TNAG-0149-FCO40-185-Cotton-textiles-to-France-1969 — Page 149

CONFIDENTIAL

10. Probably the best course of action in the above circumstances would

be to give the French the opportunity to escape from what could be an

embarrassing confrontation in open GATT forum by adopting a more

reasonable attitude than hitherto in private discussions. This would

preferably be in the context of the regular annual bilateral talks between

Hong Kong and French officials mentioned in paragraph 6 above. These

talks have hitherto not yielded a great deal in terms of liberalisation,

but it would be possible this year, provided the talks take place before

any GATT discussions, to explain to the French that we can hardly avoid

making an issue of these restrictions in the GATT unless they were at

least to remove, or appropriately modify, all those restrictions where

Hong Kong is treated less favourably than other developing countries or

Japan or the Sino-Soviet blocs. Alternatively, if the French showed

themselves not disposed to make any significant further concessions in

this context, we could put them under notice that we would wish to consult

with them on the whole issue within the framework of Article XXII(1) of

the GATT and make a formal notification to the GATT in this sense. We

could then announce this in any group studying residual restrictions and

thus avoid an open confrontation at that stage. Either or both of these

courses of action could serve to keep up the pressure; and I think it is

important that he French should be left under no illusions as to the

seriousness with which we view their actions in this field, and that they

should not Le made to feel that they can quietly go on with their present

policy without any danger of adverse reactions from our side.

11. Clearly, none of these issues are simple; and, taken together, they

raise important economic and political considerations both for Hong Kong

and, indirectly, for Britain.

However, before taking any further action,

it is equally clear that both this Mission in general, and myself in

particular, are in urgent need of instructions

<data

and instructions, I feel.

which will need to be agreed between Hong Kong and London.

whatever

/instructions

CONFIDENTIAL