COFFRE COUNCIL
[
74
BOARD OF TRADE,
1 VICTORIA STREET,
LONDON S.W.1
78
25 August 1970
G F Kinnear Esq
Hong Kong Department
Foreign & Commonwealth Office
SW1.
Dear Kinnear
RELATIONS WITH HONG KONG ON TEXTILES
HILK 6/18
The Draft Despatch enclosed with your letter of 19 August concedes to the Governor two points which require careful con- sideration.
2.
In the first place the draft accepts the Governor's request for a delegation of authority not only in respect of textiles, but in respect of overseas trade generally.
3.
The consequence of this would of course be that Hong Kong would be free to negotiate for example voluntary restraint arrange- ments outside the textiles field, beginning no doubt with items just across the border from textiles, such as footwear and umbrellas, but liable to extend to anything. While the immediate likelihood of Hong Kong being pressed far in this direction is slight, the danger in principle is great. From the Board of Trades's point of view it would be a major development, about which we would wish at least to be consulted, for Hong Kong to conclude a volun-
tary restraint agreement going outside the textiles field. The damage which such a development might cause at a time when world trade might be on the verge of a slippery slope down towards protectionism needs no underlining.
4. The point might perhaps be safeguarded by leaving the Despatch as drafted, but by adding a qualification (perhaps in a separate communication to the Governor) giving notice that developments leading towards restraint arrangements in matters outside textiles would be particularly likely to prejudice the pursuit of HMG's own commercial policies, and we were accordingly giving notice that, to minimise the risk of our having actually to use our reserve powers, we would wish to be fully consulted.
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5. However, this would appear to take away with one hand much of what we give with the other. It would also be difficult to explain internationally. It will not be difficult to say that we are simply extending the arrangements for cotton to other tex- tiles. But a larger delegation of authority looks more like a
In fact constitutional change and would provoke more questions. the larger delegation of authority comes very near to the full autonomy in the conduct of external commercial relations which, in terms of GATT Article XXVI para.5(c), permits or, on one
/possible