TNAG-0145-FCO40-181-Exports-of-textiles-to-United-States-of-America-1969 — Page 78

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that this was so, whereupon Mr. Stans requested Sir John to proceed to the next point.

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Sir John said that from the available statistical evidence, it was apparent that imports had not been reducing ther employment or production in the U.S. textile industry and that what damage there was was likely to have been caused by the application of technological advances in its more progressive sectors. The application of improved techniques was, however, a characteristic of the dynamics of the American economy. Sir John then went on to enquire as to the share of domestic consumption accounted for by imported textiles. Mr. Nehmer in reply quoted the following figures:-

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(a) Woollen textiles as a whole

(i)

Worsteds

(ii) Woollen sweaters

(b) Cotton textiles

(c) m.m.f.

25.5%

40%

47%

10.5%

4-5%

Mr. Stans added that they could supply any figures that Sir John required, and asked him to make his case. Sir John replied that he was not clear what sort of case he had to make, to which Mr. Stans retorted, "Don't play games". Sir John pointed out that he was simply seeking clarification of the points Mr. Stans had been making.

The

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Sir John then said that Hong Kong too had its political problems. Although Hong Kong did not have a democratically elected form of government, the people had to be taken into account in the formulation of policy, perhaps much more so than in an elected democracy. Restrictions of any kind placed on Hong Kong's exports would be grist to the Communists' mills. United States appeared to be concerned about the spread of Communist influence in South-East Asia, and would therefore presumably not wish to see any strengthening of their hand in Hong Kong. The best defence against Communism was a continued rise in the standard of living. Hong Kong's present GNP per head was only about 1/5 or 1/6 of that of America. What Mr. Stans seemed to have implied earlier on was that the solution to the American textile problem should come from self-sacrifice on the part of Hong Kong. While Hong Kong had achieved a rapid growth in recent years, it could not stand still, and although Mr. Stans thought his proposals would not involve un- employment at the present time, they certainly could if other countries followed the U.S. lead and imposed restrictions on Hong Kong's exports. Hong Kong depended wholly for its livelihood on its exports. Other countries could still eat even if their exports were cut off, but Hong Kong could not as it produced virtually no food of its own. It was, therefore, difficult for Hong Kong to accept that it should be required to sacrifice the possibilities of future growth in its living standards to solve what did not seem to be a major economic problem in the United States, let alone in the world.

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Sir John continued by saying that cotton had not been a pleasant problem for Hong Kong, and at the time that the C.T.A. was being negotiated, Hong Kong had found itself isolated. The situation now, however, was different in that most of the countries stood together and were striving for the same ends. Cotton had been presented as something that was unique, something that was not to be regarded as a precedent. A great deal of ill-feeling would be caused if cotton was now quoted as forming a precedent for a multilateral

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