369
RECEIVED IN
REGISTRY Nɔ.51 18 MAR 1970
HKK6|304|1
35
CONFIDENTIAL
Sir L. Monson
Reference..
Mr Canter
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parsug
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US/Japanese Textile Discussions
x (4) 7/13/3
Your comment on Tokyo telegram No.156 (attached) asking whether the Japanese have "sold a real Hong Kong pass"
2. There is some uncertainty about the Japanese official position, but we have no reason to believe that they have as yet sold any pass. It would seem they have rejected American proposals for comprehen- sive restraint over the whole field of non-cotton textiles and are feeling their way towards the possibility of reaching a compromise solution, the basis of which would be to offer selective restraints on a number of items where imports into the USA (particularly from Japan) might be shown to cause injury or threat of injury to US domestic industry. Such selective restraints would be similar to the "voluntary restraints" Hong Kong is exercising in its non-cotton textiles trade with Canada and the Scandinavians. We have already hinted to Mr. Stans, the US Secretary of Commerce, both in London and later in Hong Kong, that this might be a possible solution to American problems.
3. The danger is that the Japanese may come to terms with the Americans in a strictly bilateral context, giving ground on a weak American case of injury. This would provide the Americans with a lever to exert pressure against other major exporters to the US market (Hong Kong, Taiwan, Korea) with a view to bringing them into line on the same terms. Our position (shared by Hong Kong) is that we want the Americans to bring their problem into the GATT forum with a view to working out a multilateral solution with GATT approval. EEC have supported this line.
4. We have been trying to steer the Japanese in the latter direction and it would not be too late for them, having explored with the Americans the broad outlines of an acceptable solution involving selective restraints, to insist that the Americans pursue the final stages in the GATT forum. It is difficult to assess our chances of influencing the Japanese. Their Ministry of Foreign Affairs seem convinced that whatever the strength of the American's injury case some voluntary restraints will have to be conceded in the bilateral discussions now proceeding, because of political pressures applied at a high level by the USA. Their Ministry of Trade and Industry, together with the leaders of the textile industry and its parliamentary lobby, seem to be standing out against conceding any voluntary bilateral restraints. They are, however, fearful that any multilateral solution in GATT would involve a comprehensive arrangement similar to the LTA on cotton textiles.
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