TNAG-0633-FCO40-781-Effect-of-GATT-Multi-Fibre-Arrangement-on-Hong-Kong-negotiat-1977 — Page 43

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TO IMMEDIATE UKREP BRUSSELS TEL NO 2373 OF 15 DECEMBER

TEXTILES: RENEWAL OF THE MULTIFIBRE ARRANGEMENT

THE SECRETARY OF STATE FOR TRADE SPOKE TO COMMISSIONER DAVIGNON BY

TELEPHONE YESTERDAY EVENING (14 DECEMBER) ABOUT A NUMBER OF POINTS

OF CONCERN TO UK MINISTERS, THE FOLLOWING IS A SUMMARY OF THEIR

CONVERSATION.

COTTON YARN AND CLOTH

2. MR DELL PRESSED DAVIGNON ABOUT THE NEED TO GO SO FAR TO REACH

AGREEMENT WITH INDIA, PAKISTAN, EGYPT AND BRAZIL. HE ASKED WHY THE

COMMISSION WERE NOT PREPARED TO BE AS TOUGH WITH THESE COUNTRIES AS

WITH HONG KONG. HE REMINDED DAVIGNON OF THE ASSURANCES GIVEN IN

THE MARGINS OF THE COUNCIL IN LUXEMBOURG ON 18 OCTOBER ABOUT THE

INTENTION TO KEEP UK GROWTH ON COTTON YARN TO ZERO. THIS ASSURANCE

HAD NOT BEEN MET. MR DELL ACKNOWLEDGED THE COMMISSION'S EFFORTS TO

REDUCE THE UK'S SHARE OF THE INCREASE BUT DESPITE THIS, THE UK WAS BEING ASKED TO TAKE 5.47 MORE YARN IN 1978 THAN IN 1976. SUCH AN

INCREASE WOULD CREATE GREAT DIFFICULTIES FOR THE UK INDUSTRY, IN

VIEW OF THE POLITICAL SENSITIVITY, HE ASKED IF SOMETHING FURTHER

COULD BE DONE TO HELP THE UK.

3. DAVIGNON SAID HE DID NOT THINK THE COMMISSION COULD GET AGREEMENT

WITH THESE COUNTRIES FOR LESS. THE COMMISSION HAD ALREADY BEEN

VERY TOUGH WITH INDIA AND PAKISTAN (WHOSE NEGOTIATORS HAD ACTED AGAINST THEIR INSTRUCTIONS IN ACCEPTING THE PRESENT PROPOSALS) AND

EGYPT: IT HAD BEEN NECESSARY TO BRING IN BRAZIL IN ORDER TO AVOID A

MAJOR UPSET IN GENEVA OVER THE RENEWAL PROTOCOL. THE SOLUTION

PROPOSED ALREADY TOOK ACCOUNT OF THE UK'S SPECIAL PROBLEMS ON COTTON

YARN AND IT WAS BECAUSE THE COMMISSION FULLY UNDERSTOOD THE UK'S

POLITICAL SENSITIVITY IN THIS AREA, THAT THEY REFRAINED FROM DRAWING

UNDUE ATTENTION TO WHAT THEY REGARDED AS THE ECONOMIC WEAKNESS

OF THE UK'S CASE, WHEN PRESSED AGAIN BY MR DELL, DAVIGNON SAID

HE HAD GONE AS FAR AS HE COULD. ANY ATTEMPT TO REOPEN THESE

NEGOTIATIONS WOULD BE COUNTERPRODUCTIVE: THE FOUR COUNTRIES WOULD

SIMPLY COME BACK WITH MUCH HIGHER DEMANDS.

CONFIDENTIAL

14. DAVIGNON