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2
means of a protocol of extension negotiated at the end of 1981. On first reading the MFA and extension protocol can give the impression that they are intended as instruments of trade liberalisation (an impression that developing country suppliers try to reinforce by selective quotation). In practice however they represent a negotiated compromise varying the normal rules of the General Agreement on Tariffs and Trade (GATT) by allowing the developed importing countries a more refined (but not
necessarily more effective) instrument of protection against disruptive surges in imports and by giving each low-cost
supplier in return an individual guarantee of market access at a specified quota level.
5.
is intended only to
MFA 3, like its predecessors, provide a framework for the bilateral agreements negotiated
under it between individual developing importing countries (eg European Community, US) and individual developing country and state trader low-cost suppliers. The bilateral agreements lay
down precise details governing trade, notably quota levels. the case of the EC agreements are negotiated by the Commission on behalf of the Community as a whole, and not by individual
Member States. The EC's existing bilaterals under MFA 2 run
until the end of 1982.
In
THE EC'S MANDATE FOR MFA 3 BILATERALS
6.
Lord Belstead should be under no illusion about the depth
of feeling he will encounter in Hong Kong about the hard line
Community took during this year's MFA 3 negotiations, and the
belief that the UK was a major proponent of this policy. Since
the first limited agreement with the UK in 1959 to restrain
cotton exports, Hong Kong has seen restraints proliferate in MFA
1 in 1974 to cover all textiles plus all clothing. In MFA 2 in
1978 they were forced to accept substantial cut-backs in their exports to the Community, and now, despite the substantial (and they will argue, consequential) growth in Community imports from
other developed countries such as the US (see Annex A) MFA 3
will require yet further cuts in the most sensitive areas. They
see this as a clear violation of the spirit indeed the terms
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