TNAG-0160-FCO40-196-Exports-of-textiles-to-Norway-1969 — Page 6

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H.H. Stewart, Esq.

17th October, 1969.

On page 6 of the record there is no mention of the exposition by Carey and Stewart of their idea for a working party or study group to look into ways of "strengthening" Article XIX. We recall that they held the principal difficulty of the C.T.A. to be that it gave too much power to the importing country, which was judge and jury in its own case, and suggested that what was needed was a panel of adjudicators to arbitrate whether market disruption had taken place. The panel could arbitrate on a growing basis of case law. They believed that if no initiative were taken to propose an alternative solution or remove the bad features in the C.T.A. it was likely that this would be extended to other fibres in the autumn with the United States taking swift action to sign bilaterals with all its principal suppliers. They thought that Article XIX action with a panel of adjudicators examining the criteria could ensure that any action taken was over a limited field and was non-discriminatory. We did not follow this up in these particular discussions but as you know this proposal has since been discussed at length and its dangers of a less rather than more liberal outcome clearly seen.

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The Board of Trade record also does not record David Jordan's remarks at the end of the meeting that discussions in London on the policy to be adopted at the (recently concluded) Cotton Textiles Committee in Geneva should not be left until just before the meeting but should be held when there was adequate time for full consultations between the Governor and his advisers and in the Textiles Advisory Board in Hong Kong.

Another subject which was discussed but of which no mention is made in the Board's record was the Textile Council's report on cotton textiles. On being asked about the effects of the tariff on Hong Kong exports, David said he could only give some personal views. It was possible that Hong Kong could do well over the tariff, switching even more heavily than at present from piece goods to garments, but his fear was that if an increase in textile imports took place, the U.K. would reimpose quotas as well as maintaining the tariff on Commonwealth cottons. He also believed that a key factor was whether EFTA cotton textiles would remain duty free. Could the U.K. put a duty on the Commonwealth and leave EFTA untouched?

As we recall, Stewart replied to the effect that if Hong Kong had fears over the tariff, the answer might be to leave her with a duty free quota and to liberalise trade for other suppliers. Hughes added that H. M. G. had no obligation to act in a non-discriminatory manner under the terms of the C.T.A. In reply to this point both David and George Whitehead pointed out that H.M.G's actions towards Hong Kong in this matter could not be determined merely by the terms of the C.T.A. but would have to reflect Hong Kong's dependent status. Hughes went on to ask whether Hong Kong was not worried lest Korea and Taiwan took over her clothing market in Britain once quotas were abolished. David Jordan thought this unlikely in the immediate future since both countries had limited productive capacity and were concentrating at present on sales in the

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