TNAG-0627-FCO40-775-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1977 — Page 149

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the exception of the proposal to deal with cumulative market disruption by means of global quotas,

43.

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The Textiles Committee is scheduled to meet again cn 18 April. Progress will again depend on whether the Community will have agreed on a mandate by then. It is difficult to predict whether a mandate will emerge in time for that meeting. On the one hand the UK and French Governments have decided that global quotas should be made a condition for the renewal of the MFA. On the other hand, as reported in the press, Germany, Denmark and the Commission oppose this, presumably in the belief that the Community could never obtain the inclusion of such a provision in the MFA and that it could, consequently, lead to a breakdown in the Geneva degotiations. It has also been reported in the press that, furthermore, the Commission affirms that the Community can protect itself against cumulative disruptions by using other protective instruments for which provisions already exists in the MFA.

44.

The danger for Hong Kong in the present situation, apart from the consequences of the adoption of global quotas, lies in the possibility that as 1977 advances without a decision, the developing countries may adopt a progressively more hostile attitude, and in the likelihood that if the Community and other importing countries insist on changes in the MFA to make it more restrictive, there will be a further polarisation between the two sides' attitudes, with the result that the negotiations will break down.

45.

If the Community continues to fail to reach agreement on the question of global quotas, it is conceivable that at some stage the UK will have to reconsider its policy. And even after the Community has agreed on a negotiating mandate, it is inevitable that it will run into difficulties in the Textiles Committee because its proposals will prove unacceptable to the developing countries. On present fora, the USA will support the developing countries. In such an event, if the negotiations are not to break