catence
CONFIDENTIAL
The Non-Cotton Textiles Complex
The
17. The United States Congress is now considering restrictive
legislation (the Mills Bill) to impose quotes on non-
cotton textiles and possibly some other goods where low
cost competition is feared. The US administration has a
domestic political commitment to restrict imports of
textiles, and has sought to secure "voluntary" comprehensive
restraint with Japan and thereafter with other low-cost
producers, using the Mills Bill as a threat, and although
there is no GATT case for comprehensive restraints.
talks with Japan have recently broken down, and we are now
hoping to hold a four-power meeting of the United States,
EEC, Japan and the United Kingdom under the auspices of
GATT which might lead to voluntary restraint on a few
selected items where there really is a case for protective
action because the US industry is genuinely suffering from
disruptive competition. But there is a real risk that the
restrictions, whether by agreement or unilateral action, wil
go so wide as to create a similar situation to that already
existing in the field of cotton textiles. Restrictions on
the US market could divert the low cost exports to Europe,
and the EEC and UK might find it difficult to resist
pressures from their industries that they should take
similar restrictive action. A consequent chain reaction
could have damaging effects on world trade, and especially
for that of Hong Kong and other low-cost Asian producers,
who might find that diversifying into new lines of
production merely provoked further restrictions on their
exports.
n./E
/III
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