TNAG-0629-FCO40-777-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1988 — Page 53

CONFIDENTIAL

lag C (c)

4.

no cut-backs in quota access are applied to the

poorer developing countries (particularly India and

Pakistan).

The Community's agreed aim is to stabilise import

penetration at the level of 1976 exports to the Community. The logical

consequence of such a policy is to cut back the quota access

previously enjoyed by the Community's dominant suppliers of textiles (particularly Hong Kong, South Korea and Taiwan) below the levels of

their exports to the Community in 1976. The Council also agreed last

May that if it proved impossible to negotiate a successful series

of bilateral agreements before the end of the year, the Community

would take unilateral measures and impose textile quotas, including

the necessary cuts, without agreement.

5.

The legal means open to the Community to take such

action are not clear cut but will probably involve the use of GATT

Article XIX. The Commission have said that work on contingency

measures will be put in hand at the same time as the Community

discusses the negotiating mandate. But any unilateral measures

at the end of this year, would be bound to have repercussions on the

GATT MIN negotiations which are due to enter into their substantive

phase early in the new year. It must be in the UK interest to

avoid such action unless the overriding needs of the British and

Community textile industries make it unavoidable. In other words, we

should seek to ensure that the Commission's approach succeeds and

that it is able to conclude bilateral agreements which satisfy the

needs of the textile industry. The Prime Minister has already made

it clear that if the bilateral agreements are not good enough he

will support unilateral action, even by the UK alone if necessary.

CONFIDENTIAL