CONFIDENTIAL
In Hong Kong's view none of the other major importing countries, faced with the pressures from their textile industries which low-cost imports produce, will agree to give up the present arrangements, much less agree to a tightening of Article XIX. The proposed GATT working party is more likely to lead to a less liberal regime for exporters; and there is a danger that if special arrangements for textiles are scrapped in favour of an all-embracing and less liberal Article XIX it would be used to impose quantitative restrictions on trade in other commodities than textiles.
11. The position taken up by the F.C.0. is that the Board of Trade objectives, while admirable in themselves, could only be achieved if support from other importing countries was forthcoming in the discussions now initiated in the Cotton Textiles Committee. For the time being it has been agreed (as recorded in the P.C. paper on this subject) that we should acquiesce in an extension of the L.T.A. on cotton textiles and should accept the need, in present circumstances, for voluntary restraint undertakings on non-cotton textiles to
continue to be given.
Conduct of Commercial Relations
of
12. It is these differences on long-term textile policy, and in particular Board of Trade opposition to Hong Kong's policy of conceding voluntary restraints in non-cotton textiles, that has led to the present difficulties over the conduct of Hong Kong's commercial relations. The Colony points out that the U.K.'s interests as a major importer of textiles and Hong Kong's interests as a major exporter of textiles are virtually irreconcilable. It is argued, quite reasonably, that Hong Kong's interests in such a situation should not be submerged for the sake of U.K. interests, but it seems that, less reasonably and with doubtful logic, Hong Kong are now arguing that the Colony must be entirely free to conduct its own commercial relations.
CONFIDENTIAL
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