TNAG-0632-FCO40-780-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1977 — Page 177

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Mr Stewart (HKGD)

INE

CONFIDENTIAL

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CATEGORISATION OF HONG KONG TEXTILE IMPORTS TO THE EEC UNDER A NEW MFA

Mr Cortazzi asked Mr Smith if Economists Department would look into this issue.

1.

2. The use of the NIMEXE system in the Community's external trade is common and will become universal. Hong Kong reports 18 categories under the existing MFA though some of these are subdivided further. Under the new system Hong Kong will be expected to report 130 categories. It is worthy of note that Hong Kong in its agreement with the US already reports 120 items under an American system of classification.

3. The Community's motive in pressing Hong Kong to this new system is only in part a desire to see uniformity in the designation of its external trade. The chief purpose is to define more precisely the nature of imports from Hong Kong, and indeed other sources, in order to prevent abuse of the MFA by the manipulation of slack definitions. The Community has set out its resolve

that, in dispute, its categorisation will be authentic.

4.

349

Other participants in the present MFA negotiations, numbering about 20 countries in all, have raised no objection to the use of NIMEXE. Some of these countries do not enjoy the level of administrative expertise of Hong Kong.

The best Hong Kong could hope for in this case is a deferment on the implementation of the new system of about three months to allow for new reporting systems to be established. There are signs that such a proposal will be heard with sympathy by the Commission.

G Haley

15 November 1977

Economists Department

CONFIDENTIAL