VIAL
3. IN THE EVENT THAT THE INITIAL CONVERSATIONS WITH THE U.S. SHOULD LEAD TO MORE MEANINGFUL DISCUSSIONS, MY TENTATIVE OBSERV-
ONS AT THIS STAGE ARE THAT WE WOULD BE PREPARED TO CONTEMPLATE E EXTENDED TEXTILE ARRANGEMENT EITHER IN FARALLEL WITH OR IN THE PLACE CF CUP BILATERAL COTTON AGREEMENT WITH THE U.S., WHICH
OF
WULD BE CO-TERMINUS WITH THE C.T.A. GN 3 SEPTEMBER
HEREBY WE OBTAINED:-
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1973,
(A) MAXIMUM FLEXIBILITY BETWEEN COTTON AND NON-COTTONS SEMICOLON
(B) REDUCED CATEGORISATION AS COMPARED WITH PRESENT COTTON AGREEMENT WITH U.S. (E.G. NO FURTHER BREAKDOWN OF PRODUCT BY FIBRE OR CONSTRUCTION) SEMICOLON
(C) ECUITY VIS-A-VIS OTHER SUPPLIERS SEMICOLON
SEE
(D) AT LEAST, A BEST ENDEAVOURS UNDERTAKING BY THE U.S. ADMINIST- RATION FOR INCLUSION OF HONG KONG IN ITS PREFERENCES SCHEME WASHINGTON TELEGRAM 2056 OF 9 JULY 1970 TO YOU.
IF WE WERE UNABLE TO MAKE ANY ACCEPTABLE HEADWAY WE COULD EVENTUALLY BREAK-OFF AND IF DEEMED ESSENTIAL AT THAT STAGE, MAKE THE UNILATERAL RESTRAINT UNDERTAKING SUGGESTED IN PARA. 3 OF YOUR TELEGRAM 707 TO WASHINGTON.
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5 SUBJECT TO TOKYO'S VIEWS, I PRESUME THAT THE JAPANESE WILL VELCOME A SUPPORTING UNILATERAL RESTRAINT DECLARATION BY US, BUT MAY MISINTERPRET ANY NEGOTIATIONS WE MAY HAVE WITH THE U.S. HOWEVER, THEY CAN HARDLY EXPECT HONG KONG TO REFUSE TO CONSULT WITH THE U.S. AT THE LATTER'S REQUEST, WHEN THE JAPANESE THEMSELVES KEPT NEGOTIATIONS GOING FOR NEARLY 19 MONTHS.
6 WHILE AN ULTIMATE SOLUTION ALONG THE LINES OF PARA. 3 ABOVE MAY NOT BE THE WORST POSSIBLE CUTCOME FOR HONG KONG IN THE LIGHT OF DETERMINED U.S. PRESSUPE, I TRUST THAT HONG KONG'S SACRIFICE OF ITS GATT RIGHTS IN CONCEDING TEXTILE RESTRAINTS TO THE U.S. IN THE ABSENCE OF EVIDENCE OF INJURY, INSOFAR AS IT HELP THE CAUSE OF INTERNATIONAL TRADE, WILL BE GIVEN DUE RECOGNITION BY H.M.G., E.E.C. AND CUR OTHER MAJOR TRADING PARTNERS. IN PARTICULAR,
I WOULD BE OBLICED IF YOU COULD ENDEAVOUR TO:
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CONFIDENTIAL
/(A) ENSURE