TNAG-0212-FCO40-248-Departmental-briefs-on-Hong-Kong-1970 — Page 128

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The Americans refused this proposal which they regarded as inopportune and told us that they intended to pursue their bilateral approaches.

Future Problems and Dangers

4. If the Japanese do reach agreement with the Americans the latter will then press the other Asian producers for similar restraints.

We

shall then have to decide, in conjunction with the Hong Kong Authorities and in the light of the terms of the agreement between the Americans and the Japanese, how far Hong Kong should follow suit. We shall also have to decide how we can best prevent possible diversion of Asian non-cotton textile exports to the British market.

British Interests

5.

(i) to dissuade the US Administration from taking action

domestically or internationally to protect its textile industry in such a way as to damage the liberaliation of world trade (the economic case for overall protection for the US industry is relatively weak): such action would encourage other protectionist lobbies in the US and could lead to protectionism in other countries;

(ii) to safeguard, as far as we can, the trading position of

Hong Kong (some 50 per cent of whose total exports are textiles); and

(iii) if, despite our efforts, further restraints are placed on

non-cotton textile exports (particularly to the US), to avoid diversion of such exports to the United Kingdom.

Commodities Department.

1 June 1970.

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