Reference......
R
270
We may
find our-
selves
under
pressure
from
to con-
cede
Hong Kong
U.S.A.
I should like to draw your attention, in connection with the latest developments on Hong Kong, to Mr. Jordan's letter to Mr Hughes dated 20th August. This made two points which I believe we should keep in mind in the next few weeks. The first is Kr Jordan's view that, next to import restrictions, voluntary restraint arrangements covering broad bands of products, and perhaps even of non-cotton textile imports to the United States, would be just about the worst solution for Hong Kong, even worse than separate CTA type arrangements, because there would be no agreed set of international rules to appeal to. Mr Jordan also expressed grave doubts as to whether it would be possible to enter into negotiations with the United States on an item by item, fibre by fibre basis without prejudicing their whole position because, in practice, when a number of countries are involved, if one or two break ranks and concede on a poor case, the others would then be whipped into line by arguments of equity and the threat of sanctions. This is, of course, the point we have been making all along.
we should remind Mr Jordan of what he
restraints
said in August.
2.
If so,
The other point to which I would draw attention is the fear expressed in paragraph 10 of the enclosure to Mr Jordan's letter, that Japan would somehow steal a march on Hong Kong in doing a deal Hong Kong with the Americans, probably at llong Kong's expense. This fear nay
prompt Hong Kong to anticipate any such move by doing a deal with the Americans themselves. I do not believe that the Japanese are likely to weaken in the foreseeable future and for that reason we need to restrain Hong Kong from doing a deal with the Americans, unless and until there is clear evidence that the Japanese are going to give way. The arguments which Hong Kong has used to justify entering into voluntary restraints do not apply in the United States case so long as the Japanese are prepared to hold out. is really no possibility of the Americans doing a deal with Taiwan and Korea in the absence of any deal with Japan and Hong Kong.
on par- ticular items.
There
S. STEWART,
Ind. 1 Div.,
7th October 1969.
MR. DUNNETT (CR1)
c.c. Kr Carey,
Mr Goldsmith,
Kr Whitehead ̊ (FCO)
Mr Carter
Mr Toms
Miss Welch
Dr Stewart
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