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TO FLASH GOVERNOR HONGKONG TELEGRAM NO. 130 OF 10 FEBRUARY.
YOUR TELNO 72: COTTON TEXTILES.
WE ARE GRATEFUL FOR VIEWS OF TEXTILES ADVISORY BOARD ON REPORT OF THE TALKS IN LONDON LAST MONTH. WE UNDERSTAND THAT YOUR PURPOSE IN TRANSMITTING THESE VIEWS TO US IS NOT TO PRESENT THEM AS A FORMAL PROPOSAL FROM THE HONGKONG GOVERNMENT TO HMG. HOWEVER, WITHOUT PREJUDICE TO OUR RESPECTIVE FORMAL POSITIONS, WE HAVE CONSIDERED CAREFULLY THE VIEWS SET OUT IN YOUR TELEGRAM AND HAVE THE FOLLOWING COMMENTS TO MAKE.
2. ON YOUR PARAGRAPH 2, THE DIFFICULTIES FACING HMG ON THE QUESTION OF THE TREATMENT OF ORDERS WHICH CANNOT BE ACCOMMODATED WITHIN 1972 QUOTA LEVELS ARE GREATER IN THE CASE OF SOME SUPPLYING COUNTRIES
THAN CF OTHERS. WE CANNOT THEREFORE AGREE IN ADVANCE THAT HONGKONG SHOULD BE ENTITLED TO A SET SHARE OF ANY LICENCES THAT HMG MAY DECIDE IN THE FUTURE TO ISSUE TO COVER SUCH ORDERS. HOWEVER, WE HAVE ALREADY SAID THAT SHOULD AN OVERALL AGREEMENT BE REACHED FOR MODIFICATION OF HONGKONG'S QUOTA ARRANGEMENTS FOR 1972, AND IF HMG DECIDED IN PRINCIPLE TO AGREE TO LICENSE RE-EXISTING ORDERS OUTSIDE THE QUOTAS FROM ANYWHERE, THE CLAIMS OF HONGKONG WOULD BE GIVEN MOST SYMPATHETIC CONSIDERATION. IT IS NOT YET KNOWN WHETHER ANY HARDSHIP YARDAGE AT ALL WILL BE GRANTED.
3. YOUR PARAGRAPH 3. THE REQUEST FOR TRANSFERRING ENTITLEMENT FROM THE FABRIC GROUPS INTO GROUP IV PRESENTS US WITH THE PROBLEM THAT THIS WOULD SET A PRECEDENT WHICH OTHER SUPPLYING COUNTRIES WOULD URGE US TO FOLLOW IN THEIR CASE. NEVERTHELESS, THE ARRANGEMENTS PREVIOUSLY UNDER DISCUSSION BETWEEN US INCLUDED THE OFFER OF 5% OF THE GROUP IV LIMIT REFERRED TO BY YOU. ANY DIFFERENT PROPOSAL INVOLVING THE SWING OF A HIGHER QUANTITY INTO GROUP IV COULD ONLY BE CONSIDERED BY US ON THE BASIS OF THE FOLLOWING PRINCIPLES:
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