TNAG-0142-FCO40-178-Long-term-policy-on-International-trade-in-textiles-1969 — Page 38

to provide compensation or incur retaliation.

13. The objections to the E.E.C. proposal to not therefore seem to be in themselves conclusive, and the question is whether this result, if acceptable to the Americans, would be the least unwelcome of the possibilities. The other possi- bilities appear to be:

(i)

To bring man-made fibres to some extent within the terms of the GATT Long-Term Arrangement for cotton textiles by reducing the percentage of cotton which is now required (more than 50 per cent) to bring textiles within its scope, and by modifying the formula permitting action to be taken in cases of "deliberate substitution" of other fibres for cotton, to include substitution to meet changes in demand. This is the solution which, if a solution has to be found, Hong Kong would find least unwelcome, since it would be hoped that "roll-in", of non-cotton with cotton fibres would be per- mitted under the same quotas, and this would enable exports of man-made fibres to grow at least to the extent that there is any decline in exports of cotton from existing levels. However, the Japanese have made it clear that they would not accept a solution of this kind. Since they consider that they have done badly over cotton, they would see no advantage in the roll-in concept, and would regard any approved modifi- cation of the L.T.A. as giving it a new lease of life. The concept of "roll-in" of cottons and non-cottons would also be unwelcome to the United Kingdon, since it would entail exposing us to imports of m.m.f. at least to the full extent of any reduction of cotton imports.

(ii) There is the "personal suggestion" floated by a member of the Japanese delegation in Geneva that the major Asian exporting countries might get together and agree on unilateral restraints on exports to the United States of a few items. A solution on these lines is what M. Long, Director-General of the GATT, has for some time favoured, on the grounds that the United States case for restraint clearly does not measure up to the standards of the GATT, and that it is therefore better for GATT not to compromise its principles by being associated with action taken to meet the American political requirement. However, the view of the

/E.E.C.