TNAG-0630-FCO40-778-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1988 — Page 114

CONFIDENTIAL

1) THE PROPOSED CUT-BACKS WOULD NOT IN ANY CASE BENEFIT EUROPEAN INDUSTRY SO MUCH AS OTHER THIRD COUNTRIES LIKE INDIA, THE COMMUNITY'S MEDITERRANEAN PARTNERS AND NEW SUPPLIERS. THIS WAS ILLOGICAL: UNLIKE THESE OTHER SUPPLIERS HONG KONG'S ECONOMY WAS ALMOST ENTIRELY BASED ON INDUSTRIAL EXPORTS, 50 PER CENT OF WHICH WERE TEXTILES. THE IMPACT OF THE PROPOSED MEASURES WOULD THEREFORE

BE DISPROPORTIONATELY GREAT IN HONG KONG.

(IV) HONG KONG HAD A GOOD TRACK RECORD IN ACCEPTING RESTRAINT AGREEMENTS IN THE PAST, AND HAD HERSELF PROPOSED IN THE GENEVA DISCUSSIONS ON A RENEWED M F A THE PHRASE DEALING WITH ''JOINTLY

AGREED AND REASONABLE DEPARTURES'' FROM THE ORDINARY RULES OF THE

MFA.

(V) THE COMMISSION'S PROPOSALS WERE DOUBLY HARMFUL. THEY NOT

ONLY INVOLVED CUTS BELOW 1976 QUOTA LEVELS: THEY WERE ALSO

DISCRIMINATORY IN THEIR APPLICATION.

3. HAFERKAMP REPLIED THAT THE COMMISSION HAD RECEIVED MANY

REPRESENTATIONS ON THE TEXTILE MANDATE. THE U.K. AND FRANCE

HAD BEEN WORST HIT BY THE RECESSION IN THE TEXTILE INDUSTRY,

A SITUATION WHICH HAD LED EARLIER IN THE YEAR TO FRENCH

UNILATERAL MEASURES WHICH WERE SUBSEQUENTLY, AND WITH DIFFICULTY TAKEN OVER BY THE COMMUNITY. THE COMMISSION'S AIM IN THE CURRENT

MANDATE WAS TO BRING SOME STABILITY AND SECURITY INTO THE

TEXTILE TRADE FOR BOTH IMPORTERS AND EXPORTERS, WHILE TAKING PARALLEL STEPS TO RESTRUCTURE THE COMMUNITY INDUSTRY. IT WOULD

BE IMPORTANT TO AVOID A NEGATIVE PRECEDENT ON THE EVE OF THE

MTN'S. THE COMMISSION COULD NOT IGNORE EITHER THE 6 MILLION

UNEMPLOYED IN EUROPE OR THE NEED TO PROVIDE SOME ROOM FOR NEW

COMERS TO THE MARKET. THE PROPOSALS ENDORSED LAST WEEK BY THE COUNCIL OF MINISTERS WERE NOT DISCRIMINATORY: THE RESTRAINTS IN QUESTION WOULD APPLY TO ALL DOMINANT SUPPLIERS BUT ONLY FOR CERTAIN

PRODUCTS.

4, ELLIOTT ADDED THAT, WHILE THE U.K. WAS CERTAINLY IN FAVOUR OF GREATER PROTECTION FOR ITS TEXTILE INDUSTRY, WE WOULD NOT WISH TO SEE HONG KONG TREATED UNFAIRLY IN RELATION TO COMPARABLE

SUPPLIERS.

15.

COMMISSIONER

2 CONFIDENTIAL