TNAG-1056-FCO40-1306-Trade-relations-between-Hong-Kong-and-the-EEC-1981 — Page 14

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FM HONG KONG 0504832 DEC 81

TO IMMEDIATE FCO

TELEGRAM NUMBER 1088 OF 5 DECEMBER

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INFO PRIORITY UKMIS GENEVA (FOR CHAU) BRUSSELS (FOR BURGESS) WASHINGTON (FOR CROWSON) HONG KONG GOVERNMENT OFFICE LONDON PARIS.

FRENCH QUANTITIVE RESTRICTIONS (QRS)

WE HAVE FORMALLY REQUESTED CONSULTATIONS WITH THE COMMISSION OF

HE EEC UNDER ARTICLE XXIII OF THE GATT REGARDING THE QUANTITATIVE

RESTRICTIONS MAINTAINED BY FRANCE IN RESPECT OF CERTAIN IMPORTS FROM HONG KONG. THESE CONSULTATIONS HAVE BEEN REQUESTED WITH A VIEW TO REMOVING THESE QRS.

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2. MIFT CONTAINS THE TEXTS OF TWO NOTES VERBALE WHICH THE DIRECTOR

OF TRADE INDUSTRY AND CUSTOMS AND THE MINISTER FOR HONG KONG COMMERCIAL RELATIONS WITH THE EUROPEAN COMMUNITIES AND THE MEMBER STATES HAVE ACCORDINGLY PRESENTED TO THE FRENCH

TRADE COMMISSIONER IN HONG KONG AND THE COMMISSIONER OF THE EEC

N BRUSSELS RESPECTIVELY YESTERDAY (4 DECEMBER).

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3. THE FRENCH QRS ARE RESIDUAL MEASURES LEFT OVER FROM THE GLOBAL IMPORT RESTRICTIONS INTRODUCED BY FRANCE IN 1957 ON BALANCE OF PAYMENTS GROUNDS. IN 1959, THE RESTRICTIONS WERE REMOVED IN RRESPECT

OF IMPORTS FROM MOST COUNTRIES BUT CONTINUED TO BE APPLIED DISCRIMINATORILY ON IMPORTS FROM HONG KONG. ALTHOUGH THE FRENCH

HAVE SUBSEQUENTLY REMOVED SOME OF THESE QRS, SINCE 1977 GRS REMAINED IN RESPECT OF 8 PRODUCTS (RADIOS, SOYA SPROUTS, KNITWEAR OTHER THAN COTTON MMF AND WOOL, CLOTHING OTHER THAN COTTON

MMF AND WOOL, UMBRELLAS, PLEASURE CRAFT, MICROSCOPES AND TOYS). THEN ON 23RD OCTOBER THE FRENCH GOVERNMENT ADDED A NINTH PRODUCT BY IMPOSING QRS ON IMPORTS OF ELECTRONIC QUARTZ WATCHES FROM HONG KONG.

4. THE QR ON ELECTRONIC WATCHES AFFECTS A SIGNIFICANT PROPORTION OF DOMESTIC EXPORTS TO FRANCE. IN 1980 EXPORTS OF 5.9 MILLION ELECTRONIC WATCHES TO FRANCE ACCOUNTED FOR HK DOLLARS 237 MILLION

@ 17 PER CENT OF THE VALUE OF HONG KONG'S DOMESTIC EXPORTS TO FRANCE THAT YEAR. THIS IS AN EXPANDING TRADE AND THE QR, WHICH SETS A LIMIT OF 5.5 MILLION, WILL HAVE AN ADVERSE EFFECT ON THE TRADE.

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