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4. 764. WE HAD LONG ARGUMENTS ON FIGURES, DURING WHICH WE DISCOVERED THAT THERE IS A LARGE PRODUCTION (FULL FUGURES NOT AVAILABLE) OF CONTINUOUS SYNTHETIC KNIT ROLL-NECK SHIRTS WHICH SWEDES CLASSIFY UNDER KNITWEAR. AGAIN AT DINNER LAST NIGHT, I EXTRACTED ADMISSION THAT THIS IS AT LEAST PARTLY RESPONSIBLE FOR PRODUCTION DECLINE SHOWN IN KNIT SHIRT FIGURES. IT FURTHER WEAKENS THEIR ALREADY WEAK CASE SINCE PRODUCTION DECLINE IS ENTIRELY IN KNIT SHIRTS AND, AS WE EMPHASISED, OUR KNIT COTTON ARE UNDER RESTRAINT AND OUR EXPORTS OF KNIT M.M.F. ARE NEGLIGIBLE. I MADE IT QUITE CLEAR THAT ON THE EVIDENCE PRESENTED I COULD NOT ACCEPT THAT THERE WAS AN QUOTE INJURY UNQUOTE CASE AGAINST HONG KONG.
SWEDES CAME HERE WITH INSTRUCTIONS TO OBTAIN RESTRAINT ON ALL THREE ITEMS. AT DINNER YESTERDAY THEIR DEPUTY LEADER SAID HE HAD REFERRED TO STOCKHOLM, RECOMMENDING THAT THEY DROP SHIRTS.
16.00 HRS. TODAY HE REPORTED THAT STOCKHOLM HAD AGREED TO DROP SHIRTS, BUT WILL NOT AUTHORISE THEIR DELEGATION TO INITIAL DRAFT LETTER FORMALLY HOTIFYING RESTRAINTS UNTIL THEY HAVE SEEN
IT. WE AGREED DRAFT INFORMALLY TODAY.
JONES WILL INITIAL ON OUR BEHALF ON MONDAY, AND NOTIFY YOU. ISSUE OF EAS FOR SHIRTS CAN THEN BE RESUMED.
6.
462.
RESTRAINT LIMITS AGREED AD REFERENDUM.
HIGHEST EA LEVEL REACHED, VIZ., 563,093, FOR YEAR TO 31 JUNE 1969, ROLLED IN WITH EXISTING RESTRAINT ON WOMEN'S AND GIRLS, BUT STILL EXCLUDING MEN'S AND BOYS' ACRYLIC. TOTAL 2,230 THOUSAND.
751.
DITTO, 1.E., 615,090 EAS ROLLED IN WITH EXISTING LIMIT O MEN'S AND BOYS'.
TOTAL 795,637.
7.
GOLDSMITH AND MISS WELCH HAVE SEEN THIS TELEGRAM AND CONCUR WITH AGREEMENT REACHED.
?.
HO RETURNS HONG KONG BY BA 922 SUNDAY, JORDAN BA 912 TUESDAY.
A
FCO PASS PRIORITY GOVERNOR HONG KONG AND STOCKHOLM.
AR. MARSHALL [REPEATED AS REQUESTED]
INTERNATIONAL TRADE DISTRIBUTION:
H.K.D. V. E.D.
CONFIDENTIAL
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