RESTRICTED
210
CYPHER CAT A
ROUTINE UKDEL GECD PARIS
TELEGRAM NUMBER 64
RESTRICTED [NEUTRAL]
HRXG/R
TO FOREIGN AND COMMONWEALTH OFFICE
9 SEPTEMBER 1970
ADDRESSED TO F C O TELEGRAM NUMBER 64 OF 9 SEPTEMBER 1970 RFT TO
UKMIS GENEVA HONG KONG TOKYO WASHINGTON AND UKDEL EEC BRUSSELS.
FFOLLOWING FROM DELEGATION TO OECD GROUP ON PREFERENCES.
KARUDA, A MITI OFFICIAL IN THE JAPANESE GENEVA MISSION, WHO IS HERE FOR THE PREFERENCES MEETING, APPROACHED JONES YESTERDAY ON
TEXTILES SITUATION. HIS MAIN POINT WAS THAT JAPANESE WERE RELUCTANT
TO SIGN PROTOCOL EXTENDING LTA BEFORE 30 SEPTEMBER. MAJOR REASON
WAS THAT THEY HAD NOT YET RENOGOTIATED THEIR BILATERALS WITH EITHER
U.S. OR EEC AND THEY WISHED TO USE THIS AS A BARGAINING WEAPON. THEY
WERE NOT OPPOSED TO EXTENSION OF LTA AS SUCH BUT WOULD PROCEED
WITH RENOGOTIATION OF THEIR BILATERAL AGREEMENTS AND WOULD PROBABLY
SIGN PROTOCOL AT A LATER DATE.
2. THE QUESTION WAS WHETHER THIS ACTION WOULD BE CONSIDERED
SUFFICIENTLY SERIOUS TO NECESSITATE CALLING A MEETING OF CTC AT THE
END OF SEPTEMBER TO CONSIDER THE SITUATION. GATT SECRETARIAT HAD
INDICATED THAT THIS WOULD DEPEND ON WHETHER ONE OR MORE MAJOR
PARTICIPATING COUNTRIES REQUESTED A MEETING. WHAT WAS UK AND HONG
KONG VIEW?
3. JONES REPLIED THAT HE WAS WITHOUT INSTRUCTIONS BUT THAT HE PERSONALLY DID NOT THINK THAT THE WITHHOLDING OF SIGNATURE BY ONE
EXPORTING COUNTRY, EVEN A MAJOR ONE, WOULD MAKE THE LTA UNVIABLE AND NECESSITATE AN EMERGENCY MEETING. JAPANESE WOULD HOWEVER HAVE TO FACE RISK OF ACTION UNDER ARTICLE 6(C) AS A
NON-PARTICIPATING COUNTRY.
4. KARUDA ADDED THAT ANOTHER REASON FOR JAPANESE RELUCTANCE TO
SIGN PROTOCOL WAS THE PRESENT POSITION ON NON COTTONS. AMERICAN
TACTICS IN TRYING TO FORCE JAPANESE TO NEGOTIATE UNDER THREATS HAD
BEEN A BAD MISJUDGMENT AND HAD MISFIRED. JAPANESE WOULD NOW
PREFER NO FURTHER ACTION UNTIL ULTIMATE FATE OF US TRADE BILL
BECAME MORE CLEAR. IN THIS CONNECTION THEY WERE RELUCTANT TO LIFT
THEIR RESERVATION ON SETTING UP OF PROPOSED GATT WORKING PARTY ON
TEXTILES. THEIR INDUSTRY IN PARTICULAR FELT THIS WOULD ONLY START
THE SLIPPERY SLOPE TOWARDS EXTENSION OF THE LTA TO OTHER TEXTILES
OR TO AN LTA TYPE SOLUTION FOR NON COTTONS. THEY THEREFORE
PREFERRED POSTPONING CONSIDERATION OF THIS ISSUE IN GATT COUNCIL.
ONE POSSIBILITY THEY HAD THOUGHT OF WAS TO ESTABLISH AN EXPERT
GROUP TO ANALYSE THE FACTS BEFORE DECIDING THE NEXT MOVE AT AN
INTERGOVERNMENTAL LEVEL.
RESTRICTED
/5. JONES