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ared Mr. Yeung's views, but pointed out that Greece was a relatively Insignificant supplier whose exports went mainly to FRG. The entry of Portugal was of more significance as it was a substantial supplier to the DEC. Mr. Archer said that Portuga, considered all its territories as a part of Portugal and this meant the inclusion of Macau. Mr. Parkinson said that it was the first time he had heard this mentioned and would check this on his return to the UK. In response to Mr. Archer's request, Mr. Parkinson said that HMG would look after Hong Kong's interest during negotiations for the enlargement of the Community.
13.
Referring to the 'recession clause' proposed by the British Textiles Confederation, Mr. Chen asked whether HMG had already taken a view on this. Referring to speeches made by Mr. Nott and himself on this, Mr. Parkinson said that HMG was happy to consider this proposal but was keeping an open mind. He felt that this proposal might not be as alarming as it seemed.
14.
Referring to flexibility provisions, Mr. Tang said that arguments had been made by industries in developed importing countries that exporting countries could substantially increase their quota limits and create surges of imports through the combined use of the flexibility provisions. The British Textiles Confederation had called for an end to these provisions. Flexibility provisions were however designed to take pressure off weak market sectors and to allow trade to move in harmony with demand into strong sectors. Exports in any restraint period might exclude the specific category limit through the swing provision. However this could only be done if there was unused quotas in other categories. The application of the flexibility provisions would not increase the total negotiated access rights of the exporting countries. Hong Kong's industry could not therefore agree with the views of the British Textiles Confederation.
15.
Mr. Parkinson said that what the developed countries' industries meant was that through the combined use of flexibility provisions, the quota limit of a given category could be substantially increased. What the industries in the importing countries failed to understand was that in using these flexibility provisions, the exporting countries had to surrender an equivalent amount of yardage from other categories. In their view, flexibilities were their enemies. They wanted utmost rigidity. Mr. Parkinson continued that to the extent that the industries of developed countries were constantly chasing these hobby-horses, Mr. Tang's comments would be worth repeating by Hong Kong from time to time.
16.
The Chairman said that the concept of "surge" had been created by the US. After many rounds of negotiations between July 1979 and January 1980, Hong Kong had accepted, under extreme pressure, the demands of the US. These involved, in respect of exports in 1980 of ten categories of apparel, giving up carryover and carryforward and a reduction in swing margin from between 6% and 7% to 5%. This set a highly damaging precedent particularly in view of the fact that the one apparent statistical example of "surge" which had been quoted was a freak distortion of imports caused by a two-month dock strike in the United States. Mr. Yeung added that in the case of the US/HK Agreement, the provisions for swing, carryover and carry forward amounted to 246 altogether, and so the US claimed that a maximum export level of 124%
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