TNAG-0301-FCO40-337-Effects-of-tariffs-on-imports-of-cotton-textiles-to-UK-from--1971 — Page 127

CODE 18-77

1

MR R GRAY, CRE1

Mr Gildea, CRE3

cc Me Toms, CRE2

{

Reference..

RECEIVED IN

REGISTRY No.51

18 MAR 1971

12

Mr M E Heath, FCO

Mr M Laird, FCO

Mr Carey, CT

HONG KONG: COTTON TEXTILES

HKK 6/548/3

I enclose a draft reply to most of the Governor of Hong Kong's saving

despatch no 28. As you know, Hong Kong have now asked for an answer if possible

before 18 March. If we can agree on the draft early next week, it will be

possible to telegraph the main points by that date..

Most of the draft answers the Hong Kong plea for delay in introducing the

cotton textile tariff. The substance of our answer was, of course, never in

question and we are concerned only with how, best to present our rejection of the

request.

Paragraph 6 deals with Mr Cater's request during the talks on 1 February

for an assurance that if we were to reimpose quotas under the safeguards

procedure outlined in Mr Crosland's statement of July 1969, we would have regard

to traditional patterns of trade (ie those likely to favour Hong Kong). As we

are turning down substantially all the other Hong Kong points, we have done our

best to sound favourable on this one. The difficulty is that a literal application

of the LTA would seen to require us to base quotas on not less than trade in the

year immediately preceding their imposition so that we would not, as I interpret

the LTA, be free to cut back, say, Taiwan to an earlier and lower base period.

We did, of course, interpret the LTA rather liberally in establishing the base

period for our global quotas some years ago, but it seems questionable whether

it would be desirable in the future to set a precedent for other countries not

to observe the safeguard provisions (including those of any successor to the LTA).

Be this as it may, I feel that we should not tie our hands with any firm

commitment to Hong Kong.