TNAG-0142-FCO40-178-Long-term-policy-on-International-trade-in-textiles-1969 — Page 191

CONFIDENTIAL

possibility of more permanent action on tariffs i.e. unbinding their

iffs in the textile sector. Article XXVIII of the GATT provides a procedure under which at the beginning of each 3 year period (and such a period begins on January 1st 1970) a contracting party may modify a tariff concession contained in its schedule by negotiation and agreement with any contracting party with which such concession was initially negotiated, and with any other contracting party determined to have a principal supplying interest. Notification of any intention

to negotiate such a change has to be given between 3 and 6 months beforehand i.e. between July 1st and 30th September 1969. While

Mr. Stans is reported to include this course in his recommendations to the President, it is not clear whether this is intended to be a serious line of policy, or a tactic which might somehow assist the achievement of some preferable solution to the United States problem.

In any event the countries with whom the United States would have to reach

agreement would be entitled to compensation, to the extent of the damage likely to be suffered by their trade, and even in respect simply of the loss of tariff bindings. The idea has been entertained

in certain American quarters that they would not have to offer compensation if the level of tariffs which they arrive at is sufficient to permit the continuance of trade at the present level. But this

position seems untenable. No purpose would be served by altering the

level of tariffs, unless the effect would be to curtail at least the

growth of trade, and compensation could certainly be exacted for the loss of such growth. As already mentioned above, the United States Administration lacks legislative authority to offer compensation in

normal GATT terms.

CONTIDENTIAL

/Voluntary