TNAG-0627-FCO40-775-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1977 — Page 25

CONFIDENTIAL

IF FRANCE INSISTS ON ACTING UNILATERALLY (AND BY DEFINITION. ILLEGALLY) WE SHOULD EXPECT THE COMMISSION TO DEAL WITH POSSIBLE DIVERSION. THERE ARE TWO MAIN TYPES. FIRSTLY, WHERE THE UK DOES NOT - ALREADY HAVE A QUOTA ON IMPORTS OF ANY OF THE FOUR PRODUCTS

CONCERNED, THERE IS A RISK OF DEFLECTION. THE MAIN FOTENTIAL SOURCES

IN ADDITION TO THE COUNTRIES ALREADY SPECIFIED IN PARA 3 ABOVE)

ARE:

COTTON YARN

KNITTED SHIRTS

WOVEN SHIRTS

WOVEN BLOUSES

1

1

HONG KONG

TUNISIA, MOPROCCO, SPAIN

MALTA, TUNISIA, MOROCCO, PAKISTAN, SRI LANKA, PHILLIPPINES, HUNGARY, CZECHOSLOVAKIA,

EULGARIA (THE LAST 3 FOR SYNTHETIC FIBRES

ONLY)

TUNISIA, MOROCCO, TURKEY, PAKISTAN, SRI LANKA, PHILIPPINES, SINGAPORE.

WE DO NOT WISH THE COMMISSION TO INTRODUCE QUOTA S FOR THE UK NOW BUT WE WISH IT TO GUARANTEE THAT A RESTRAINT VILL BE INTRODUCED

WITHIN THREE MONTHS IF THE UK EXPERIENCES A SHARP AND SUBSTANTIAL

INCREASE IN IMPORTS FROM ANY OF THESE SOURCES,

6. SECONDLY, WHERE THE UK ALREADY HAS A QUOTA, THE RISK OF FREE CIRCULATION IS INCREASED. IN PARTICULAR, THERE IS THE LIKELIHOOD THAT GOODS INTENDED FOR FRANCE PUT BROUGHT INTO OTHER MEMBER

STATES INITIALLY WILL FIND THEIR WAY INTO THE UK. YC CXPECT THE COMMISSION TO GRANT PERMISSION TO REFUSE ALL FREE CIRCULATION LICENCES SO LONG AS THE FRENCH UNILATERAL MEASURES LAST.

+

7. IF FRANCE PERSISTS IN ACTING UNILATERALLY WE SHOULD MAKE IT CLEAR THAT THE COMMISSION'S PROPOSALS FOR DEALING WITH THE RESULTANT DIVERSION WILL NEED TO BE WATERTIGHT TO AVOID THE RISK OF UNILATEPAL PEASURES BY OTHER MEMBER STATES.

BACKGROUND,

-3- CONFIDENTIAL

18. PROPOSALS