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is precisely against them that we (UK and Community) are likely to need to be most protectionist. For that reason, however, those are the countries most likely to be susceptible to suggestions of some bargain between a more liberal MFA and some of our objectives in a new GATT round.
4.
Faced with such diversity of interest among LDC and NIC suppliers our assessment is that there is unlikely to be any organised reaction by them against the UK or the EC if our position in the negotiations proves to be fairly protectionist. The only likely spill-over is into the MTN preparations. But we cannot at this stage of our knowledge of the suppliers' views usefully speculate in detail about the form of deal which might emerge from such linkage (which can of course in theory be made to work both ways). We also doubt if there is likely to be more than sporadic opportunistic attempts to use a "negative" UK position in the MFA negotiation as a pretext for action on the bilateral front, e.g in relation to a large contract with a UK supplier, unless our position remains very hard and we find ourselves exposed instead of being able to shelter behind others. In markets such as India, important to us for defence sales and for large industrial projects, or in South America, where restrictions on imports on textiles would be inconsistent with our "self help" policy of encouraging major textile exporters such as Brazil and Peru to improve their foreign debt difficulties through greater export earnings, we might then be vulnerable. A special case is Hong Kong, where the agreement with China on the transfer of sovereignty may lend a more political quality to any Hong Kong reaction to the squeeze we shall no doubt need to try to impose on them. We shall have to watch this aspect carefully during the preparatory and negotiating phases.
EC Partners' Views
5. Since we do not negotiate alone the negotiating aims of our EC partners will be highly significant (paragraph 16). Responses to enquiries by our posts suggest that the prevailing mood is likely to be still fairly protectionist. The Dutch will come out for a more liberal regime than at present, and so may the Danes, both looking for a gradual return to full liberalisation. But the Italians will be looking for renewal on current lines. Within the Community they are major textile and clothing manufacturers with a very vocal industrial lobby. Greek thinking is still at an early stage, but they will be looking for further protection for their domestic industry. The Germans and Belgians will probably go along with this too, though the former may, like the Dutch and Danes, hope that this MFA will be the last. The French seem certain to support renewal, possibly modified to strengthen the anti-surge provisions.
US Attitudes
6.
Our objectives also need to be tempered by our assessment of what the US will want (paragraph 16). The prevailing mood is strongly protectionist. This will comfort the protectionists in
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