TNAG-0165-FCO40-201-Export-of-textiles-to-Norway-and-Sweden-1969 — Page 107

SWEDISH TEXTILE NEGOTIATIONS

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advised

The principle of restraint has been conceded already in negotiations with the Canadians, Swedes and Norwegians. Hong Kong was authorised to say in talks with Mr. Stans that she would be prepared to consider

cases for restraint on an item by item basis where the evidence seemed to support this. Our objection to concluding these negotiations in April was that it would have been untimely in relation to Stans' tours

It was agreed that there

This would not have made

not

Any

in that there was no objection in principle. should be a meeting with the Swedes in June. sense unless we were prepared, in principle, to agree to restraint.

It would be dishonest to go to Stockholm for talks with the possibility that whatever the strength of the cases and the levels suggested we should, in the end, refuse in any circumstances to concede restraint. Furthermore, such action would severely damage Hong Kong's reputation, might provoke the Swedes into action which both Hong Kong and we would find seriously disadvantageous and would also destroy

HMG's credibility with the Swedish Government. If Sweden acted to our disadvantage in these circumstances she would be likely, at the least, to be provoked into action under Article XIX of the GATT which might well lead to a chain reaction in other countries which neither Hong Kong

nor we would welcome.

This would give rise to a situation which would cause great damage to Hong Kong interests and we have to consider what supporting action we should take. We think it very unlikely that such Article XIX action would be successfully challenged in GATT and it is not clear what, if any, retaliatory action we could take on Hong Kong's behalf. At this

of time point assume we cannot put Hong Kong in the position of inviting unilateral Swedish action until we have faced the implications of such

action.

We have been operating on this principle of voluntary restraint in specific serious injury cases; it is a major issue as to whether this policy should be changed. This cannot be settled, if the Board of Trade finally does decide to seek to change it, before Monday. These consultations have already been adjourned once at HMG's suggestion, and the Swedes are naturally expecting that they will, on this occasion,

be concluded.