CONFIDENTIAL
Whe XIX
claus
the general encoupl
H.K. has no
(iii)
to see that, so far as practical politics allow, any restrictions imposed by importing countries are related to strict economic criteria of "serious injury" and that if possible such criteria should be inter- nationally agreed or operated under some form of international discipline.
Courses open to the U.K.
26.
Lower
of retaliation
The main courses open to us are:
(i)
to agree to extend the Cotton L.T.A. to cover non- cotton textiles We should continue to resist this. It would be contrary to our general policy and would enable other countries, notably the U.S.A., to impose restrictions that would be excessive and too broadly based. Our own exports would be exposed to some risk of restriction. In this attitude we are likely to be supported by the E.E.C. and of course by the developing countries.
(ii) to insist on strict adherence to the letter of the
G.A.T.T., with the corollary that any bilateral restraint arrangements should either be terminated or brought within the framework of the G.A.T.T. course is attractive in principle, but
(iii)
(a)
1
(b)
This
the restraint arrangements have grown up largely because most developing countries (in particular Hong Kong, Korea and Taiwan) are not able to contemplate the use of the retaliation for which Article XIX provides and have therefore felt obliged to agree, under pressure, to "voluntary" restraint;
-
insistence on the use of Article XIX (possibly amended, or reinforced by agreed guide-lines) might by emphasising the availability of a legal justification actually lead to a greater proliferation of restrictions than might otherwise occur. There is also some risk that if Article XIX came to be regarded as more readily useable it might be applied increasingly to products other than textiles e.g. footwear and steel.
It
to allow bilateral restraint arrangements to continue to develop. This course has certain advantages. corresponds with reality in that the exporting countries can judge for themselves how fast it is prudent for them to press their penetration of a particular market, even though they may on occasion find themselves unreasonably restrained because of domestic pressure in importing countries that owe more to local political influence than strict economic justification. It has also tended until now to ensure that restrictions are narrowly related to those products which are causing most trouble to a particular importing country.
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