Views of Industries 1 Division on policy to be adopted in the forth- coming llong Kong/Swedish negotiations
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1.
The concern of Industries 1 Division is to ensure that
Government policy towards the textile industry on protection is
consistent with its foreign commercial policy. The Government has,
with one exception, set its face against the use of quotas to protect
industry. That exception is cotton, where the policy is under
review; but whatever the outcome on cotton it would be a major
departure for H.M.G. not to exercise its authority to stop quotas
from being extended on a more or less permanent basis outside the
cotton field. The consequences we face if the Swedes get their way
seem to I.1 to be the following :-
(a) it would greatly encourage Mr. Stans to act unilaterally
if the exporting countries (including at least Italy among the
developed countries) did not agree to an extension of the
L.T.A. or voluntary restraints. H.M. Embassy, Washington, told
us on 29th May that Mr. Stans' claim that the U.S. is "the only
free market in the world for textiles" is regarded by the State
Department and others as one of the strongest arguments in
Mr. Stans's case;
(b) it would increase the already very severe pressure on
the United Kingdom market, which is suffering from exactly the
same sort of problem as the Swedes outside the cotton field.
We have so far managed to resist strong pressure from the shirt
and knitwear manufacturers to impose controls on m.m.f. and wool
garments on the grounds that this would be contrary to our
international obligations. This defence would be untenable if
we gave the Swedes what they want;
/(c)
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