SWEDISH TEXTILE NEGOTIATIONS
POLICY ISSUES INVOLVED
159/€
A. Impact on U.K. industry
B
We have been told by the Board of Trade that any prolifera- tion of restraints on nen-cotton textiles (and on knitwear in particular) will lead to renewed strong pressure from sections of U.K. industry concerned for parallel restraints, which Ministers are likely to find irresistible.
2. This warning has been sounded before by Industries Division. But this is the first time that we have been put on notice by the
Board of Trade in these forthright terms. CRE Division backs
Industries Division to the extent of saying that if any section
of U.K. industry has as good a case as any conceded by Hong Kong to the Swedes they would not stand in the way of U.K. calling on
Hong Kong for similar restraint.
3.
Britain would have to take part in a situation of "accelerating bilateralism" if its own industry was not to be damaged by
deflections of trade.
"Creeping Bilateriem" and its significance in the context of
American initiatives for an L.T.A. type arrangement covering non-cotton textiles.
4.
Industries Division of the Board of Trade maintains that the gradual proliferation of such restraints is inevitable if a stand is not taken; that they will be taken up by the Americans and others; and that they will lead inevitably to the extension of
the L.T.A. sought by the Americans.
5.
C.R.E. Division, Hong Kong and ourselves have argued that to avoid a concerted move to extend the L.T.A. to non-cottons we must accept the existence of these voluntary undertakings on a strictly limited basis. This was the basis on which the Americans were handled both in London and Hong Kong last month, in accordance with a brief prepared by the Board of Trade and agreed with them. There is no evidence (except to the contrary) that the Americans are interested in voluntary restraints. There is no history of widespread recourse to such arrangements which have been confined to meeting the problems presented by competition from low-cost producers and have served as a safety-valve to rising pressure for a formal L.T.A.-type arrangement.
/ C.
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