the Swedes had no case on anoraks; even the Swedes themselves admitted this. The case on knitwear was thought to be very little better. We conceded both only because the Swedish Government was facing an election and the F.C.0. feared that the Swedes might act unilaterally to llong Kong's disadvantage if we held out any longer. The Swedes now want to extend the restrictions to a number of other items. They told us earlier this year that they would not want to do more than extend the existing restraints for another year and we accordingly sent a telegram to Hong Kong telling them in no uncertain terms to limit the negotiations to those two items. In spite of this Hong Kong negotiated "hypothetical" quota levels on additional items which they immediately asked us to agree to. We refused in view of Mr. Stans' imminent visit and Industries 1 see no justification for extending control to any of these items. The relevant figures are discussed very briefly at Annex A.
5.
It should not be thought that restraints on a mere couple of items are unimportant: five items account for 80 per cent of U.S. garment imports and agreement on two of these - shirts and sweaters would knock the stuffing out of the American case.
6.
Industries 1 also wish to draw attention to the serious situation which has been caused by the action which Hong Kong has taken on a number of cotton items. A year ago we agreed to restraints on a number of cotton items of which some could not have been justified under the L.T.A. on the understanding that the Swedes would drop the non-cotton items. The Swedes went back on this. Sweden has now proposed the extension of the controls to six more items, including two knitted cotton items. We believe that
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