CONFIDENTIAL
CYPHER CAT A
PRIORITY UKMIS GENEVA TO FCO
TEL NO 543
LAST
RFF
274
11 OCTOBER 1969
{}.
CONFIDENTIAL
NEUTRAL
ADDSD TO FCO TEL NO 543 OF 11 OCTOBER REPTD FOR INFMN TO WASHINGTON HONG KONG UKDEL BRUSSELS AND SAVING TO TOKYO UTTAWA AND NEW DELHI AND UKDEL OECD PARIS
270
•N.O.F.
RED IN REGISTRY No.51
13 OCT 1969
HKK6/204/
MY TEL NO 539 AND NO 23 TO HONG KONG (NOT TO ALL). COTTON TEXTILES
THE GATT DISCUSSION FINISHED YESTERDAY MUCH WHERE WE EXPECTED IT WOULD. THERE WAS ONLY A VERY PRELIMINARY EXCHANGE ON PROLONGING THE PRESENT COTTON ARRANGEMENT AND ON THE KIND OF CHANGES IN ITS PROVISIONS WHICH SOME PARTICIPATING COUNTRIES WOULD LIKE TO SEE MADE. ALTHOUGH A NUMBER OF EXPORTING COUNTRIES SPOKE OUT AGAINST PROLONGING RESTRAINTS BEYOND 1978 AND WE MADE IT CLEAR THAT WE COULD DO WITHOUT THEM AT LEAST AFTER 1971, THE UNDERTONE OF THE EXPORTERS' STATEMENTS WAS SURPRISINGLY MILD AND THE SENSE OF THE DISCUSSION WAS THAT A PROLONGATION OF INTERNATIONALLY AGREED RESTRAINTS IN SOME FORM WOULD BE INEVITABLE. THE AMERICANS MADE IT CLEAR, QUIETLY BUT FIRMLY, THAT THE ALTERNATIVE FOR THEM WAS TO CONTINUE QUOTA RESTRICTIONS UNILATERALLY. MOST OF OUR EFTA COLLEAGUES CAME OUT FLATLY IN FAVOUR OF PROLONGATION. WHEN THE COMMITTEE MEETS AGAIN IN MID-DECEMBER, THEREFORE, IT WILL TAKE AS ITS WORKING HYPOTHESIS THE NEED TO PROLONG THE COTTON ARRANGEMENT AND BEGIN TO TRY TO REACH CONCLUSIONS ON WHAT IF ANY MODIFICATIONS TO ITS PROVISIONS CAN BE AGREED AND FOR HOW LONG THE EXTENSION
SHOULD RUN.
2.
WE TOOK THE OPPORTUNITY PROVIDED BY A DISCUSSION OF ADJUSTMENT MEASURES TO EXPLAIN IN SOME DETAIL OUR DECISION TO GO OVER TO THE TARIFF AS THE ONLY FORM OF PROTECTION. THE INDIANS MADE A REFERENCE
IN MEASURED TERMS, TO THE EFFECT OF THIS ON THEIR EXPORTS TO THE U K AND TO THE NEED FOR COTTON TEXTILES TO BE INCLUDED IN THE GENERAL SCHEME OF PREFERENCES ON WHICH UNCTAD IS WORKING. BUT MOST COMMENTS, INCLUDING THOSE OF JAPAN AND ISRAEL WERE FAVOURABLE.
3. THE QUESTION OF NON COTTON TEXTILES (MAN MADE FIBRES AND WOOL) AND THE AMERICAN PRESSURE FOR SOME KIND OF RESTRAINING ACTION WAS
THE OF COURSE PROMINENT IN THE MINDS OF MOST DELEGATIONS. AMERICANS RAISED THEIR PROBLEM EARLY IN THE DISCUSSION BUT DID SO
CONFIDENT I AL
/IN