TNAG-0153-FCO40-189-Exports-of-cotton-textiles-to-Canada-1969 — Page 145

CONFIDENTIAL

HONG KONG TELEGRAM NO.647 TO FCO

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THAT THEY HAVE AN ARTICLE XIX-TYPE CASE, THEN WE SHOULD FORCE THEM TO THE CONCLUSION THAT THE ONLY WAY TO DEAL WITH THE PROBLEM (WHICH, BECAUSE OF INTERNAL POLITICAL AND ECONOMIC PRESSURES, THEY FEEL THEY MUST DEAL WITH) WOULD BE BY MEANS OF AN

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INTERNATIONAL AGREEMENT LIKE THE C T A. SUCH AN AGREEMENT, WHICH IN THE LAST RESORT, AUTHORISES UNILATERAL ACTION BY THE IMPORTING COUNTRY, WOULD INVOLVE A SUBSTANTIAL DETERIORATION FROM OUR PRESENT POSITION.

7. IT WAS MY UNDERSTANDING THAT THE OUTCOME OF THE PRE- STOCKHOLM DISCUSSIONS WAS TO CONFIRM THE ESTABLISHED POLICY THAT WE SHOULD ALWAYS BE PREPARED TO CONSULT AND THAT, WHERE AN ARTICLE XIX-TYPE CASE HAD BEEN MADE, WE SHOULD BE PREPARED TO CONSIDER RESTRAINT.

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I REALLY CANNOT SEE THAT ANY NEW FACTORS HAVE APPEARED IN THE PAST TWO MONTHS - AND THERE IS NO INDICATION OF ANY IN YOUR

TELEGRAMS. WE ALL KNEW IN JUNE THAT THE COTTON TEXTILES COMMITTEE

WOULD MEET IN THE AUTUMN AND WERE EXPECTING THE AMERICANS TO

TRY TO RAISE THE NON-COTTON TEXTILE ISSUE. J CANNOT THEREFORE

-SEE HOW THE PACKAGE DEAL ENVISAGED IN MYTEL 463 OF 7 JUNE

WOULD PREJUDICE MAJOR ISSUES OF POLICY AFFECTING BOTH THE

U.K. AND HONG KONG (PARA, 2(C) OF YOUR TELEGRAM 536).

9.

CANADIAN FIGURES OF TOTAL IMPORTS FROM S.E. ASIAN COUNTRIES

OF ALL THE ITEMS INVOLVED PRESENT A MUCH BETTER CASE THAN THE

AMERICANS CAN SHOW.

10. MORE PARTICULARLY, I CONSIDER THAT THE FORMULA SET OUT

IN PARA. 3 OF YOUR TELEGRAM 536 WILL NEITHER BE PRACTICABLE TO

OPERATE IN THE CONDITIONS OF THE TRADE NOR WILL IT BE SUFFICIENT TO MEET THE CONDITION IN (A) OF YOUR PARA. 2. IN THE FIRST PLACE A THREE MONTH RESTRAINT AGREEMENT, AS SUGGESTED IN (A) OF YOUR

PARA. 3, WILL BE DISRUPTIVE OF TRADE IN THAT MANUFACTURERS

AND EXPORTERS IN HONG KONG WILL NOT BE FREE TO MAKE THEIR USUAL

/CONTRACTS

CONFIDENTIAL