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effects on Hong Kong's economy and thus on Japanese
exports to Hong Kong. The Secretary of State recently
sent a message to the Japanese Foreign Minister on these
lines.
U.S. Protectionism
21.
Mr. Sato will be discussing the textiles problem
It might
be useful to get his own views on protectionism and the
best means of combating it.
with President Nixon while ne is in the U.S.
22.
In bilateral negotiations with the Japanese, the
U.S. tried to persuade them 'voluntarily' to limit exports
of non-cotton textiles to the U.S. for a period of at
least five years. The Japanese refused. The
U.S. Administration then gave its backing to the 'Mills'
Bill, which contains provisions for quotas to be imposed
on a wide range of goods, including textiles. The Bill
has yet to be discussed in Congress and it will almost
certainly not be considered before the end of November.
23.
We view with concern the possibility that the 'Mills'
Bill might lead to quantitative restrictions being
imposed which would undermine the principles of the GATT
and lead to a diversion of low-cost Asian non-cotton
textiles to Europe. The solution least likely to affect
world trading patterns would be an agreement between the
Japanese and the U.S., within the terms of the GATT, which
might lead to a weakening of the provisions of the 'Mills'
Bill.
24. The Prime Minister might also express the hope that
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