TNAG-0281-FCO40-317-Visit-of-the-Chancellor-of-the-Duchy-of-Lancaster-to-Hong-Ko-1970 — Page 128

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CONFIDENTIAL

Mc

Sent under comp slip

18819/20

to Ballescombe

13/393/5

Mr. Rippon's Visit to Hong Kong

Background Note

Hong Kong's Textile Exports to the U.S.A.

The Effect of the proposed U.S. legislation to restrict imports

General

Since 1961 Quantitative restrictions on trade in cotton textiles

have been permissible under the terms of a special derogation from

the General Agreement on Tariffs and Trade, known as the "Long Term Arrangement" (LTA) or the "Cotton Textiles Agreement" (CTA). Trade

in non-cotton textiles is generally free of restraint, except for

The United States textile industry has campaigned vigorously

for a limitation on the expansion of exports of non-cotton textiles

from Asian producers, especially Hong Kong, Japan, Korea and Taiwan.

In his electoral campaign in 1968 Mr. Nixon promised to protect the

industry.

tariffs.

2.

The Americans have tried to persuade textile exporting countries

in Asia to accept long-term voluntary limitation of non-cotton textile

exports to the United States. The GATT permits restrictive action

only on a selective basis where injury can be proved. The Americans

have yet to prove injury; it is doubtful whether they can do so,

except perhaps on a few items. In bilateral negotiations with the

Japanese they have tried to persuade them to limit, "voluntarily,'

their exports of non-cotton textiles to the United States. The

Japanese refused the limits proposed, on the grounds that their

textile industry would not accept this withdrawal of their rights

under the GATT.

The "Mills" Bill

3. During the course of these negotiations the Ways and Means

Committee of the House of Representatives was conducting a public

hearing of a bill (H.R. 18970; "To amend the Tariff Laws of the

CONFIDENTIAL