Mr. Carter, HKD
Mr. Wilford
Mr. Gallagher Mr. Hale
M
Pickles.
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Reference....
copics.
Rm. G69G Commodities Dept.
Us File os
290)
Non Cotton Textiles:
US/Hong Kong
Discussions in Geneva on
13 October
Sir E. Melville has promised us a report of these discussions which has not however yet reached us. I therefore had a word this afternoon with Mr. S. Stewart of the Board of Trade who was present at the discussions at which Sir E. Melville took the Chair.
2.
Mr. Stewart said that the talks were conducted in a low key and were amicable. The Americans said that there had got to be a solution of their problem and that progress would need to be made fairly soon. The British side were intent mainly on listening to the American case and probing it.
3. The talks were originally scheduled to last only for one morning but the Americans asked specially for time to explain what they meant by comprehensive restraint and in the event the talks lasted all day.
4.
•
The Americans explained that what they intended was to split items of wool and man-made fibres into two broad categories of "garments" and "others" and to have specific restraints on a few items with all the other items put into a single "basket" There would also be an overall ceiling on total imports from an individual exporting country covered by the pet restraint arrangements. Mr. Stewart felt that this approach reflected the fact that about 80 per cent of US imports of non cotton textiles were composed of four or five items in the garment field and it might well be the American intention to specify these items for individual ceilings. The overall ceiling would ensure that other items would not be allowed to grow.
5. The Americans also introduced a new concept of "fungibility" by which I gather they meant that/there were restraint on one specified item, the producers of that item might well decide to switch to another item which in turn could cause an import problem. In other words this seems to be a concept of producer substitution as compared with market substitution. It was pointed out that if this concept were applied it would imply the need to look not simply at whether individual items were causing injury to domestic producers but whether imports as a whole were having or threatening to have that effect.
6. The Americans asked what was the difference between what they were wanting and what Hong Kong had already done for Canada, Norway and Sweden. Mr. Stewart said that he was able to blur the issue here by referring to the American concept of fungibility and saying that if it was a question of proving material injury the narrower the range of