(61) on Part C
ising.
(Flag M)
Flags N
and O
Argument
11. The growth issue has fortunately become an academic issue
in a sense. Hong Kong's export performance in 1969 in the
sheeting categories did not entitle them to more than 1%
growth in the current year under the provisions of the Heads
of Agreement (which will expire at the end of this year). But
I think we must pursue this matter. Hong Kong feels strongly
that as a matter of principle the provisions of the Heads of
Agreement must be held to apply in the absence of any agreed
variation for this category of cotton exports during the neg-
otiations. This is an issue on which they are deserving of
support from us for the reasons set out in the attached note.
There are grounds for hope that, with the departure of Mr
Stewart and the severance of the Industries Division from the
Board of Trade, a more compromising spirit may be evident at
this end. We could have an ally in the Board of Trade; in
this connection you should see a recent exchange of minutes
between Mr Stewart (paragraph 3) and Mr Goldsmith (paragraph 6).
12. We need to consider how we should pursue it. So far as
we know, the Board of Trade remain responsible for the negot-
iation and administration of trade agreements with overseas
countries. It is of course unthinkable that they should
reach any new conclusions about this particular agreement
without consulting the Ministry of Technology. But it does
mean that any further approach ought to be made to Mr Goldsmith
and not to Mr Carey. The first step might be a meeting with
Mr Goldsmith at which the note attached might be used as a
/basis