CONFIDENTIAL
HONG KONG TELEGRAM NO.638 TO FCO.
-5-
11. YOUR PARAGRAPH 6. IT IS NOT JUST JAPANESE EXPORTS TO
CANADA THAT HAVE TO BE TAKEN INTO ACCOUNT BUT ALL THE OTHERS
REFERRED TO IN PARAGRAPH 9 ABOVE. THIS IS A SITUATION WHERE
IMPORTS FROM A NUMBER OF COUNTRIES ARE CAUSING DISRUPTION AND
IT IS SIMILAR TO THE SWEDISH CASE ON SHIRTS (THE ''BRICKS
IN THE WALL CONCEPT PUT FORWARD IN THE JUNE DISCUSSIONS
WITH THE BOT).
12. I CANNOT OBJECT TO YOUR PARAGRAPH 7 PROVIDED IT IS MADE
CLEAR THAT THESE VIEWS ARE YOURS ALONE, BUT DOUBT WHETHER
IT WILL IMPRESS THE CANADIANS OR PREVENT THEM FROM IMPOSING A
SURCHARGE IF AGREEMENT IS UNDULY DELAYED. IF A. SURCHARGE WERE
IMPOSED, THE TRADE WOULD BE COMPLETELY KILLED. IF THIS WERE
TO HAPPEN AS A CONSEQUENCE OF YOUR OVERRIDING, IN THE U.K.
INTEREST, THE VIEWS BOTH OF THE TRADE AND OF MYSELF AS TO HOW
BEST HONG KONG INTERESTS ARE TO BE PROTECTED IN THE PRESENT
SITUATION, A VERY DIFFICULT POLITICAL SITUATION COULD NOT BE
AVOIDED, PARTICUARLY COMING AFTER HMG'S ANNOUNCEMENT OF THEIR INTENTIONS TO IMPOSE TARIFFS IN IMPORTS OF HONG KONG COTTON
GOODS INTO THE U.K.
13. TO SUM UP, THE SITUATION CUTLINED ABOVE AND OUR EXPERIENCE
WITH CANADIANS LEADS US TO BELIEIVE THAT THERE IS NO HOPE THAT
THEY WILL ABANDON THEIR DEMAND FOR CONTINUATION OF POLYESTER/
COTTON RESTRAINTS AND INCLUSION OF POLYESTER/POLYNOSIC
SHIRTS AND THAT IF THEY BELIEVE WE ARE BEING UNREASONABLE THEY
WILL IMPOSE SURCHARGE. FAILURE TO REACH AGREEMENT WILL ALSO
CONFIDENTIAL
/WEAKEN
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