FRIV
COUNCIL
113
CONFIDENTIAL
Department of Trade and Industry
1 Victoria Street
LONDON SW1
W Dorward Esq.
Commerce and Industry Department Fire Brigade Building
Hong Kong
Dear Bill,
113/2
31 March 1971
129
•
Many thanks for your letter of 23 March, which reached me yesterday.
2 As regards the US escape clause, the position of the Administration has not changed since their statement to the UNCTAD Preferences Committee in April last year. Their explanation of their intentions is set out in full in paragraphs 389 - 393 of TD/B/300 Rev. 1. Briefly this is that the existing escape clause under the 1962 TEA is to be amended in the trade legislation submitted to Congress and resubmitted by Mr Mills in January. The legislation to implement preferences will provide that the same escape clause procedure will be applied to generalised preferences. It follows that the competitive need approach will have no place and that action will have to be based on a finding of injury to domestic industry or to workers. In such cases the President can, as you know, increase the full rate of duty, or impose quantitative restraints and/or provide adjustment assistance.
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As you say, it remains to be seen whether Congress will endorse this proposal. One can only speculate but our information is that the proposed legislation will include the escape clause provisions described last April.
. I appreciate your sense of frustration that firm decisions to include
Hong Kong cannotyet be obtained from Japan or the US. We are in continuous dialogue with the Japanese and I think we can reasonably assume that they will include Hong Kong. The problem is to what extent and our line will be that Japan should be generous in proportion to Hong Kong's importance as an export market and not in proportion to what the EEC is prepared to do.
I am not sure that yet another high level official approach to the Americans would now be appropriate. Since the Aide Memoire last lay, we have used many opportunities to raise the matter at official level in Washington, in Paris and here. Mr Noble raised it during his visit to Washington in January. The Prime Minister was briefed to raise it during his visit in December but did not do so. We can certainly seek his intervention if and when it appears desirable.
CONFIDENTIAL
RECEIVED IN REGISTRY No.51
- 6 APR 1971
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