TNAG-0143-FCO40-179-Exports-of-textiles-to-United-States-of-America-1969 — Page 82

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Mr. Stewart (Hong Kong Department)

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Recaved it ARCHIVES No.31

26 MAR 1969

6/30441

HKK 6/304

U.S. Trade Policy

If only for the record, it might be useful for me to put in writing that following our three-cornered discussion yesterday with Mr. Collings I spoke to geographical department in the Board of Trade about the briefing for Mr. Stans' visit and have emphasised (as I have told you orally) that we shall want an early opportunity of commenting on the Board of Trade's line in the matter of textiles in particular. The Board of Trade are unlikely to get down to the serious job of briefing until after Easter but they clearly understand that there is a policy issue at stake in the matter of voluntary restraints and this means that they cannot start briefing until policy has been decided. I was told that the country branch in the Board of Trade had originated a paper already but that this had now been taken over and another department (CRE 1) is preparing a paper covering the subject of voluntary restraints on textiles. (This information ties in with what I understand Mr. Collings learnt from another source in the Board, which mentioned a paper for PCO.) I was told that the Board of Trade's paper should appear before Easter but we shall need to keep pressure up if we are to get a sight of it before the Easter holidays.

2. None of this helps much over the immediate problem of what to say to Hong Kong in regard to the Hong Kong- Swedish textiles talks and I think I must leave you and Mr. Collings to make the running here. Meanwhile, on the general question of our policy towards voluntary restraints, we agreed yesterday that it was difficult to formulate an FCO view until the Board of Trade, the Department primarily responsible, let us know what line they propose to take. In the light of what was said before and during President Nixon's visit about possible limitations on textiles, it would involve a reversal of policy to extend a welcome to voluntary restraints in general but Mr. Collings has suggested two ways of reconciling Hong Kong's textile interests vis-à-vis Sweden with our general position on voluntary restraints, viz. (a) that there is no parallel between the economic situation of Sweden and the USA so that negotiations with Sweden would not necessarily be prejudicial even if they involved some measure of restraint, and (b) that since the Hong Kong Government is prepared to limit its exports to Sweden, the case here is one of real voluntary restraint as opposed to the rather bogus variety due to force majeure. To this I would add that we introduced Hong Kong to the volun- tary restraint system and have made use of it ourselves very recently in the case of cheese;

we could perhaps argue, if it suits us to do so, that the doctrinal line on voluntary restraints is not a very straight one and could be bent further.

as

3. Unfortunately, as I see it, it is not enough to produce a formula to accommodate Hong Kong.

The impli- Cations of any such formula on our trade relations with other countries need to be considered and this is a

/task