TNAG-0142-FCO40-178-Long-term-policy-on-International-trade-in-textiles-1969 — Page 106

Mr. Stewart

copied to Mr. Carter, HXD

Hong Kong/Textiles

(19)

RAR

K6/31.

The attached letter dated 20 September from Mr. Jordan to Mr. Wilford is interesting and contains some useful arguments in reinforcement of Hong Kong's views on the textiles problem generally.

In particular I feel (and this has been reflected in the FCO attitude as described in Mr. Hulley's letter to Mr. Crosland) it is only realistic to accept that the LTA for cotton textiles will be extended and that there is a very real risk that an initiative for a Working Party as envisaged by the Board of Trade could land us in a worse situation than the one they now have. On the other hand, I feel that the Hong Kong

position as described by Mr. Jordan does insufficient justice to the following factors.

(a)

The Americans may not be satisfied with a defeat over non cotton textiles and some sort of initiative may be needed from somewhere (not necessarily from us) in order to keep the dialogue going and to save American face.

(b) The basis of our case for oppo si ng

continued restraint through quotas and voluntary restraint arrangements is that if we alone of the major importing countries rely on a tariff rather than quotas to control imports this contains the danger that the goods which are effectively excluded from other countries will be diverted to Britain notwithstanding our tariff. This would force us to reimpose quota arrangements (an outcome which we in the FCO fear in any case).

As regards paragraph 12 of Mr. Jordan's letter, provided other countries accepted a strict interpretation of Article XIX, I do not think that we should object to its operation in the way described by Mr. Jordan. Surely we said this Apecifically in Mr. Crosland's statement in the House of Commons announcing the tariff decision.

I hope that the Hong Kong authorities will not allow themselves to be led too far up the path of considering whether or not Britain has a case for restraining imports. This is something which Mr. Stewart of the Board of Trade has threatened obliquely from time to time during the discussions but, as I have said on previous occasions, we do not want to risk turning this hypothetical and nebulous threat into something concrete by taking it too seriously.

(G.S. Whitehead).