18.
I am afraid that we shall have to trouble Mr. Hughes again on the issue of the Swedish/Hong Kong negotiations. These are due to resume on 16th June in Stockholm and the Board of Trade are likely to be represented by Industries I (probably Mr. Stewart), Mr. Jordan, Hong Kong's negotiator, will come here on 10th June to discuss his negotiating brief. Hong Kong's proposals for the final round have been sent to us as long ago as 30th April in telegran No.339 (doc 59) We have sent them telegram 320 at doo 82 and 361 at doo 95. Hong Kong's latest proposals in their telegram 446 are at doo 96 and Mr. S. Stewart has now circulated a minute which is at doc 97.
2. Mr. Stewart's minute talks at length about restrictions on cotton items, the use of Article XIX of the GATT and the play the Americans are likely to make of these voluntary restraints. The considerations – why we feel that Hong Kong should be allowed to negotiate for herself on cotton textiles, why she was probably right in seeking to avoid a breakdown with Sweden and an Article XIX confrontation, and why within the precedents Hong Kong should be allowed to reach the best possible agreement she could were all set out in your minute of 10th March to Mr. Hughes at doc 3 above, which he endorsed. We cannot reasonably prevent Hong Kong from reaching agreements on cotton textiles that fall within the ITA, regardless of what arrangements we administer for the sake of our own industry. As regards the Americans, it should be noted from Mr. Whitehead's letter to Mr. Dunnett of 22nd May copied to Mr. S.Stewart (at doc 35 in file CRE.26414 attached) that the Stana party in Hong Kong referred only briefly to bilateral issues on non-cotton textiles between Hong Kong and other countries and Mr. Nehmer is quoted as commenting privately "that this sort of arrangement was not what, they were looking for and was not really of much help to their case".
3. As regards pressure from the U.K. industries, the line that should surely be taken is that if they can show percentages of U.K. consumption of non-cotton textiles supplied from Hong Kong imports anything like those of Sweden, we shall be willing to take a similar line as the Swedes.
4. We must therefore look at the facts of the case on each product put to us by Hong Kong in the light of the precedents. On non-cotton textiles, with which this minute is concerned, the existing arrangements for the year ending 30th June 1969 were extended at the session at Geneva in February to cover men's and women's synthetic anoraks (excluding dis-continuous women's anoraks) at a combined level of 795,000 pieces and certain knitwear of synthetics and wool at 2,238,000 pieces.
5. The changes for the twelve months from 1st July 1969 which Hong Kong is seeking with the Swedes aret
Anoraks : continuation at a reduced level somewhere between the level acreed in February and 378,000 pieces (the Swedes have requested 450,000).
Knitwear: continued restraint at about the existing agreed level: 2,200,000 pieces or 1,981,000 with one item liberalised.
Women's underwear: 3,458,000 pieces.
new restraints at the existing level :
/woven
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