CONFIDENTIAL
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3. AT PRESENT THE TOTAL MALAYSIAN QUOTA IS GIVEN TO ONE FIRM. ADDITIONAL COTTON TEXTILE FIRMS HAVE, AS PART OF GENERAL INDUSTRIALISATION POLICY, NOW BEEN SET UP AND WE CAN FORSEE EMBARRASSMENT TO THE MALAYSIAN GOVERNMENT IF THEY CANNOT ACCOMMODATE THEIR EXPORT ASPIRATIONS WITHOUT PEMALISING ORIGINAL QUOTA HOLDER.
THE
4. THE IMPOSITION OF A DUTY GIVING E.G. PORTUGAL A PREFERENCE AGAINST MALAYSIA WOULD ALMOST CERTAINLY CAUSE A STRONG OUTBURST HERE WITH SUGGESTIONS THAT THIS MADE A MOCKERY OF OUR MUCH VAUNTED UNCTAD INITIATIVE. THE MALAYSIANS WOULD FEEL THAT THEY HAD BEEN LET DOWN BY BRITAIN ONCE MORE AND THEY MIGHT RETALIATE, SUCH ACTION BY US WOULD SOMEWHAT FURTHER STRENGTHEN THE HANDS OF THOSE WHO ARE SUGGESTING A CONTROL ON THE REPATRIATION OF PROFITS. THE REACTION WOULD BE IMMEASURABLY STRONGER IF WE MAINTAIN QUOTA RESTRICTIONS AT THE SAME TIME UNLESS THESE INCREASED BY SAY, 10% A YEAR.
5. THE MALAYSIANS WOULD PROBABLY PREFER A QUOTA INCREASE OF ANYTHING OVER 2% A YEAR TO THE IMPOSITION OF A TARIFF. THEY ARE CONVINCED THAT COUNTRIES LIKE KOREA DUMP AND WOULD REGARD THE IMPOSITION OF A TARIFF ON MALAYSIAN TEXTILES AS AN ENCOURAGEMENT OF THIS ALLEGED PRACTICE.
MR. DUFF
FILE S
COMMODITIES DEPT.
SOUTH ASIAN DEPT.
N.A.C.D.
W. AFRI. DEPT.
E. AFRI. DEPT.
S. EUR. DEPT.
H.K. DEPT.
0. & S.A.D.
S.W.P.D.
TRADE POLICY DEPT.
SIR A. SNELLING
MR. GALLAGHER
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CONFIDENTIAL
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