TNAG-0239-FCO40-275-Entitlement-of-Hong-Kong-to-generalised-tariffs-preferences--1970 — Page 70

CONFIDENTIAL

effects on Hong Kong's economy and thus on Japanese

exports to Hong Kong. The Secretary of State recently

sent a message to the Japanese Foreign Minister on these

lines.

U.S. Protectionism

21.

Mr. Sato will be discussing the textiles problem

It might

be useful to get his own views on protectionism and the

best means of combating it.

with President Nixon while ne is in the U.S.

22.

In bilateral negotiations with the Japanese, the

U.S. tried to persuade them 'voluntarily' to limit exports

of non-cotton textiles to the U.S. for a period of at

least five years. The Japanese refused. The

U.S. Administration then gave its backing to the 'Mills'

Bill, which contains provisions for quotas to be imposed

on a wide range of goods, including textiles. The Bill

has yet to be discussed in Congress and it will almost

certainly not be considered before the end of November.

23.

We view with concern the possibility that the 'Mills'

Bill might lead to quantitative restrictions being

imposed which would undermine the principles of the GATT

and lead to a diversion of low-cost Asian non-cotton

textiles to Europe. The solution least likely to affect

world trading patterns would be an agreement between the

Japanese and the U.S., within the terms of the GATT, which

might lead to a weakening of the provisions of the 'Mills'

Bill.

24. The Prime Minister might also express the hope that

11

CONFIDENTIAL