CONFIDENTIAL
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WOULD BE MUCH ADVANTAGE I
5. IT SEEMS TO US THAT THERE WOULD BE MUCH ADVANTAGE IN CONCERTING THE HONG KONG ANSWER WITH THE OTHER COUNTRIES CONCERNED OR AT LEAST INFORMING THEM, ESPECIALLY JAPAN, OF THE PROPOSED TERMS OF THE
HONG KONG ANSWER AS SOON AS THESE ARE AGREED.
6. IF WE ARE RIGHT IN BELIEVING THAT THERE IS NOW NO CHANCE AT ALL THAT TOTAL RESISTANCE BY ALL SUPPLYING COUNTRIES WILL PERSUADE BOTH THE U.S. ADMINISTRATION AND CONGRESS TO RENOUNCE ALL METHODS OF CONTROLLING TEXTILE IMPORTS, OUR STRATEGY MUST BE TO GUIDE THEM TOWARDS A GRADUAL ACCEPTANCE OF SOMETHING CONSIDERABLY LESS THAN THE COMPREHENSIVE RESTRAINTS WHICH THEY ARE DEMANDING. IN EFFECT THIS MEANS THE QUOTE SELECTIVE APPROACH UNQUOTE WHICH AT THE MOMENT THEY ARE REJECTING AS A SOLUTION (SECRETARY STANS PUBLICLY QUOTED THE PRESIDENT AS REJECTING IT IN A RECENT STATEMENT) AND WHICH WOULD NOT SERIOUSLY CONFLICT WITH HONG KONG'S NORMAL POLICY OR SET A PRECEDENT FOR OTHER IMPORT RESTRICTIONS WITHOUT QUOTE INJURY UNQUOTE JUSTIFICATION. AT THE MOMENT, HOWEVER, THE JAPANESE SEEM TO REJECT IT TOO, AND WE SEE SOME DANGER THAT THEY MAY REPLY TO THE FORTHCOMING FORMAL REQUEST WITH NO CATEGORICAL A REFUSAL AS TO MAKE AN EVENTUAL COMPROMISE MUCH HARDER TO ACHIEVE. WORSE STILL, THEIR REFUSAL MIGHT CONVINCE THE KEY FIGURES IN CONGRESS, WHO ARE HOLDING OFF IN THE HOPE THAT THE ADMINISTRATION MAY GAIN SOME SUCCESS, THAT THERE IS NO POINT IN FURTHER DELAYING QUOTA LEGIS- LATION SEMI COLON AND WHILE WE ARE CONFIDENT THAT PRESIDENT NIXON WOULD WISH TO AVOID SUCH A MAJOR INFRINGEMENT OF THE G.A.T.T. WE CANNOT BE SURE THAT HE WOULD FEEL ABLE TO VETO LEGISLATION IF HE COULD OFFER NO REASONABLE ALTERNATIVE.
6. SO IT IS IN OUR INTEREST TO SOFTEN THE JAPANESE. WE KNOW LESS OF THE ATTITUDES OF TAIWAN AND ISRAEL, BUT PERHAPS WE SHOULD ENVISAGE THE POSSIBILITY OF THE BEING PERSUADED (PERHAPS BY POLITICAL CONSIDERATIONS) TO YIELD MORE THAN IS NECESSARY. IN ANY CASE IT IS CLEARLY DESIRABLE THAT THEY SHOULD KNOW HONG KONG'S POLICY AND THE LATEST STATE OF PLAY.
F.C.O. PASS HONG KONG, UKMIS GENEVA AND TOKYO.
MR. FREEMAN.
REPEATED AS REQUESTED]
INTERNATIONAL TRADE DISTRIBUTION
COPY TO:
HONG KONG DEPT
COMMODITIES DEPT
AMERICAN DEPT
CONFIDENTIAL
HONG KONG GOVT OFFICE,
54, PALL MALL,
LONDON, S.W.1.