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TO PRIORITY FCO TELNO. 139 OF 26 JANUARYĺINFO PRIORITY TO UKREP BRUSSELS UKMIS GENEVA SAVING TO COPENHAGEN DUBLIN THE HAGUE PARIS

LUXEMBOURG ROME BRUSSELS

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UK PEP BRUSSELS TELNO, 226 TO YOU AND TELEPHONE CONVERSATIONS STATHAM/LAM (DTI) : RESTRAINTS ON NON-COTTON TEXTILES FROM HONG

KONG

1. STATHAM HAD AN OPPORTUNITY OF DISCUSSING THIS QUESTICH BRIEFLY

WITH HANEMANN (DEPUTY SECRETARY, FOREIGN TRADE, MINISTRY OF ECONOMY) LAST NIGHT, AND CALLED BY APPOINTMENT TODAY ON ELSON, HANEMANN'S DEPUTY, BOTH, AND ESPECIALLY ELSON, WERE A GOOD DEAL MORE OPEN- MINDED AND LESS COMBATIVE THAN FRIEDRICH (MY TELNO. 194) WHILST MAINTAINING THE SUBSTANCE OF THE GERMAN POSITION.

2. STATHAM SAID WE WERE CONCERNED LEST AN OVERALL APPROACH TO THE QUESTION OF LIMITING IMPORTS FROM HONG KONG BY THE COMMUNITY SHOULD

LEAD TO AN EXCESSIVELY ILLIBERAL PATTERN, SET A BAD EXAMPLE, AND RISK PREJUDICING DISCUSSIONS IN GATT. AS THE GERMANS KNEW, WE

BELIEVED THAT IT WAS IMPORTANT THAT RESTRICTIONS ON A COMMUNITY BASE

SHOULD CONFORM TO THE PRINCIPLES WHICH THE COMMUNITY WOULD LIKE TO

SEE INTERNATIONALLY AGREED.

3. HAHEMANN REHEARSED THE INTERNAL POLITICAL DIFFICULTIES. IN VIEW

OF THEIR GENERALLY LIBERAL ATTITUDES TO TRADE, IT HAD BEEN A PARTICULARLY DIFFICULT DECISION FOR THE GERMANS. BUT IMPORTS FROM

HONG KONG HAD RISEN ALARMINGLY LAST YEAR AND SOME ACTION HAD TO

BE TAKEN. HE MENTIONED THAT (AS IS REPORTED IN TODAY'S GERIAAN PRESS) CRUENER, THE NEWLY APPOINTED STATE SECRETARY IN THE MINISTRY OF THE ECONOMY, HAD YESTERDAY CONFIRMED TO A MEETING OF THE GERMAN TEXTILE MANUFACTURERS ASSOCIATION (GESAMTTEXTIL) THAT THE FEDERAL

GOVERNMENT SUPPORTED THE PROPOSALS MADE IN THE COMMUNITY FOR

NEGOTIATIONS WITH HONG KONG. GRUENER, INICIDENTALLY, ALSO SAID THAT

THE FEDERAL GOVERNMENT WAS NOT IN FAVOUR OF A WORLD TEXTILE

AGREEMENT SUCH AS HAD BEEN ADVOCATED BY EUROPEAN TEXTILE INDUSTRIES,

4. STATHAM SAID THAT IF THE GERMANS ARGUED THAT THEY WERE NO LESS

ENTITLED THAN WE WERE TO SEEK RESTRAINTS ON IMPORTS FROM HONG KONG,

WE WOULD FIND IT DIFFICULT TO DISAGREE: BUT WE HAD NEGOTIATED A

/SELECTIVE AGREEMENT

CONFIDENTIAL

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