6.
2.
One exercise which we have done, and which you may find useful, is to draw up a list of all the possibilities we can think of and to Encl.2place them in a rising order of undesirability. I attach the result.
I cannot say that we have necessarily got it right yet (for instance
6 and 9 in the list are a bit difficult to place until we know the magni- tudes involved, and the ordering of the others may be affected by new developments). But I doubt whether we would want to make any changes in the ordering from now on. Ideally, we would prefer any solutions to fall within the possibilities 1 - 4, although we might be prepared to consider 5 and 6. But anything from 7 onwards would be very undesirable and we would hope that every effort would be made to avoid those alter- natives.
7.
So far as trade policy is concerned, there is no question more important than this for Hong Kong. In 1968 our total domestic exports were worth HK$8,428 million (£577.3 m.) and 4,041 million (£276.8 m.) of this was in textiles and garments, of which garments were worth $3,006 million (£205.9 m.). Thirty nine percent of our total exports went to the U.S. and £1,470 million (£100.7 m.) was in textiles and garments, of which garments were worth $1,219 million (£83.5 m.). This year's exports are generally running about 25% above last year's. drastic curtailment of this trade the internal economic effects in Hong Kong would clearly be disastrous.
If there were any
social political
8.
I might add that I was very surprised to find that the paper says so little about "voluntary" export restraint and even more surprised at the line that London has been taking over our Canadian negotiations. There seems to be some big misunderstanding here. When we met in June, Hong Kong had already sent its telegram about Canada making clear that, if the Canadian case was sufficiently cogent, we envisaged continuing the polyester/cotton restraints and adding polyester/polynosic. No-one raised objection to this telegram in our talks in June and it was our understanding that we had re-confirmed the policy of restraint (under pressure) in Article XIX-type cases. We believe that we must also always be prepared to consult in accordance with our G.A.T.T. Article XXII obligations, even if we don't think there is a case on which we should concede.
9.
We were therefore taken completely aback by the telegram that refused to agree not only to extension to polyester/polynosic shirts but even to the continuation of the existing polyester/cotton restraints.
10.
Clearly this whole issue has got to be settled soon for it is literally impossible to go on as at present, but if there is so much con- cern about the effect of the "voluntary" restraint policy on international trade, i.e. vis-a-vis the G.A.T.T., Stans and the extension of the L.T.A., etc., I should have thought that your paper should have gone into these aspects.
11.
You say in your letter that you are hoping to reach conclusions on all this and on how to handle the Cotton Textiles Committee some time about the middle of September.
I could come to London at that time
to discuss/
No comments yet.
Private notes are available after approval.