should give up the freedom of action which they now enjoy under Article XlX, in addition to giving up (a) the possibility of restricting imports of cotton textiles discriminatorily without compensation which
the CTA now gives them and
(b) all possibility of voluntary restraint arrange-
ments.
(b) It may be said that though long and arduous, the campaign is worth setting on foot, since once it is moving it will attract support e.g. from developing countries and merely by being on foot will have a deterrent effect on the proliferation of bilateral restraint arrangements. This is a dangerous delusion. Given the prolonged argument that would be involved, lasting years rather than months; the incredulity with which a crusade launched by the United Kingdom
in favour of free trade would be regarded; and the doubtful prospects of success, it cannot be assumed that it would have any inhibiting effect on other developed countries and their bilateral arrangements; our own hands, however, would be tied from contem- plating any bilateral arrangements ourselves and we would be logically bound to forbid Hong Kong to enter into any, even in situations in which liong Kong would judge it advantageous. This would impose a severe strain on our relations with Hong Kong.
24. The conclusion which may be drawn from the foregoing is perhaps as follows:
✓
(:1)
We should prepare to engage in discussion of escape clause action in general with the object of using every opportunity that offers to press the argument in favour of maintaining open markets, rather than imposing or agreeing
restrictions on trade.
(11) We should maintain the principle that while
working for the reduction of restrictions, wo
and Hong Kong must maintain freedom to use any
devices operated by other countries.
(111)
We might, if the tactical situation recommenda this in the context of promoting a compromise on the lines of phasing out (rather than either prolonging or terminating) the CTA, propose tho establishment of a Working Party to examine the
/possibility