TNAG-0145-FCO40-181-Exports-of-textiles-to-United-States-of-America-1969 — Page 79

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Sir John

arrangement on m.m.f. and wool, The C.T.A. had been presented too as an answer to protectionist sentiments, and as a catalyst for a freer trade system in the world, exactly the arguments that Mr. Stans appeared to be using in respect of m.m.f. and wool. It was generally believed that the C..A. had enabled the Kennedy Round to be negotiated, but Hong Kong had gained nothing from the latter, and the Americans had withdrawn the major part of their offers in categories in which Hong Kong was a substantial supplier. Furthermore it was something of a paradox to speak about liberalising trade by imposing restraints in particular fields. The defect of multilateral arrangements of the kind proposed was that they would spread the virus of protectionism and involve formal derogation from G.A.T.T. rights. This derogation arose from the fact that the importing country had the sole right to decide which countries and which products were to be restricted. said that all these considerations brought one back to the

According question of whether the U.S. case was convincing. to the statistical evidence, American production and employment were rising, while American manufacturers had continued to enjoy a major share of the domestic market; the growth rate of imports taken alone did not give an accurate picture. Sir John added that Mr. Stans had not shown what damage had been caused by imports as compared with other factors, nor had he mentioned the effect of the more efficient, more modernised and more highly capitalised domestic producer on the smaller textile mills in the South. Mr. Stans' economic case for a multilateral arrangement on m.n.f. and wool was one which Hong Kong could not accept in totality across the board, and judging from previous experience with the C.T.A., Hong Kong would not wish to put its head in the lion's mouth again.

15.

Sir John said that the Hong Kong reaction to Mr. Stans' proposal might not sound like the response to be expected from a good trading partner. Hong Kong's philosophy

it could on non-cotton textiles was, however, quite simple: not accept across the board restrictions, but it was always willing to consider individual items on request. Hong Kong items had been prepared to concede restraint on individual where the importing country had advanced a convincing case that Hong Kong's exports of these items were doing real damage to the relevant sector of the domestic industry and where Hong

However, Kong's share of the country's imports was substantial. this type of concession had not been given very often and was always confined to individual items, and globalised, multilateral, general arrangements could not be accepted. Sir John concluded by remarking that what had not come out of Mr. Stans' presentation of his own case was what he had wanted Hong Kong to do.

16.

Mr. Stans replied that Sir John had done in part what they had wanted, in that Hong Kong's reaction to their problems had been obtained. Sir John had made the point that to accommodate the United States would mean sacrificing future growth of the economy, employment and standard of living. However, if nothing were done to solve the problem, it would mean transferring employment from the United States to other countries. Whether or not this made economic sense, it created serious social and political problems in the United States.

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