TNAG-2090-FCO40-2975-Diplomatic-representation-of-third-countries-in-Hong-Kong-1991 — Page 27

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EVIDENCE, TO THE FACT THAT JAPANESE DIRECT EXPORTS AND NISSAN UK SALES IN 1989 AMOUNTED TO 11 PER CENT OF THE UK MARKET (11 PER CENT IS GENERALLY UNDERSTOOD TO BE THE UK VER LIMIT). BRIDGE EXPLAINED THAT THIS WAS A STATISTICAL QUIRK: THE MARKET HAD PROVED UNEXPECTEDLY STRONG THUS REDUCING THE PERCENTAGE MARKET SHARE FIGURES. WE UNDERTOOK TO PROVIDE A PAPER EXPLAINING HOW THE VER AND THE LOCAL CONTENT ARRANGEMENTS WORKED, EMPHASISING THAT THE TWO WERE QUITE SEPARATE.

4. ON SAFEGUARDING, GIOLA OUTLINED THE FRENCH PROPOSALS FOR A BASE QUOTA SET AT AROUND THE LEVEL OF CURRENT JAPANESE SALES, FROM WHICH AMOUNTS WOULD BE ADDED OR SUBTRACTED TO REFLECT MARKET GROWTH OR DECLINE. THIS WOULD GUARANTEE CONTINUATION OF THE CAR MANUFACTURERS RELATIVE POSITIONS IN THE RESTRICTED MARKETS. THE JAPANESE HAD SAID THAT THEY WOULD BE PREPARED TO SHARE MARKET MOVEMENTS BUT NOT TO GUARANTEE OTHER COMPANIES' MARKET SHARE. BRIDGE SAID THAT A CEILING ON TRANSPLANT PRODUCTION WAS INHERENT IN THE PROPOSAL SO IT WAS NOT ACCEPTABLE.

5.

ON NON-TARGETTING GIOLA SAID HE WAS SATISFIED FROM HIS TALKS WITH THE JAPANESE THAT THERE WAS NO REAL THREAT OF TARGETTING. HOWEVER THE FRENCH AND INDUSTRY ATTACHED GREAT IMPORTANCE TO THE ISSUE AND WOULD NOT BE EASILY REASSURED.

6.

ROBERTS SAID FRENCH OFFICIALS WERE NOT WORRIED AT THE PROSPECT OF FAILING TO REACH AGREEMENT. THE UK DID WANT AN AGREEMENT BUT ONLY ON THE RIGHT TERMS, IE NO LINKAGE AND EARLY AND SUBSTANTIAL PROGRESS TOWARDS LIBERALISATION IN THE RESTRICTED MARKETS. OUR POLICY WOULD NOT BE AFFECTED BY MINISTERIAL CHANGES.

7. GIOLA SAID THAT THE FRENCH, DRIVEN BY CALVET, WERE SPINNING THINGS OUT. CALVET'S REASONS WERE NOT CLEAR BUT PERHAPS HE HOPED A RECESSION NEXT YEAR WOULD ADD WEIGHT TO HIS CASE. ROCARD WAS BESET BY POLITICAL PROBLEMS AND WAS NOT DISPOSED TO CROSS INDUSTRY. GIOLA COULD NOT FORECAST WHEN THE RESTRICTED GROUP OF MINISTERS WOULD MEET AGAIN.

8.

OVER LUNCH NIEDUSZYNSKI AND BRIDGE ASKED WHAT WOULD HAPPEN IF NO AGREEMENT COULD BE REACHED. GIOLA SPOKE VAGUELY OF TAKING ACTION WHICH WOULD MAKE IT HARDER FOR THE FRENCH TO CONTINUE THEIR ILLEGAL RESTRAINT EG BY RELAXING PARALLEL IMPORTS EITHER UNDER THE EXISTING BLOCK EXEMPTION OR BY AMENDING THE BLOCK

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