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FOREIGN AND COMMONWEALTH TELEGRAM NO. 954 TO WASHINGTON
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HE ASKED WHICH OF THE THREE COURSES WE PREFERRED, A MULTILATERAL AGREEMENT, BILATERAL AGREEMENTS OR UNILATERAL ACTION BY CONGRESS. 5. IN REPLY THE PRESIDENT OF THE BOARD OF TRADE EMPHASISED OUR DIFFICULTY IN UNDERSTANDING THE ECONOMIC JUSTIFICATION FOR EXTENDED RESTRAINTS AGAINST THE BACKGROUND OF THE US TEXTILE INDUSTRY'S RISING PROSPERITY. IMPORTS TOOK A MUCH LOWER SHARE OF THE US MARKET THAN IN THE U K. EXTENSION OF THE L T A WOULD GIVE AN IMPETUS TO PROTECTIONIST MEASURES AROUND THE WORLD AND WOULD BE PARTICULARLY SERIOUS FOR RELATIONS WITH DEVELOPING COUNTRIES IN UNCTAD AND ELSEWHERE. A CONTINUING FAILURE BY THE UNITED STATES TO ACT ON
A S P, FOR WHATEVER REASON, WOULD BE A SERIOUS FACTOR IN
U S/EUROPEAN RELATIONS. MR. MULLEY EMPHASISED HONG KONG'S DEPENDENCE ON TEXTILE EXPORTS, WHICH WOULD BE THREATENED IN MANY MARKETS IF THE US SET A BAD EXAMPLE.
6. OFFICIALS ON BOTH SIDES DISCUSSED STATISTICS IN SOME DETAIL. THE AMERICANS CONCENTRATED ON THE RATE OF INCREASE IN IMPORTS, ESPECIALLY OF PARTICULAR PRODUCTS, BUT WHEN CHALLENGED TO RELATE THIS TO THE GROWTH OF THE MARKET AND OF DOMESTIC PROTECTION, CLAIMED THAT THEY HAD NO COMPARABLE FIGURES. WE SOUGHT TO BRING HOME THAT, CONTRARY TO THE AMERICAN CLAIM OF A THREATENING TREND OF IMPORTS FOR THE FUTURE, THE CURRENT TREND OF DOMESTIC SALES, EMPLOYMENT, PROFITS, ETC WAS STEADILY UPWARDS. WE WOULD STUDY THEIR FIGURES FURTHER BUT AT A FIRST REACTION WE REMAINED UNCONVINCED OF THEIR CASE. THEY HAD SPOKEN OF THE POSSIBILITY OF UNILATERAL ACTION, BUT THE QUESTION OF GATT OBLIGATIONS REMAINED. 7. NEHMER MADE IT CLEAR THAT THE US HAD IN MIND A GATT MEETING IN EARLY JUNE TO DISCUSSING EXTENDING THE L TA TO MAN-MADE AND WOOL TEXTILES AND WOULD PROBABLY MAKE A FORMAL PROPOSAL SHORTLY. WE SAID THAT THE VALUE OF A GATT MEETING WHICH MIGHT ACHIEVE NOTHING SEEMED PROBLEMATICAL.
8. POSTS TO WHICH THIS TELEGRAM IS REPEATED MAY DRAW ON THIS ACCOUNT IN SPEAKING TO THE GOVERNMENTS TO WHICH THEY ARE ACCREDITED/THE GATT SECRETARIAT/ THE EEC COMMISSION.
MR. STEWART
INTERNATIONAL TRADE DISTRIBUTION
TRADE POLICY DEPT.
COMMODITIES DEPT.
N.A.C. DEPT.
H.K. DEPT.
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