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was no doubt that voluntary restraint would continue to exist internationally and they thought that Canada had a case for restraint, including polyester/polynosics. 13. Mr. Carter said that there werc the clements of a first class constitutional crisis which could involve the resignation of unofficial members of EXCO. This was a situation that Ministers could not contemplatc. In the past there had been differences betw on Hong Kong and the U.K. over trade, but to sacrifice Hong Kong intercsts for some grand design of U.K. policy rould be impossible to explain in Hong Kong. This was not a matter of Hong Kong trade with the U.K. Voluntary restraint affected trade world wide. Any new trade regimen proposed by the U.K. would take months or even years to achicvc. Hong Kong trade could not be allowed to wither in the meantime. They must opcrate under the existing arrangements. Article XIX was no real safeguard for Hong Kong since Hong Kong had no power to retaliate and it seemed doubtful if the U.K. could retaliate on Hong Kong's behalf. Mr. Wilford said that all this added up to a strong political casc.
14. Mr. Stewart said that, for the record the question of woollen goods for Germany had been considered fully in the Board of Trade. The Commercial Counsellor at Bonn had taken
part in talks in London and the Board of Trade had been fully consulted and fully engaged in all details of the negotiations. As regards Canada, there had been preliminary murmurs of a need for restraint in 1966. There had been talks in Geneva in which the U.K. had participated. The talks were adjourned to Ottawa, but were concluded ad referendum for one month. The formula then deviscd had been designed to preserve the position for the future. It was not a formal agreement but a unilateral declaration by Hong Kong from which Hong Kong was frce to withdraw if any other country
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