CONFIDENTIAL,
area should not lead to the intensification of existing
barriers to trade. It might also be pointed out to the
ERC that by extending restrictions on Hong Kong without
evidence of injury to the industries concerned, they are
doing the very thing that we and they are currently urging
the Americans to desist from. If the EEC behave like this,
our joint representations to the Americans to refrain from
imposing restrictions on low cost non-cotton textiles
without evidence of injury will be more easily ignored.
27. But in the last resort, arguments based on the GATT
illegality of extending restrictions against Hong Kong
are unlikely to carry much weight. Hong Kong has no friends
in the GATT and no scope for retaliation. And the EEC
would correctly judge that we would not go so far as to
retaliate on Hong Kong's behalf, or go very far along the
road which might lead to retaliation.
d. The Non-Cotton Textiles Complex
28. We are already taking all possible action to prevent the
protectionist forces in the United States from seriously
damaging the world-wide liberal trading system which has
been established since the war under the GATT, and we
shall continue to do so.
29. It thus appears that, while we shall fight a rear guard
action in the interests of Hong Kong in the negotiations
for the UNCTAD Generalised Preferences Scheme, we have
not much hope of preventing tariff discrimination against
her. We must concentrate our efforts in the field of the
Common Commercial Policy as it develops during the period
/of