TNAG-1157-FCO40-1437-Visits-by-FCO-Ministers-to-Hong-Kong-1982 — Page 81

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of the MFA and a reneging on the general free trade sentiments expressed by Community and US leaders for example at the

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Versailles Summit in June, and the GATT Ministerial in November.

7.

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It took a considerable effort to work out the Community

position for negotiations with Hong Kong and the other

suppliers. There was early agreement that up to 1986 growth in total low-cost imports would have to be limited to take account

of the forecast rate of growth in Community consumption (!%

per year). But Member States had divergent views about how the

limited access should be divided up between individual

suppliers. The UK repeatedly made the point that Hong Kong's open market policy, and the meticulously fair way in which she administers her textile agreements, should count in her favour.

The Minister for Trade (Mr Rees) tried to get the main burden of

cut-backs placed on the other "dominant" suppliers (South Korea,

Macao and, although outside the MFA, Taiwan) to Hong Kong's

advantage. However, the rest of the Community in line with

the UK industry insisted that the aim should be to treat Hong

Kong (the biggest supplier) the same way as the others and in

the end we had to along with them, since it was clear no agreement would be be possible on any other basis.

8.

In order to meet the Council's tough mandate to maintain

overall "global ceilings" consistent with a growth rate of

around 10%, the Commission's initial mandate was for cut-backs

of 10% in the "dominants'" quotas for the 5 most sensitive

clothing categories. The UK insisted that cut-backs should not

exceed 10% on average (Italy, France and Ireland wanted 12 -

15%).

9.

The Commission's mandate also included low annual growth

rates; a revised "basket extractor" mechanism for introducing

new quotas; a new anti-surge mechanism to prevent surges of imports caused by any sudden take up of previously unutilised

quotas and reduced "flexibility" (transfers from year to year

and from category to category), in the use of quotas by the "dominant" suppliers. It also incorporated fraud provisions to prevent the evasion of quotas. The agreement finally reached with Hong Kong incorporates all of these.

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