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Reference...
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COMIQUA Vie8 Dopdi 2
Textiles: Working Party
Please see the attached draft minute and note by Mr. Dunnett of 3. October and Mr. Hale's minute of 7 October.
Mr. Dunnett's note illustrates our dilemma. It may well be that some face-saving formula for the Americans will be needed, though present indications are that the crunch will not be reached
on this for some time (Geneva telegram No. 535). This could be achieved by some sort of fact finding exercise.
A fact finding exercise however would not solve the problem of ensuring that arrangements to control imports would work equitably as between importing countries. For this to be achieved it would be necessary to overhaul the existing rules and arrangements. But once we embark on this leg of the exercise we run into the danger referred to in Mr. Mulley's letter to the President of the Board of Trade of 22 September (Flag A) viz. that owing to the likely attitudes of developed countries we could very well end up with a system which allowed importing countries greater freedom to impose import restrictions.
I am afraid that the terms of reference suggested in paragraph 8 of Mr. Dunnett's note are likely to lead us straight into this danger. Indeed, I do not see how the danger can be avoided if the Working Party is asked to review the present situation and make recommendations. If, therefore, a face-saving exercise for the Americans has to be mounted, I would prefer this to take the form of a fact finding exercise in the first instance.
Because of our dilemma over all this, and because of the reactions we have received to informal soundings which we have taken so far, I am sure that we ought not to take the initiative to suggest any exercise, whether fact finding or of a wider character. We must however be prepared to respond if someone else, e.g. the Canadians or the Germans, takes such an initiative. If they do, I think that we should aim at terms of reference on the following lines:
"Noting that in the view of some countries
a situation has arisen or may arise in which imports cause disruption in their markets Zespecially in the field of non cotton textiles, and at the same time recognising the importance of maintaining and fostering orderly progress towards the further liber- alisation of trade, the Contracting Parties decided to establish a Working Party -
to examine the position in respect of world trade in non cotton textiles and report on
(i) the extent to which the rise
of imports is causing or
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