4.
13.
(c)
An amendment to Article 9 to count as cotton any product containing more than, say, 30% cotton instead of 50%. But again the restraint limits would have to be increased to take account of trade achieved in mixtures and blends con- taining between 30% and 50% cotton.
Changes of this sort would not do anything about wool and wool- type m.m.f. products but those would have to be dealt with by other means (e.g. Article XIX-type situations). The point is that these changes could be presented as an up-dating of the C.T.A. and as not applying it to "other fields".
14.
Incidentally, isn't it likely that developing countries in general will, at least to start with, oppose even the extension of the existing Long-Term Arrangement let alone its extension into other fibres?
Paragraphs 8 and 9
15.
We would rather say that the correct procedure would be for the Americans to invoke Article XIX on imports of particular products in respect of which they can make out a case of injury to domestic producers being caused by increasing imports. We think that the reason why the Commerce Department has not seriously contemplated this course is that it would not meet the political requirement "to do something for the textile industry" as a whole, and that they know that they would have difficulty not only in satisfying their own Tariff Commission that they had a satis- factory case in particular products, but also in satisfying their fellow members of the G.A.T.T. On the other hand, it is, we think, now clear that other people in Washington (the State Department and Gilbert Office) are arguing that this is the only reasonable course to consider.
16.
Paragraph 9 touches on the possibility of unilateral action to curtail imports without making it clear that such action would be initiated by the Congress rather than the Administration. The action could be either non-discriminatory or discriminatory. If it was the former it would, of course, involve opening up a pandora's box of retaliation and counter- retaliation and the U.S. Administration will presumably go to great lengths to avoid it. But the possibility of Congressional action of this sort cannot be ruled out and Stans has been waving it around as a threat. If it was discriminatory, the chances of retaliation would depend on which countries were on the list. Japan could hardly be left out. And the implications for the G.A.T.T. would in some ways be even more serious. It hardly needs saying that import restrictions, especially if they are discriminatory, are anathema to Hong Kong. We have no retaliatory power at all unless the U.K. is prepared to retaliate on our behalf.
Paragraphs 10 and 11
17.
We know that the Commerce Department has mentioned this possib- ility, but wonder if we can go so far as to say that "the Americans are known to be considering seriously" this possibility. Or is it just one
of Nehmer's threats?
18.
We feel that the possibility of tariff action is less likely, partly for the reasons stated in these paragraphs (surely the G.A.T.T. experts will soon set Nehmer straight on this). But it should not be ruled out. Provided, of course, the tariff increases were non-discriminatory and there was adequate compensation Hong Kong would object less to this procedure than to some of the other possibilities.
Paragraph 12/
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