TNAG-0145-FCO40-181-Exports-of-textiles-to-United-States-of-America-1969 — Page 76

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G.F. 323

CONFIDENTIAL

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Ir. Stans emphasized that his proposals would not cause any unemployment in Hong Kong because no roll back on current

erformance was envisaged. He morely wished to sec a moderation of the rate of growth of textile imports into the United States.

3.

Mr. Stans then went on to describe the state of the American textile industry. He said that the textiles and garment sectors, with 35,000 plants, many of them small, employed 21⁄2 million workers. A large number of the plants were to be found in the Southern States, and any unemployment there, especially among black textile workers who would be most affected by any recession in the textile industry, would create serious social and political problems.

4.

Mr. Stans claimed that the C.T.A. had allowed Hong Kong to export substantially to the U.3. with a good measure of annual growth. Sir John intervened to say that Hong Kong had been unwilling participants in the C.T.A., and that they would have derived greater benefits had there been no C.T.A.

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5.

Mr. Stans then went on to say that the trade surplus in textiles that the United States had had in the early 1960's had become a deficit in 1968 to the extent of $800 million, pointing out that there had been an increase of 54% in imports of n.m.f. over the previous year. This order of increase, he said, could be absorbed in 1968 but not in 1969 or 1970. again emphasised that the American concern was with the trend line of imports and not the actual levels reached in 1968. Labour organizations in the United States were very agitated about the situation, and Congress itself had been under strong pressure from textile quarters to bring imports under control. In the absence of a voluntary solution, it was more than likely that Congress would be persuaded to take unilateral action. The Hollings Bill in 1968 which involved cutbacks in textile imports was only just held back by Mr. Wilbur Mills (Chairman of the House of Representatives Ways and Means Committee and a very influential member of Congress). 365 bills proposing restrictions had been introduced into Congress in the current session and the possibility of products other than textiles being the subject of restrictive legislation could not be discounted.

6.

There was the further risk of restrictive measures being introduced by the addition of amendments to other legislation passing through Congress, as had happened with

This Senator Hollings' amendment to the 1968 tax bill. amendment had been removed only in the Senate-House Conference. President Nixon had, however, committed his Administration to pursuing a policy of freer trade, and had a number of legislative proposals, designed to liberalise trade, which he would be putting to Congress. But the chances of these proposals getting through were virtually nil with the textile problem looming so large over the situation.

7.

Mr. Stans stated that there were three possible

solutions to the problem:-

(a)

a multilateral arrangement on C.T.A. lines under the G.A.T.T.;

(3)

(c)

bilateral arrangements with individual countrics covering m.m.f. and wool;

unilateral action by the United States to restrict imports.

CONFIDENTIAL