TNAG-0167-FCO40-203-Exports-of-textiles-to-United-Kingdom-1969 — Page 162

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G.F. 323

CONFIDENTIAL

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79.

Mr. Stewart said Hong Kong's counter-offer was so far away from the B.O.T.'s proposals that it virtually amounted to a complete rejection. The high levels proposed, taken with the conditions and with the compensation requested, were almost insulting. He could not accept that the Heads of Agreement precluded H.M.G. from taking steps to deal with a situation of market disruption. Hong Kong was, in effect, using the Heads of Agreement to the detriment of one of the two parties to it. He was disappointed with Hong Kong's response which was not in keeping with the spirit of the C.T.A. Mr. Carter commented that

Mr. Jordan the Hong Kong proposal had the merit of being reasoned. replied that there was little point in going over doctrinal arguments again as the views of the two sides on the Heads of Agreement and its connection with the C.T.A. were so divergent.

80.

Mr. Stewart said that Hong Kong's intransigence would make his task in New Delhi much more difficult. If faced with a blank refusal on both fronts, he would have no option but to place all the facts before his Ministers, in which event the worst might be expected. He found it difficult to understand Hong Kong's unwillingness to accede to the B.O.T.'s request as the industry in Hong Kong was efficient and sufficiently flexible to switch from one type of product to another.

81.

Mr. Jordan replied that as the Hong Kong counter-offer amounting to 23 million square yards was not widely different from performance in 1967, he could not understand Mr. Stewart's attitude. As it was, Hong Kong was prepared to turn down future trading opportunities to assist the B.O.T., and this might well

Mr. Stewart lead to other suppliers gaining at Hong Kong's expense. thought this was unlikely as all major or potential suppliers of wide sheeting and sheets were caught within the global quota or special country arrangements; also, Portugal was strictly limited as he had explained earlier. He repeated that he found it extremely hard to sympathise with Hong Kong's negative attitude as H.M.G. had been obliged to deal far more severely with Portugal. Mr. Jordan replied that, while Hong Kong was prepared to help, the cut-back of some 16 million square yards proposed by the B.O.T. was quite unacceptable. British production was, in fact, increasing in 1968.

82.

Mr. Stewart explained that the increasing British production in 1968 was a temporary situation caused by the build-

Mail order houses up of stocks run down in previous years. particularly were increasing their stocks to meet future commitments. These mail order houses were increasingly turning overseas for their supplies. But to take account of Hong Kong's difficulties, he was prepared to make the following final offer, although this meant going beyond his instructions:

(a) any arrangement agreed upon would be for one year only and would become effective from 1st January, 1969;

(b) the annual limit on Hong Kong exports of wide sheeting

and sheets should be 17.5 million square yards distributed as follows

grey wide sheeting

finished wide sheeting

sheets

million square yards

11.0

5.5

1.0

Total

17.5

CONFIDENTIAL...