C. & 1. 371
2700493
3,000-7/67-855633
Fromunsellor for Hong Kong Commercial Affairs, Washington
To
: Lector of Commerce and Industry
Memorandum No. 51 (continued)
BRITISH EMBASSY,
WASHINGTON, D.C.
2
only the U.S., but also other importing countries to restrain imports from Hong Kong and the other 1.d.c.'s, including those which are not in the market yet but may enter it in future. It would be hard for any importing country, once having an international right to restrain, to resist pressure from its domestic industry even if it wanted to. This encouragement of other importing countries to participate in a protectionist agreement is a gratuitous attack on the 1.d.c.'s, going beyond the U.S.A.'s own interests.
(c) An all-textile arrangement would inhibit growth in the sort of export which Hong Kong is best suited to, and which, for some 1.d.c.'s,is the only export with growth potential.
(a) If I am not mistaken, experience of American behaviour under the L.T.A., and later under the bilateral agreements, shows clearly that, once entitled to demand category restraints, they will demand them on the slenderest of pretexts. Any profession on their part that, once given the right to request restraint, they will exercise it with circumspection can be disregarded unless of course safeguards are written into the arrangement.
6.
As seen from here there must be no deviation from the objective of so discouraging the Administration about the prospects of negotiating restraints of any kind, and so impressing them with the damage they would do to their own general trade interests by imposing restraints, that they will drop the attempt and look for other ways of settling their political debts. However, we ought perhaps to envisage the worst, and consider in good time what we should aim for in negotiating a textile arrangement, if in the end we see no alternative to doing so. There must be many defects, from our point of view, in the C.T.A. which we should try to have eliminated from a new arrangement, and it might be useful to start listing possible improvements. The most obvious improvement would be to rewrite Article 3, in such a way as not to give the U.S. (and other importing countries) unilateral rights, but merely to impose on supplying countries the obligation to restrain their exports, on a category basis, to a certain level if presented with solid evidence of injury to the industry of an importing country. This may sound wishful thinking, but, after all, the Americans are talking incessantly of "voluntary restraints", not "voluntary acceptance of control"; and as they are very much the demandeurs, they might find it hard to refuse any reasonable offer. The level of voluntary restraint might be past performance, preferably without rollback and with annual growth (with of course some let-out for countries not yet actively in business.) As for evidence of injury, this clause should be as tight as is acceptable to all. (The Americans, as you know, are at the moment quite unable to compile detailed and up-to-date domestic production and sales figures, though they could no doubt organise some thing if needed.) An agreed criterion for injury, such as an import/ consumption ratio, would simplify matters for everyone (including new entrants, if it were per country,) but there are obvious drawbacks to that.
7.
What I am getting at in general is that our tactics (if indeed a C.T.A.-type agreement is requested) should be
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