the tariff treatment of these products. These arguments are considered separately.
22.
There is undoubtedly a risk of diversion of Asian non-cotton textiles to Europe since the new American restrictions are set at levels which we know are below the productive capacity of the countries concerned. But the UK is already protected against any uncontrolled increase in imports of non-cotton textiles from Japan since these are still subject to quotas under the Anglo- Japanese Trade Agreement. As far as diversion from the other three is concerned, the greatest immediate danger may come from Hong Kong which has both the capacity and the necessary trading connections with UK importers. But we believe that following our acquiescence in their making an agreement with the USA, Hong Kong recognise some obligation not to flood our market with these products. If the need arose, we would make approaches to the Hong Kong Government for some voluntary restraint on exports, but imposition of quotas against Hong Kong by us would be a different mattor which would certainly cause resentment and political difficulties in our relations with Hong Kong. As for Taiwan and South Korea, they may require longer to build up trade but we shall need to keep the situation under close review.
...
23. So far, other countries have not yet taken tangible measures to forestall this threat of diversion.other than by issuing public and private warnings.
Some, including Canada, Sweden,
Bring
France and Germany already operate some forms of import restrictions against non-cotton textiles. But it would be difficult for us to move ahead of the EEC in secking either muf restraints or multi-fibre restraints. Such restraints could be negotiated only with great difficulty or more likely as the US have dono, against the threat of unilateral action to impose quotas if the suppliers did not agree. Plainly we cannot wait Arx even for an agreed solution to this problem, but we are of the view that we can still wait a little longer in the full knowledge that if the threat of viersion should become a reality we could move quickly to impose restrictions. In that event others would probably be facing the same reality and we would be
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