142
Крий
2411
Reference
Hong Kong/Swedish negotiations
You have seen a copy of Mr. Kemnis' Minute to Mr. Goldsmith dated 6th June.
2. You will see that CRE1 are now arguing that Article XIX is not relevant to the negotiations. This is a fundamental change from the position which they took last year and is the first occasion on which it has been mentioned in this context.
3. The implication is that any country is entitled to invoke restrictions on imports from developing countries of any product. This is a major issue of principle.
4.
You may not wish to accept the implication that it is too late for us to intervene. I have placed on a separate folder the telegrams we have exchanged with Hong Kong on this issue since 20th February. Every telegram makes it clear that Hong Kong had no discretion even to discuss the possibility of new restraints on cotton or non-cotton items. The telegrams were admirably firm on the point We also made it clear that the extension of the old restraints would have to be justified on the figures, though, because the figures were not produced in time, we gave Hong Kong authority to agree to an extension at the April meeting in Hong Kong. This authority was not, in the event, used.
5. When the discussions were held last year, the Swedes had managed to persuade the Yugoslavs to agree to restraints. Now they have extended controls to Taiwan, South Korea, possibly Thailand and Portugal. Singapore is also being brought into the net.
6. CRE1 are making great play with the argument that Sweden would not invoke Article XIX of the G.A.T.T., but would simply impose discriminatory restrictions. I have been through the record of the discussions last summer which were made by the Hong Kong delegation and Baron de Geer made it abundantly clear that they would comply with their G.A.T.T. obligations, though he said it was arguable whether the adoption of nondiscrimination under Article XIX would apply to other E.F.T.A. countries. The Swedes have been very careful to ensure that the consultations with llong Kong took place under Article XXII(i) of the G.A.T.T. and it would therefore be perfectly feasible for us to invoke Article XXII(ii) to appeal to the contracting parties to have the issue resolved. The fact that the Germans have liberalised knitwear and that Mr. Stans wants to impose restrictions on imports of Italian knitwear would rally a lot of sympathy for the Hong Kong case, given the weakness of the Swedish
principle apply to other E.F.T.A. countries.
case.
7. The argument that the Swedes would penalise Hong Kong if she were to appeal to the G.A.T.7. seems to me to be emotive. There is nothing in the record last year to suggest that Hong Kong would be worse off by going to arbitration.
8. I do not accept that the long CRE1 paper does justice to our views and I would hope that any submission to higher authority would include our case as we set it out.
9.
pas yet
There is no evidence that the F.C.0. generally - as opposed to the llong Kong desk - supports the Hong Kong position in this matter.
RECEIVED IN REGISTRY No.51
JUN 1969
S. STEWART, Ind. 1,
9th June 1969-
Mr. P.. Carey (11)
c.c. Mr. Kermis (CRE1),
Mr. Goldsmith (CRE1),
r. Carter, (FCC)
Kr. Whitelfad (FCO) Mr. Toms (CRE2) Mr. Barry (CRE3).
HKK 6/531/1