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it, save insofar as Article 20 of the EFTA Convention provides an
'escape-clause',
11.
So, I think the foundations of the case built up by the BOT paper will prove, on edanination, to be rather shaky. But even if they weren't, I would query
(a)
the practicability of securing international acceptance of the' Article XIX Policy';
(b)
whether it would really be in Britain's interests.
Derek and I have both said a good deal about (a) already but I think really we need have done no more than draw attention to the fact that if any policy is to secure acceptance in the GATT it is necessary to drum up some support for it beforehand.
12.
On (b) I think the most difficult point would be, as I have suggested before, that if Britain was trying to secure acceptance of a strict interpretation of Article XIX, with adjudication, she would obviously be inhibited from taking action herself except on a very strong case, whatever the degree of pressure from the British industry, and that other countries would undoubtedly argue that the present level of imports would not justify restrictions, because Article XIX says
Fundly we specifients being imported in such increased quantities as to cause or threaten accuper this "
serious injury' *
i.e. you could use Article XIX only if, after the abolition of quotas on cotton and the expiry of the LTA, there was a hefty increase in importe,
13.
With reference to the policy now under consideration, I would therefore suggest that it might not suit British interests to see the LTA terninated after 1972, and that the best thing is to extend it, with such improvements as can be obtained. While we should resist any US proposal to extend the LTA to all non-cotton textiles (but not necessarily to the bitter end ace my letter of 20 August 1969 to Hughes), it might be worthwhile, as we have suggested, to be prepared to consider some extension of the LTA's scope as a quid pro quo for some of the improvements.
14.
But we see, for Britain and Hong Kong, considerable risks in proposing a working party to reow the situation, because we fear that it is far more likely to lead to a more restrictive situation than we have now, Indeed to propose a working party on the lines proposed in the BOT paper seems to us to be playing into Mr. Stans' hands. It would be to admit that the LTA plus existing voluntary restraints agreed under Article XXII are inadequate, with the clear implication that something else needs to be done about non-cotton textiles. If this line was supported by the arguments that prevent arrangements don't share the burden properly and that the distinction between cotton and non-cotton is getting more and more unrealistic, Mr. Stans would surely go home rejoicing, leaving Stanley Nehmer in Geneva to consolidate his viatory. You will recall that one of Mr. Stans' arguments was that in the non-cotton field the USA is taking more than its fair share of the burden 'no other market is so open as ours to the textile products of the world' and all that. In other words the Working Party should not be proposed unless it is concluded that there is no other way to head Stens off. And the Working Party proposal needs to be worked out in a good deal more detail first.
15. XIX
Surely we don't want to see the widespread use of Article with retaliation and counter-retaliation even if the rules
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