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(b) these concessions to Sweden would encourage the Americans to act sinilarly against the exporting countries. The Americans attach great importance to their claim that their market is the only free one in the world for these goods.
(c) we are under strong pressure from our domestic industries to take similar action. So far we have been able to resist pressures from the manufacturers of shirts and knitwear to impose controls on m.n.f and woollen garments, on the grounds that this would be contrary to our international obligations. But we cannot do so if these levels are conceded
to Sweden.
(a) the planned programme of liberalisation for Japen would be made much more difficult by giving way on this case.
(e) our position as regards Portugal has become vey difficult and if the Swedes are able to extend the controls to further m.m.f. imports from Fortugal, we would be urged to follow their example.
(5) CRE 1's view is that these major issues of policy are not called into question by the proposals to extend to some additional items, restraint arrangements that already apply between Sweden and Hong Kong on certain woollen and m.n.f garments. We think that Hong Kong is right that if they have to refuse Sweden's request, the reaction is likely to be imposed controls at levels considerably lower than would be reached by negotiation and that if II.H.G, should on behalf of Hong Kong raise the matter in the G.A.7.7. as a breach of Article XIX, the outcome would be unlikely to be sufficiently favourable to safe-guard Hong Konga trade. This would only encourage other importing countries to do the same. There is little evidence that the Americans regard these particular negotiations as of much significance for their proposal to extend the cotton textile arrangements to other garments. Indeed on official level they have stated that these arrange- ments were not of much help to their case.. CRE 1 consider that although these issues of textiles policy are important they raise long term considerations that cannot at this late stage be used to determine the instructions we now give to liong Kong.
INJURY
(6) Industries 1 argue that restraints should in any case be conceded only where there are legitimate grounds to justify them. The cotton textile arrangement has a comprehen- sive definition of market disruption but leaves it to the importing countries to decide the matter; this is why the Americans wish to see it extended. They consider that the importing country has to show that imports have caused or are threatening serious injury to domestic producers of like or competitive products. On these particular cases Industriea l's
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