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Hong Kong has so far successfully resisted American demands for
comprehensive restraints but would no doubt consider it difficult
to maintain this line if the Japanese were to give way. The
Prime Minister recently sent a message to President Nixon, drawing
attention to the damage which could be caused to international
trade generally if the USA pursued its present course and
suggesting that if there are specific non-cotton items where
serious injury may exist or be threatened, these can be discussed
in the GATT forum.
7. The President has replied that while his administration
shared our commitment to freer international trade, they must
reach a satisfactory solution to the "very special case" of
textiles to enable them to maintain effectively their overall.
pursuit of free trade; he believed that the course they were
following would give relief to their textile industry without
adverse effect in the movement to freer trade.
Hong Kong/UK Trade in Textiles
8.
Hong Kong's cotton textile exports to the UK enter free
of duty but since 1959 have been subject to quantitative
restrictions of a voluntary nature; these arrangements were
originally inter-industry agreements (the "Lancashire Agreement")
but are now embodied in an inter-governmental agreement known
as the "Heads of Agreement". Non-cotton textiles are free of
quantitative restrictions but are subject to the Commonwealth
preferertial tariff.
9. On 22 July, 1969 the President of the Board of Trade
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/announced