CONFIDIAL
Reference...
(6)
(7)
(8)
(9)
through a tariff against Commonwealth
exports. To this extent it could be
argued that our reasons for opposing voluntary restraint arrangements in
principle have been strengthened.
On the other hand, we have to accept the position as it is and the fact that some voluntary restraint arrangements are
already in existence. To attempt to
reverse the existing arrangements before
we have made up our minds about our own future attitude would be very dangerous and might lead to damage both in our
6th
relations with Hong Kong and with other
countries at a time when we need co-opera-
tion in seeking to put over our own new
policies.
A stronger case could be made for a
holding operation in which existing
restraints are allowed to continue but
no new ones are conceded unless the case
is very strong.
The Canadian authorities are obviously
expecting the Hong Kong talks next week to
end in some sort of settlement on the
non cotton textile items which will be
under discussion. If they are put off
by stalling tactics of the sort we have
proposed, it is possible that they will
retaliate against Hong Kong exports.
It is perhaps open to argument whether
Canada would be justified in such action but they have done it before (in the case of Malaysia and Korea) and have got away