14.8
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of Trade that they were on the verge of submitting proposals in favour of the tariff solution for interdepartmental consideration (I understand that a paper has now been circulated). Clearly a consistent textile policy on these lines would be in danger if pressure built up in the U.X. industry for quota restrictions in the non-cotton field because of restraints conceded by Hong Kong to other
countries.
4. It was against this background that pressure was brought to bear on us last week to make the current Swedish megotiations into a holding operation to give time for the policy issues to be thrashed out. Hong Kong had argued that there were good grounds for conceding the Swedish demando (1.8. continuation of restraint on two items and
three new restraints). We had agreed with C.K.3. that there was a
good case for conceding all but one of the new restraints, subject to
some adjustment of the proposed restraint levels and had drafted a telegram accordingly. Mr. Hughes felt mable to approve this in the face of objections from Industries Division (Mr. Peek).
5. So on 10 June Mr. Whitehead and I attended a meeting chaired by Kr. Hughes (Kr. Peck was present) at which we were asked to consider
postponement of the negotiations. This we felt unable to do in view of the history of these negotiations, the fact that the principle of voluntary restraint had already been conceded and the damage to long Kong's trade of my recultant unilateral action by the Swedes, With
great reluctance and little hope that the Governor would accept, I
sgreed to suggest to Hong Kong modified instructions that would have the effect of conceding no new restraints (P.C.0. Tel.No.387 to long X.ene).
At the same time i sent a personal telegram to the Governor, partly to avert an explosion and partly to get him to send Mr. Jordan to London (F.0.0. Tel. No.388 to Hong Kong). As expected the
(H.K. Tel No.475) Governor was unable to accept the suggested negotiating instructions;
he agreed that Mr. Jordan should visit London en route to Stockholm.
In meetings at the Board of Trade attended by Mr. Jordan and Mr. Sellers (in which Cir A. Snelling intervened in the final stages)
more realistic negotiating instructions z ra agreed and accepted by Hong Kong (F.C.0. Tel. No.395 to Hong Kong); continuation of the existing restraints plus one new restraint (shirts) could be conceded,
/ while...