TNAG-0391-FCO40-437-Restriction-on-cotton-textile-exports-from-Hong-Kong-to-the--1973 — Page 26

1. 200 270020€

200x100-7/71-083972

BY AIRMAIL

TELEGRAPHIC ADDRESS.~~~

"CANDIHONG" HONG KONG

OUR REF.:

YOUR REF.:

CR/EIC294/5/12 II

My dear Liz,

މ

Mum Wallers Me Lecom

COMMERCE & INDUSTRY DEPARTMENT,?

M. Hage

for youn Condole

HK

1419

3/61

057

FIRE BRIGADE BUILDING

HONG KONG.

M: Hope oli.

4 September, 19 73 .

Air Costin

Air frein,

(see Miss Cowne's

Thank you for your letter of 21 August 1973.

We too prefer twelve-month quota periods, on practical grounds, because any substantially shorter period does not provide adequately for seasonal factors; nor does it give shippers the security to accept contracts six to eight months ahead, which is the normal period in this trade.

It was these considerations that decidel us on a grossing up exercise to spread the quota year to eighteen months; or twenty-one months, as you point out, in the case of polyester/ cotton. You may think that a bit illogical, in that an announce- ment of a new six month period, such as you suggest, should in theory give the same assurance to the trade. In fact, however, it would not, for we would not be able to calculate and allocate 1974 quota to individual companies until their 1973 performance was known. They would get a provisional bit to tide them over in January and then a final quota in February. The way we are now handling it the quota holders will shortly be given an additional amount, regardless of their current performance so that they will now know where they stand from here to 30 June 1974;

and any adjustments based on performance will be made as and when quota is allocated in accordance with a new Hong Kong/240 agreement.

We have reconsidered in the light of your letter, but still feel that this is the most reasonable and realistic way to proceed. We are, of course, being consistent and iealing likewise with the rest of the EEC.

I wholeheartedly agree with your assessment of how difficult the task of negotiating the new bilateral is going to be, whatever the final shape of a new multilateral arrangement. The main trouble is that, in the absence of free trade and free circulation, the unevenness of 530 textile imports will make a case for any Community vide restraints near to impossible. there is the bad precedent of the 'model agreement' on cotton

I know (when we accepted assurances that have come to nothing) but we are

/now

...

Miss L. Lowne,

Department of Trade and Industry,

Millbank Tower,

Millbank,

London SWIP 4QU,

England.