TNAG-0239-FCO40-275-Entitlement-of-Hong-Kong-to-generalised-tariffs-preferences--1970 — Page 197

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CYPHER CAT A

ROUTINE UKDEL GECD PARIS

TELEGRAM NUMBER 64

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HRXG/R

TO FOREIGN AND COMMONWEALTH OFFICE

9 SEPTEMBER 1970

ADDRESSED TO F C O TELEGRAM NUMBER 64 OF 9 SEPTEMBER 1970 RFT TO

UKMIS GENEVA HONG KONG TOKYO WASHINGTON AND UKDEL EEC BRUSSELS.

FFOLLOWING FROM DELEGATION TO OECD GROUP ON PREFERENCES.

KARUDA, A MITI OFFICIAL IN THE JAPANESE GENEVA MISSION, WHO IS HERE FOR THE PREFERENCES MEETING, APPROACHED JONES YESTERDAY ON

TEXTILES SITUATION. HIS MAIN POINT WAS THAT JAPANESE WERE RELUCTANT

TO SIGN PROTOCOL EXTENDING LTA BEFORE 30 SEPTEMBER. MAJOR REASON

WAS THAT THEY HAD NOT YET RENOGOTIATED THEIR BILATERALS WITH EITHER

U.S. OR EEC AND THEY WISHED TO USE THIS AS A BARGAINING WEAPON. THEY

WERE NOT OPPOSED TO EXTENSION OF LTA AS SUCH BUT WOULD PROCEED

WITH RENOGOTIATION OF THEIR BILATERAL AGREEMENTS AND WOULD PROBABLY

SIGN PROTOCOL AT A LATER DATE.

2. THE QUESTION WAS WHETHER THIS ACTION WOULD BE CONSIDERED

SUFFICIENTLY SERIOUS TO NECESSITATE CALLING A MEETING OF CTC AT THE

END OF SEPTEMBER TO CONSIDER THE SITUATION. GATT SECRETARIAT HAD

INDICATED THAT THIS WOULD DEPEND ON WHETHER ONE OR MORE MAJOR

PARTICIPATING COUNTRIES REQUESTED A MEETING. WHAT WAS UK AND HONG

KONG VIEW?

3. JONES REPLIED THAT HE WAS WITHOUT INSTRUCTIONS BUT THAT HE PERSONALLY DID NOT THINK THAT THE WITHHOLDING OF SIGNATURE BY ONE

EXPORTING COUNTRY, EVEN A MAJOR ONE, WOULD MAKE THE LTA UNVIABLE AND NECESSITATE AN EMERGENCY MEETING. JAPANESE WOULD HOWEVER HAVE TO FACE RISK OF ACTION UNDER ARTICLE 6(C) AS A

NON-PARTICIPATING COUNTRY.

4. KARUDA ADDED THAT ANOTHER REASON FOR JAPANESE RELUCTANCE TO

SIGN PROTOCOL WAS THE PRESENT POSITION ON NON COTTONS. AMERICAN

TACTICS IN TRYING TO FORCE JAPANESE TO NEGOTIATE UNDER THREATS HAD

BEEN A BAD MISJUDGMENT AND HAD MISFIRED. JAPANESE WOULD NOW

PREFER NO FURTHER ACTION UNTIL ULTIMATE FATE OF US TRADE BILL

BECAME MORE CLEAR. IN THIS CONNECTION THEY WERE RELUCTANT TO LIFT

THEIR RESERVATION ON SETTING UP OF PROPOSED GATT WORKING PARTY ON

TEXTILES. THEIR INDUSTRY IN PARTICULAR FELT THIS WOULD ONLY START

THE SLIPPERY SLOPE TOWARDS EXTENSION OF THE LTA TO OTHER TEXTILES

OR TO AN LTA TYPE SOLUTION FOR NON COTTONS. THEY THEREFORE

PREFERRED POSTPONING CONSIDERATION OF THIS ISSUE IN GATT COUNCIL.

ONE POSSIBILITY THEY HAD THOUGHT OF WAS TO ESTABLISH AN EXPERT

GROUP TO ANALYSE THE FACTS BEFORE DECIDING THE NEXT MOVE AT AN

INTERGOVERNMENTAL LEVEL.

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/5. JONES