TNAG-0629-FCO40-777-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1988 — Page 117

RENEWAL OF THE MULTI-FIBRE ARRANGEMENT

1. On 21 June the Council of Ministers finally adopted directives

for the renegotiation of the MFA which expires at the end of this

year. This brought to an end many months of difficult discussions

between the Commission and the Member States. During these discussions,

we and the French, with support from some other Member States, made

most of the running in pressing for the toughest possible mandate, against resistance from the Germans and Commission.

2.

Agreement was eventually reached on two main objectives:

(A)

(B)

Growth rates

To secure lower annual growth rates for quotas by relating these in future inversely to the rate of import penetration (ie. where import penetration is high, growth would be correspondingly reduced). Within this scale the Community will try to be more generous to the poorest developing countries;

Global ceilings

To introduce internal global ceilings for the most sensitive

items within which would be contained individual quotas

for existing suppliers and modest provision for newcomers.

These ceilings and quotas would be based on 1976 trade levels with minimal growth depending on the degree of import penetration and forecast trends in consumption. Eight products were identified for this treatment: cotton yarn (for which there would be no growth at all for two years), cotton fabric, synthetic fabric, woven shirts, woven

blouses, knitted shirts, pullovers and trousers. This list

will be kept under review. In most cases, existing quota access will be respected but where existing quotas have not been fully used, new quotas may be based on actual trade.

Other objectives include more realistic base periods for quotas, procedures to prevent forestalling, more precise definitions of handloom products, and the inclusion of the concept of cumulative disruption (ie. individually small increases in imports from a large number of suppliers) among the criteria for establishing market

disruption. No firm positions were taken on whether the text of

the MFA itself would need to be changed or whether sufficient international understanding could be reached to enable the objectives

to be achieved through bilateral negotiation.

3.