CONFIDENTIAL
has been forced to be in some degree accommodating to such
There are a number of live issues of this sort
pressures.
dealt with briefly in the notes below.
United States
4. As an exception to the support he has declared for freer international trade in general, President Nixon has made known his intention that arrangements should be made to restrict imports into the U.S.A. of non-cotton textiles. This reflects election campaign promises to Southern and textile interests which have great influence in Congress.
5. The U.S. Secretary of Commerce, Mr. Stans, has recently made a tour of Western Europe and the Far East (including Hong Kong). While to some extent he raised matters such as obstacles to freer trade, e.g. non-tariff barriers, he was mainly concerned with testing international reaction to proposals designed to allow the United States, by one means or another, to fulfil the political undertakings to restrict imports of non-cotton textiles. He received a negative response to his proposals at each place he visited. The general view in the countries concerned is that the ease for such restrictions lacks economic justification.
6. Trade in cotton textiles is already regulated by the GATT long-term arrangement for cotton textiles ("LTA" or "CTA") of which the United States has made restrictive use. The impression Mr. Stans has given in discussions is that the "solution" the U.S. would most prefer would be the extension of the LTA to cover non-cotton textiles. He would like to have a meeting under GATT auspices with a view to achieving such an arrangement which would presumably have the advantage of apparent GATT "respectability". Failing that, he implied that the choice might lie between bilateral agreements and
unilateral action.
7.
Such an extension of the LTA would be against the trade interests of both the United Kingdom and Hong Kong. Hong Kong are in general opposed to the extension of restraints to man-made fibres and wool textiles, either on a voluntary basis
or under multilateral arrangements.
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/ 8.