ever arisen. No agreement could be reached on this item which would be referred to Council.
Increases in cotton quotas (Annex 5 to German letter).
No problems were raised over proposed increases in Group I (grey cloth) items but Group II (finished cloth) proved much more difficult. France and Benelux both looked for substantial cuts in the proposed new levels. Freydrich was prepared to accept a new Group II total of some 5,000 tonnes (original proposal 6,375 tonnes) provided that the full weight of
the cuts fell on countries other than India (which was for the first time in a long while actually filling her quotas), Pakistan (whose quotas were small) and Jugoslavia (which Germany also regarded as being a deserving case) This meant that the countries not getting the full increased Germany had originally proposed would be Taiwan and Hong Kong. Pownall protested at discrimination against Hong Kong (and was not very sympathetically received); for the sake of reaching agreement he was reluctantly prepared to accept that Hong Kong's quota should only be increased from 12,710 tonnes to 14,510 tonnes instead of the German proposal for 15,710 tonnes
since this was in line with the, across the board 4) per cent cut in the original German bid which had found favour with a number of delegations but he could not accept that there should be any further loss of increase to Hong Kong so that India, Pakistan and Jugoslavia could benefit. Agreement was nearly reached on these lines with a further proportionate reduction in Taiwan's increase to arrive at an agreed total figure but the Dutch representative entered a reservation. Pownall then said that he would only be prepared to compromise on the basis of agreement being reached and, if others were going to reserve thir position, he must do so too. Freydrich also was not willing to accept a qualified compromise. The Chairman intervened to say that the matter would now become the subject for e Commission recommendation to the Council, implying that the Commission would propose the compromise which had been reached and would expect the Council to endorse this.
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