TNAG-0627-FCO40-775-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1977 — Page 142

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previous quota levels in the old IKAT (Six) Agreement and in the bilateral arrangement between the UK and ilong Kong (both of which incidentally bxpired at the end of 1973 and were unilaterally extended by us in 1974 and 1975 without growth pending the conclusion of. negotiations for a new agreement under. the MFA). Therefore, in our

case, the Community has had more than its pound of flesh as far as

the base levels are concerned. Where the other supplying countries are concerned, we suspect that the high base levels eventually arrived at were mainly the result of the Community's delay in agreeing on a negotiating mandate and in seeking negotiations. The protracted

negotiations which took place were more likely to have been caused by the Community's inflexible negotiating directives and the time-

consuming process of getting them modified as the negotiations

progressed, than by supplying countries deliberately stalling for time in order to build up base levels. In any case, any "forestalling" that may have occurred is over and done with now that the EDC has concluded agreements with all its principal "low-cost" suppliers.

"A further weakness is the lack of an adequate safeguard to deal

effectively with new suppliers of sensitive products.. At the moment,

these have to be nicked off one by one... This permits a degree of

control ... but it is unsatisfactory and cumbersone way of dealing

with a constantly recurring problem."

21.

The FA represents an acceptance by the low-cost supplying

countries of a derogation from their rights under the GATT. The latter does not permit discriminatory action against particular sources of supply but, where safeguard measures are taken by an importing country under Article XIX on particular products, it has to do so

against imports from all sources without discrimination. Article XIX

permits exporting countries with a substantial interest in the product concerned to demand compensation from the importing country or to take retaliatory action against it. The 1A on the other hand permits

importing countries to take action against imports of particular

products from particular sources of low-cost supply, obliges the

exporting countries concerned to accept import restrictions in certain circumstances, and does not provide for compensation or the right to retaliato. In return for giving up these GATT rights, the low-cost

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