TNAG-0627-FCO40-775-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1977 — Page 139

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penetration in particular sectors which are, frankly, unacceptable.

and with more in prospect unless the FTA provisions are changed.

13.

14.

There are three points here.

Were long-term growth prospects much rosier when the MFA

was negotiated then they are now? The ITA was concluded on

23 December 1973 after a protracted series of negotiations over a period of many months, with the most intensive stretch of the

negotiations taking place between October and December 1973. The

hugh increases in oil prices which took place that year were announced in mid-October. By December, although no one could have

predicted the depth of the recession into which the world was plunged

later in 1974 and 1975, it was generally accepted that conditions

were bound to deteriorate in 1974 and that therefore if the MFA

could not be concluded by the end of 1973, the pressure from

domestic industry in importing countries would become stronger and

make the conclusion of a generally acceptable MFA impossible. It was against this depressing background that the MFA was concluded so this argument that the growth rate of 6 was accepted in the expectation of a continuing boom is likely to fall on pretty stony ground. It was in fact accepted in the expectation that recession was ahead and presumably the "importing countries involved realiced that in that recession it would in many cases become meaningless

because the exporting countries would not be able to fill their

quotas.

15.

Nit picking

Is the growth rate in the IFA the absolute minimum?

It is not. The MFA provides that "in exceptional cases where there

are clear grounds for holding that the situation of market disruption will recur if / growth rate is implemented, a lower positive

growth rate may be decided upon after consultation with the exporting country or countries concerned." In the HK/EX Agreement, the overall Erowth rate in 6 out of the 14 categories for which restraint applies to exports to the entire Community is only 2.5%. In the case of 7 out of 21.categories under restraint to the UK the growth rate is only 0.5%. This extremely low rate of growth applies in those categories where our trade is rost substantial and our quotas are highest knit shirts and blouses, knit rullovers, woven blouses and woven shirts. In 6 other categories to the UK, the

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