TNAG-0631-FCO40-779-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1977 — Page 37

Ir Jenkins

Mr Fretwell

308

tas

_HKK 121.1616/1 in Quarkull

The Thampan

„CONFIDENTIAL.

1 1 NOV 977

RENEGOTIATION OF THE MULTIFIBRE ARRANGEMENT: EEC BILATERAL

NEGOTIATIONS

The

1. The Community's bilateral negotiations with textile suppliers, the success of which will decide whether the Community agrees to renew the MFA, are reaching their culmination. recipients of this note may therefore find it helpful to have an impression of where matters now stand. It should however be emphasised that the situation is continuing to evolve very rapidly. Since the failure of the GATT Textiles Committee to reach agreement at its meeting in July on the future of the MFA, the main activity has been the preparation for bilateral negotiations with the supplying countries. The EEC finally adopted directives for negotiations with some 30 countries on 18 October, when the UK lifted its reserve at the Council of Ministers. The UK delayed the start of the negotiations until we had extracted enough information from the Commission to enable us to assess the implications for British industry of the proposed quota arrange-

ments.

2. The EEC has two main objectives in the bilateral negotiations: first to secure more effective restraints generally and deal with the problem of cumulative disruption by securing more comprehensive quotas with more realistic base levels and lower growth rates; and secondly to stabilise import penetration for the most sensitive products by restricting all low-cost imports within a global limit.

3. We have made it clear to the Commission that unless these objectives are achieved in the bilateral negotiations, we shall

The Commission be unable to agree to the EEC's renewal of the MFA. themselves have made clear publicly that if the results of the bilaterals are not satisfactory they will propose unilateral measures for the whole Community. The question of any unilateral action by the UK is very difficult because of our legal obligations under the Treaty of Rome and the whole matter is being considered

CONFIDENTIAL

by