CONFIDENTIAL
15. When in the middle of this year the Canadians asked for renewal of the existing undertakings plus new undertakings, the balance of influence in the Board of Trade was changing. Industries Division, which had previously opposed these undertakings on the grounds that trade in non-cottons would thereby be deflected to the U.K., could now point to the new policy for the U.K. cotton textile industry approved by Ministers in July and the implications of this for our long-
We were term textile policy in the international field. accordingly faced with a hard struggle to obtain Board of Trade agreement to Hong Kong entering into negotiations with the Canadians. Hong Kong, faced with the threat of arbitrary Canadian action against its trade, could not accept the situation that its interests must suffer for the sake of U.K. policy objectives which it felt were "visionary". stormy sessions in the Textile Advisory Board in Hong Kong, with industry representatives questioning H.M.G.'s right to subordinate Hong Kong's interests in this way. The Governor indicated that he would need to present to the Board a statement of the constitutional position on the conduct of Hong Kong's commercial relations and an indication of H.M.G.'s intentions
towards the Canadian negotiations.
There were
16. At this stage Hong Kong representatives came to London and a statement for presentation to the Textile Advisory Board was hammered out with the Board of Trade (Sir Anthony Part in the chair). The text, as set out in Hong Kong telegram No. 580, is attached. The first three paragraphs defined responsibility for the conduct of commercial relations on lines
The next three approximating to paragraph 13 above.
paragraphs conceded what we had been seeking namely the continuance (albeit on a temporary basis) of the policy of conceding voluntary restraints under pressure, with particular reference to the Canadian case. The Governor accepted the statement as holding the position with his Executive Council and Textile Advisory Board for the time being, but indicated
CONFIDENTIAL
/that