TNAG-0152-FCO40-188-Exports-of-cotton-textiles-to-Canada-1969 — Page 94

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4. The Hong Kong Textile Advisory Board agreed this line with the

Hong Kong Government and are, therefore, reconciled to an interval

when trade in these shirts is frozen but one which will allow

resumption of exports at a guaranteed level after eighteen August.

5. But I am not concerned in this minute with any disobedience

there may have been on the part of Hong Kong, although the Board of Trade's conviction that our legitimate interest in this matter has

been disregarded has certainly influenced their thinking. After discussion between the Board of Trade, Mr. Whitehead and myself we have had to send a telegram instructing Hong Kong not to conclude an agreement with Canada on 18/19 August (although there are other trading matters they could decide) but to await the Board of Trade's

study of the case which looks like taking until the end of September at the earlieșt. We expect that the issue will have to go to their

Minister.

6.

7.

Almost certain consequences of our telegram will be

(i)

(ii)

that the Canadians will be disappointed and annoyed with Hong Kong;

that Hong Kong industry will feel great resentment if they have to be told that trade in this commodity is in for a more

prolonged standstill than they had expected.

Hong Kong believes that one serious consequence might be that the Canadians will impose a penal surcharge on imports of these shirts. Flag They warned of this in a recent telegram, of which I attach a copy.

42/The Board of Trade think not. But if Hong Kong are right the

resentment of their industry will turn on HMG, the more readily because they are still smarting at the recent imposition of a tariff. There will be resentment in any event if the suspension of trade is more prolonged than they had thought.

8. These are arguments Hong Kong will certainly use, probably in a telegram first thing on Monday, because time is now very short.

I cannot argue at this stage that the embarrassment will not be of their own causing. But this apart, and subject of course to the Governor's reaction, it will be desirable, in my opinion, to avoid ill feeling between the Governor and his industry, to effect a compromise between the Board of Trade and the Hong Kong Government.

/9.