CODE 18-77
1
MR R GRAY, CRE1
Mr Gildea, CRE3
cc Me Toms, CRE2
{
Reference..
RECEIVED IN
REGISTRY No.51
18 MAR 1971
12
Mr M E Heath, FCO
Mr M Laird, FCO
Mr Carey, CT
HONG KONG: COTTON TEXTILES
HKK 6/548/3
I enclose a draft reply to most of the Governor of Hong Kong's saving
despatch no 28. As you know, Hong Kong have now asked for an answer if possible
before 18 March. If we can agree on the draft early next week, it will be
possible to telegraph the main points by that date..
Most of the draft answers the Hong Kong plea for delay in introducing the
cotton textile tariff. The substance of our answer was, of course, never in
question and we are concerned only with how, best to present our rejection of the
request.
Paragraph 6 deals with Mr Cater's request during the talks on 1 February
for an assurance that if we were to reimpose quotas under the safeguards
procedure outlined in Mr Crosland's statement of July 1969, we would have regard
to traditional patterns of trade (ie those likely to favour Hong Kong). As we
are turning down substantially all the other Hong Kong points, we have done our
best to sound favourable on this one. The difficulty is that a literal application
of the LTA would seen to require us to base quotas on not less than trade in the
year immediately preceding their imposition so that we would not, as I interpret
the LTA, be free to cut back, say, Taiwan to an earlier and lower base period.
We did, of course, interpret the LTA rather liberally in establishing the base
period for our global quotas some years ago, but it seems questionable whether
it would be desirable in the future to set a precedent for other countries not
to observe the safeguard provisions (including those of any successor to the LTA).
Be this as it may, I feel that we should not tie our hands with any firm
commitment to Hong Kong.