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that Hong Kong might help us persuade our Community partners to adopt a selective approach towards restraints on non- cotton textiles from Hong Kong and other low cost countries by offering at a suitable stage to enter into discussions with the Community about restraints on products which could be shown to be disruptive in particular sectors or regions of the Community market. Even though the immediate problem seemed to apply mainly to Germany, it would be presentationally better vis-à-vis both the Commission and the German Government to make the offer to the Commission. An alternative would be for Hong Kong unilaterally to introduce certain restraints, though this would be less valuable to us in establishing a negotiated precedent. When we had a report in London of the discussions in Brussels on 22 January we would consider telegraphing this suggestion to the Hong Kong Government.
5
Hr Ho said that the Hong Kong Government would respond positively to our request for export statistics un anitted textiles. I warned Mr Ho that, whilst at present the decision on whether or not to accept the UK knitting industry's application for restraints hung in the balance, any significant increase in the present level of exports from long long could quickly tip the balance in favour of our seeking restraints. Mr Ho took the warning on board, but pointed out that the Hong Kong Government could do little if the trade in both countries got the idea that restraints were going to come sooner or later and of making hay while the sun still shone. 6 r o expressed great concern at the Commission's assertion that the restraint levels under the existing LTA agreements between the Six and 7 supplier countries could formally be extended to the 9 without increasing the quantities. I said that this was formally possible (and we had found the argument useful in hurriedly bilateralising the UK arrangements for 1973 with Takistan, South Korea and Egypt), but that we would oppose applying the doctrine in practice. Mr Ho expressed relief.
DR
I W RIDLEY
CT DIVISION
23 January 1973
MT Rm 2018 834 4422 Ex 658