Au
encouraging
skaft
263
GRS 380
CYPHER/CAT A
FROM UKREP BRUSSELS 240731Z
RESTRICTED
FRAME EXTERNAL
BA
RESTRICTED
HKK 121/616/1
2
TO ROUTINE FCO TELNO 6387 OF 24TH OCTOBER 1977
INFO BTC HONG KONG.
MIPT: TEXTILES HONG KONG.
(262)
1. TRAN OPENED THE NEGOTIATIONS ON 19 OCTOBER WITH A WARNING THAT THE GOOD TIMES WERE OVER FOR TEXTILE EXPORTERS. EXTRAORDINARY GROWTH RATES WOULD NO LONGER BE POSSIBLE. THE COMMUNITY INTENDED AN ORDERLY DEVELOPMENT OF THE MARKET, AND WERE CONSIDERING AUTONOMOUS MEASURES IN CASE OF FAILURE IN THE BILATERAL NEGOTIATIONS HONG KONG WOULD HAVE TO ACCEPT SACRIFICES, AND SHOULD NOT HARK BACK TO THE PROVISIONS FOR CONTINUING GROWTH ENSHRINED IN THE MFA.
2. MILLS REACTED FIRMLY. THE COMMUNITY'S OFFER OF GROWTH RATES FOR PRODUCTS IN GROUP 1 WERE DISMISSED AS TOTALLY UNACCEPTABLE, THE DRAFT AGREEMENT WAS CRITICIZED AS ILLEGAL UNDER THE MFA. MILLS THOUGHT IT OFFERED LITTLE SECURITY, AND WAS OFFENSIVE IN ITS EMPHASIS ON IMPORT CONTROL AS OPPOSED TO EXPORT CONTROL.
3. MILLS FOLLOWED UP HIS INITIAL REACTION BY A LONG PREPARED STATEMENT ON 21 OCTOBER (FULL TEXT BY BAG TO EID(E), HKD AND CRE1). THIS CRITICIZES THE COMMUNITY'S USE OF IMPORT PENETRATION AS A MEASURE OF MARKET DISRUPTION: TOTAL IMPORTS FROM ALL SOURCES (INCLUDING DEVELOPED COUNTRIES AND OTHER MEMBER STATES), EXPORTS AND CONSUMER DEMAND WERE AS MUCH PART OF THE EQUATION AS IMPORTS FROM DEVELOPING COUNTRIES, RESTRAINTS ON IMPORTS FROM THE MORE SUCCESSFUL AND EFFICIENT LOW-COST PRODUCERS WOULD ONLY INCREASE THE PROPENSITY OF IMPORTERS TO SEEK ALTERNATIVE QUALITY SUPPLIES FROM DEVELOPED COUNTRIES, WHOSE EXPORTS ARE UNRESTRAINED: HENCE THE PURPOSE OF RESTRAINT WILL BE FRUSTRATED, MILLS ALSO OBJECTED TO CUTBACKS IN EXPORTS UNDER ART 4 OF THE MFA WHICH PROVIDES FOR
RESTRICTED.
/GROWTH
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