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CONFIDENTIAL
US Textile Problem
(HKK 6/304/1)
When he was in Hong Kong in May to discuss possible measures
to protect the US textile industry from competition from imports
Mr. Stans, who encountered firm opposition from the Hong Kong
Government, warned that "the dialogue would continue".
On 23 September the US Consul General formally proposed to the Director of Commerce and Industry negotiations for a compre- hensive bilateral agreement on man-made and wool fibre textiles.
He said that this approach had been decided "at the highest US
Government level" and rehearsed the same weak case for restraining
imports which Mr. Stans had presented.
We immediately reminded Hong Kong that major issues of Britis
international commercial policy were involved and considered tryin to channel the Americans into the more correct procedure of an
approach to HMG rather than to Hong Kong. In the event we decided against this.
Hong Kong's reply to the US approach, carefully concerted wit
ourselves, was delivered on 8 October. After some statistical re-
buttal of the American case it recalled that Hong Kong had no comprehensive bilateral agreement of the sort proposed with any other country outside the context of the Cotton Textiles
Arrangement so that a new issue of principle would be involved.
Hong Kong would not therefore enter into comprehensive negotiation
on non-cotton textiles but were prepared as always to fulfil their
general GATT obligations and to consult on any particular sectors
where Hong Kong imports were causing or threatening serious injury
to domestic industry.
The discussions were held on 13 October in Geneva after the. Cotton Textiles Committee (C.T.C.) meeting, with Sir Eugene Melville in the chair. The Americans renewed their argument that the disruption of their industry was an accomplished fact in certain areas and threatened in others. They even outlined a
form of agreement but were told that substantive discussion was
premature
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