*
Dear Duck,
Industries 1 Division
2
Tol. 01-222 7877 ext.2015
15th October, 1969
Thank you for your letter of 8th September.
Virtually the whole of the strongly argued caso which you put forward rests on the proposition that trade in cotton. and non-cotton goods cannot in any circumstances be lumpod together. lowever, this is not the position which has been taken up by the Government of Hong Kong. David Jordan, in his preliminary comments on the recent TCO paper, described the distinction between cotton and non-cotton as unrealistic and in his letter to bill Hughes, dated 20th August, he put the point forward more sharply when he said that it mould be very undesirable from liong Kong's point of view to put cotton quotas and non-cotton quotas into water-tight compartments, and that, if Hong Kong had to face more than a limited number of item by item, fibre by fibro restruints, she would have a parascunt interest in recogniping the "one-market" concept and rolling in non-cotton (n.m.f.) quotas with her relatively large cotton quotas on similar items.
This chows clearly that your objections to the line we have taken in our discussions are not based on any point of principle. Indeed, Hong Kong accepted the validity of the one- market concept in the negotiations with Norway, Sweden and Canada, and in recent correspondence Jordan has even put forward the idea that the LTA should be extended to cover man-made fibre goods on condition that the cotton quotas arc enlarged to include the trade which would thus be brought within the scope of the Agreement.
I cannot therefore accept the argument that in the case of trousera, for example, where imports of cotton trousers account for a large and rapidly increasing share of the U.. market, the V.K. vould not be justified in invoking restrictions under Article XIX of the GATT unicos and until the imports of nen-nade fibre trousers had also increased their share of the market substantially. This would be piling Felion upon Ossa. To be fair I should perhaps say that it is not clear from your letter that you were going quite as far as this, but in that case it is very difficult to know where you were trying to draw the dividing line. Ey view is that no such dividing linc can be drawn, as I believe vill be clear from an examination of the figures in the case of trousers, sweaters and shirts, to take the three leading examples.
D.J.C. Jones Toq.,
Counsellor (Hong Kong),
U.K. Mission,
37-39 Lue du Vermont, GELVA.
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