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BRIEF FOR MEETING WITH THE DIRECTOR OF THE COMMERCE AND INDUSTRI DEPAKOMENTA HONG KONG, 22 OCTOBER 1974
SUBJECT MUULTILATERAL TRADE NEGOTIATIONS
BACKGROUND
Following the Tokyo Declaration in September 1973, the Multi-lateral Trade Negotiations have passed through a pre-negotiation phase without enthusiasm, while awaiting the United States Trade Reform Act. Thie bill emerged from the House of Representatives in a form which gave the Administration limited scope for negotiation, so much so that many countries considered it barely satisfactory. This scope has been further trimmed in the Senate Finance Committee. President Ford has expressed himself
in favour of the House version. It now seems likely, though not certain that the bill will be passed, that that will be in mid-December in a 'lame duck' version and that it will contain most of the Senate Finance Committee amendments, In the Kennedy Round of negotiations, countries felt they had suffered because the United States Administration negotiated a package ad referendum, which it was unable later to get in full. The other countries withdrew tentative concessions of their own, but they still felt that the United States was (unfairly) the gainer and many of them would not be willing to risk the same thing happening again.
Complete tariff cutting is not to be expected in the HFW. Neither of the versions of the American Trade Reform Act allow the Administration to negotiate complete cuts in high USA tariffs. They do however authorise them to negotiate complete cuts of low USA tariffs, but the Common Market *Global Approach' is against this. So, at the end of the day, there will ctill be some tariffs, no matter how successful the negotiations have been and one can try to get generous preferences for developing countries within them. It is, formally, quite unacceptable to us, as to other developed countries, that the developing countries should be compansated for their eroded margins and it is our contention that improved access on an MFN basis works, on balance, in favour of the developing countries too. Some economic studies support this view. Notwithstanding this, it is difficult to believe that SP margins will not enter the HIN's at some point, whether formally or not.
No developed countries expect reciprocity between their commitments and those of the developing countries; that principle is embodied in the Tokyo Declaration. But it has been stated by the USA and others that the developing countries should not take this to mean they need make no con- tribution at all. It can already been seen and will emerge more clearly in the months ahead that there are places where it lies within their power to make a substantial contribution to a trading regime that will benefit all parties.
The subject of export restrictions has recently been raised by the USA and others as something which may become far more significant in inter- national trade in the near future as raw material exporters begin to apply restrictive controls protecting their processing industries. During the negotiations there may well be some attempt to control the indiscriminate use of export restrictions.
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