TNAG-0143-FCO40-179-Exports-of-textiles-to-United-States-of-America-1969 — Page 20

Mr. Collings,

Commodities Department

CONFIDENTIAL

78

Visit to London of Mr. Stans,

U.8. Secretary for Commerce

Mr. Stewart of my department has already commented on the Board of Trade's draft paper for the Official committee on commercial policy. I agree with the substance of the second and third paragraphs of his minute. I should like to add two points which Mr. Gallagher may like to consider before he attends the Committee's meeting on Tuesday, 16 April. The second point I regard as one of great importance.

2. The paper was apparently drafted before receipt of Washington telegram No.1129 which (to my mind) recommends a very much more robust line in tactics, Both are agreed in not facing the Americans with a flat rejection of their ideas.

The paper (paragraph 9(c)) suggests that we "explore American thinking and the strength (or weakness) of their case; and discover how they think they can overcome the considerable international obstacles to their

proposals". Admittedly it goes on to say that "we should make it clear that we do not like the proposal". But it seems to me that at this juncture the Washington emphasis (paragraph 3 of their telegram) on "getting them (the Americans) to recognise that the international consequences are unacceptable" is tactically right, as being a harder and less accommodating line than that proposed in the paper and more likely to avoid giving the Americans any impression that "in principle the U.K. were prepared to go along with their ideas".

3.

My second point concerns paragraph (a) of the paper. I think Mr. Stewart is reading into the first sentence a meaning which is not there when he suggests that it savours of sacrificing Hong Kong in the interests of our EEC ambitions. I am sure it means only that, since Mr. Stans' discussions with EEC should throw more light on his objectives and the strength of European opposition, we should postpone a final decision on tactics. This seem s reasonable enough. But what does not seem to me to be reasonable is that at this stage we should indicate to the Americans, without any kind of qualification, that we would be happy to see them move bilaterally against low cost producers including Hong Kong - and certainly, as the paper says, Hong Kong would not like this. But if tactically it is wise or necessary to show our hand to this extent at this stage - and this is a point which I agree should be carefully considered in the light of the EEC discussions - I strongly suggest that it should be on a strictly qualified basis. We might suggest to the Americans that they seek bilateral solutions to their problems as some other countries have done, but at the same time ask them to take note that if they had it in mind to move against Hong Kong we would not be prepared to accept any arrangement that was not fully justified on an Item by item, fibre by fibro. basis by reference to

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ONFIDENTIAL Item by Item.

CON