CONFIDENTIAL
F.C.O. TELEGRAM NO.115 TO HONG KONG
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DOMESTIC PRODUCTION, IMPORTS OF WOOL TEXTILES FELL IN 1969 AS COMPARED WITH 1968 AND ALTHOUGH IMPORTS OF MAN-MADE CLOTH
INCREASED IMPORTS OF YARN FELL BY A GREATER AMOUNT. IMPORTS OF
APPAREL GREW IN 1969 BUT THE INDEX OF PRODUCTION REMAINED AT A
HIGH LEVEL AND FOR MOST OF THE YEAR EMPLOYMENT WAS AT A RECORD
LEVEL FOR THE DECADE.
4. IF IN THESE CIRCUMSTANCES WIDE-SPREAD LIMITATIONS ON IMPORTS
WERE IMPOSED, IT WOULD BE LIKELY TO ENCOURAGE THE GROWTH OF
PROTECTIONISM AND DISCOURAGE TRADE LIBERALISATION IN ALL THE
DEVELOPED COUNTRIES. THIS WOULD STILL BE THE CASE IF THESE
LIMITATIONS WERE INTRODUCED UNDER BILATERAL ARRANGEMENTS OF A KIND
WHICH ARE NOT FORMALLY PROHIBITED BY GATT. MOREOVER THEY WOULD
APPEAR TO BE CONTRARY TO THE SPIRIT OF THE AGREEMENT AND IT WOULD
BE KNOWN IN ALL COUNTRIES THAT THEY HAD BEEN ACCEPTED UNDER DURESS.
5. HOWEVER, IT IS POSSIBLE THAT THERE ARE LIMITED SECTORS OF
INDUSTRY WHERE THE EXISTENCE OF SERIOUS INJURY OR THE THREAT OF
IT CAN BE ESTABLISHED BY REFERENCE TO THE NORMAL CRITERIA.
SHOULD THERE BE SUCH CASES THEY COULD BE DISCUSSED IN THE GATT
FORUM WHERE ANY SPECIAL ELEMENTS IN THE PROBLEM COULD BE CONSIDERED
AND THE JUSTIFICATION AND THE REMEDIAL MEASURES TO BE TAKEN COULD
BE APPROVED.
CONCLUSION.
6. IN ORDER TO AVOID THE DANGER OF A SERIOUS SETBACK TO THE LIBERALISATION OF TRADE AND TO SUSTAIN THE GATT SYSTEM THAT SERVED WELL TO PROMOTE FREER TRADE, IT IS DESIRABLE THAT ANY US PROPOSALS FOR RESTRAINTS ON HER IMPORTS OF NON-COTTON TEXTILES SHOULD BE PURSUED IN THE GATT AND LIMITED TO THOSE ITEMS WHERE DAMAGE TO HER DOMESTIC INDUSTRY CAN BE SHOWN TO BE CAUSED OR
THREATENED BY IMPORTS. ENDS.
STEWART
FILES
HONG KONG DEPT. COMMODITIES DEPT.
MR. WILFORD
MR. GALLAGHER
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CONFIDENTIAL
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