TNAG-0763-FCO40-967-Effect-of-GATT-Multi-Fibre-Arrangement-(MFA)-on-Hong-Kong-ex-1978 — Page 49

EXPLANATORY MEMORANDUM

1.

By Decision of 19 October 1977 the Council authorised the

Commission to open negotiations with Hong Kong with a view to the conclusion of an agreement on trade in textile products.

3.

In accor·lance with that Council Decision, and in consultation with the

Article 113 Committee, the Commission conducted negotiations with Hong Kong from 19 October to 3 December 1977.

Following the negotiations, a draft Agreement was drawn up.

The draft Agreement:

(i) covers all MFA products of wool, cotton and man-made fibres

originating in Hong Kong;

(ii) calls for voluntary restraint, at agreed levels, on exports to the Community of certain categories of products covered by the Agreement;

(iii) provides for a consultation procedure whereby voluntary restraint measures may be introduced for categories of products not initially subject to limitation, where certain thresholds are exceeded;

(iv) establishes a double checking system for categories of products subject to limitation, and an origin control system for all categories covered by the Agreement;

(v) includes a flexibility clause allowing the transfer of a certain percentage of the quotas from category to category, or from one year to

another;

(vi) in exchange for limitation, contains an undertaking by the Community not to introduce further quantitative restrictions under Article XIX of the CATT or Article 3 of the MFA, or to measures having an effect equivalent to quantitative restrictions.