CONFIDENTIAL
that the only realistic assumption is that renewal of the LTA
will be inevitable and regards HMG's hopes for the contrary as
"visionary Hong Kong's hopes are concentrated on securing a
more liberal regime as the price for agreeing to renewal.
Non-Cotton Textiles (Artificial fibres and wool)
5.
Trade in non-cotton textiles is not subject to any general
system of restriction, and the rules of the GATT itself therefore
apply. But in the last three years pressure has built up for
restrictions on trade in non-cotton textiles, comparable to those
imposed on cotton textiles under the LTA, Under threat of
arbitrary action by the importing countries concerned Hong Kong
has given voluntary undertakings outside the GATT to restrain
exports of limited categories of non-cotton textiles to Canada,
Sweden and Norway. These arrangements were not altogether dis-
advantageous to Hong Kong, since they guaranteed that she would
continue to enjoy her existing large share of these export
markets; but they have caused HMG considerable concern on the
principal ground that they constitute undesirable precedents
for the extension of LTA-type restrictions not only throughout
the whole field of textiles but to other commodities.
6.
The pressure for a system of comprehensive restraints on non-cotton textiles from low-cost suppliers (particularly Japan,
Hong Kong, Korea and Taiwan) has been brought to a head by the
recent American initiative to this end. There is no convincing
evidence that the American textile industry as a whole is
threatened with a serious injury by the scale of imports, although
one or two specific sectors may be experiencing difficulties.
/Hong Kong
CONFIDENTIAL