TNAG-0299-FCO40-335-Entitlement-of-Hong-Kong-to-generalized-tariffs-preferences--1971 — Page 186

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4. DISCUSSIONS WERE VERY GENERAL:

HE MADE IT CLEAR THAT

UNILATERAL RESTRAINTS ON THE JAPANESE MODEL WERE NOT AN

ACCEPTABLE SUBSTITUTE FOR AN AGREEMENT. WE ASKED WHAT BASIC

PRINCIPLES THEY THOUGHT THEY MUST INSIST ON FOR ANY AGREEMENT SEMICOLON THEY REPLIED CATEGORISATION AND THE BASE PERIOD, ALTHOUGH THESE WERE TO SOME EXTENT FLEXIBLE, WE SAID THAT, FOR OUR PART, THE BASIC PRINCIPLES WERE INJURY (ALONG WITH A RELATED DISLIKE OF THE COMPREHENSIVE RESTRICTIONS), FLEXIBILITY BETWEEN FIBRES AND EQUITY BETWEEN SUPPLIERS (INCLUDING

EUROPEAN SUPPLIERS IF THEY WERE SEEN TO BE TAKING ADVANTAGE OF RESTRICTIONS).

5. WE SPOKE OF OUR DIFFICULTY BOTH VIS-A-VIS JAPAN (PARTICULARLY IN RELATION TO OUR G.P.S. PROBLEM) AND IN EUROPE WHERE IT WAS, WE UNDERSTOOD, VERY PROBABLE THAT RESTRICTION WOULD BE DEMANDED ON GROUNDS OF PROBABLE DEFLEXION OF TRADE IF WE AGREED TO RESTRICT EXPORTS TO THE U.S. ON THE FORMER HE REPEATED HIS STATEMENT AS TO THE JAPANESE POSITION AND ON THE LATTER HE PROMISED THAT HE WOULD PROTECT US, WITHOUT SPECIFYING QUITE

HOW.

6. HE SAID THAT HE EXPECTED THE GREATEST DIFFICULTY IN KOREA BOTH BECAUSE OF KOREAN ATTITUDES AND OF U.S. INVOLVEMENT THERE

BUT THAT HE HAD A FEW CARDS TO PLAY.

7. AT A SUBSEQUENT MEETING WE INFORMED HIM THAT WE HAD REACHED THE CONCLUSION THAT EACH SIDE'S BASIC PRINCIPLES WERE NOT SO GREATLY IN CONFLICT AS TO PRECLUDE SERIOUS DISCUSSIONS WITH

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A VIEW TO REACHING AGREEMENT AND WE WERE READY TO ENTER INTO THEM, BUT WITH ONE ESSENTIAL PRECONDITION. THAT WAS THAT, WHILE WE ACCEPTED HIS STATEMENT AS TO WHAT THE JAPANESE HAD SAID THEIR ATTITUDE WAS TO NEGOTIATION BETWEEN HONG KONG AND THE U.S.,

WE WERE AWARE OF THE DIVERGENCE OF OPINION IN JAPAN AND FOR OUR OWN PROTECTION WE WOULD HAVE TO HAVE SOME DIRECT ASSURANCE FROM JAPAN THAT, FAR FROM HOLDING IT AGAINST US, THEY WOULD WELCOME OUR NEGOTIATING, WE ASKED IF HE THOUGHT THIS COULD BE DONE AND, IF SO, HOW BEST TO GO ABOUT IT. HE ACCEPTED THE POINT AND PROMISED TO SOUND OUT THE JAPANESE WHEN HE SEES THEM AFTER HIS KOREA VISIT (PROBABLY NOT IN JAPAN).

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/HE HAD