TNAG-0386-FCO40-432-Exports-of-non-cotton-textiles-from-Hong-Kong-to-the-EEC-1973 — Page 113

CONFIDENTIAL

WITH HONG KONG. HOWEVER, IN THE ABSENCE OF A CASE AND HAVING REGARD TO THE FAILURE OF OUR ACTION IN RESPECT OF CERMANY TO STAVE OFF A DISCRIMINATORY MANDATE, I AM AFRAID IT WILL NOT BE POSSIBLE TO ACHIEVE AN EXTENSION OF OUR UNILATERAL RESTRAINT TO THE BENELUX BEFORE 16 MARCH. WE CLEARLY MUST SATISFY QUSELVES AS FAR AS POSSIBLE THAT ANY FURTHER UNILATERAL ACTION WOULD HAVE DESIRABLE AND NOT PREJUDICIAL REPERCUSSIONS FOR US ESPECIALLY IF WE ARE TO MAINTAIN OUR CREDIBILITY WITH OUR INDUSTRY.

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4. ALTHOUGH THE TEXTILES ADVISORY BOARD EVENTUALLY WENT ALONG WITH OUR LINE IN INTRODUCING THE UNILATERAL RESTRAINT TO GERMANY (PARA 4 OF MY TELEGRAM. 132), WE HAD SOME DIFFICULTY WITH THEM. ULTIMATELY AN IMPORTANT CONSIDERATION IN THEIR ACQUIESCENCE WAS THAT THE ACTION WAS LIMITED TO GERMANY AND ALSO THAT WE WOULD STRENGTHEN THE HAND OF THE LBIERAL TRADERS WITHIN THE COMMUNITY IN RESISTING PROTECTIONIST PRESSURES. THE POSSIBLE EXTENSION OF SOME UNILATERAL RESTRAINT TO THE BENELUX WAS REFERRED TO AT THE TIME AND THAT POSSIBILITY WAS NOT RULED OUT BY THE CHAIRMAN BUT, AS THINGS STAND, WE WILL NOT BE ABLE TO SAY TO THE BOARD THAT THE BENELUX WILL WELCOME SUCH A STEP BY US AS IN HO'S INFORMAL CALLS ON DE

MAELE IN BRUSSELS ON 26 FEBRUARY, AND ON VERHAGEN IN THE HAGUE ON 27 FEBRUARY 1973, NEITHER GAVE ANY HINTS THAT THEY WISHED TO SEE OUR UNILATERAL RESTRAINT TO GERMANY EXTENDED TO THE BENELUX, ALTHOUGH THEY AGREED THAT OUR GERMAN MEASURES HAD BEEN HELPFUL. INDEED, VERHAGEN WENT SO FAR AS TO SAY THAT HE WAS NOT AWARE OF ANY DIFFICULTIES BEING CAUSED BY M.M.F. IMPORTS INTO THE BENELUX FROM HONG KONG (ALTHOUGH HE ALSO MADE IT CLEAR THAT A QUOTE COMMUNITY UNQUOTE SOLUTION TO GERMANY'S PROBLEM WAS HEEDED).

5. WE ARE URGENTLY EXAMINING OUR LATEST EXPORT FIGURES TO THE BENELUX TO SEE IF THE CRITERIA WE APPLIED IN RESPECT OF GERMANY SUGGEST A NEED FOR SIMILAR ACTION IN RESPECT OF THE BENELUX.

6. IT WOULD GREATLY ASSIST IN THE DELIBERATIONS IN THE TEXTILES ADVISORY BOARD IF THE DIRECTOR OF COMMERCE AND INDUSTRY COULD BE AUTHORISED TO INFORM ITS MEMBERS IN CONFIDENCE OF THE ASSURANCES YOUR OFFICIALS HAVE GIVEN TO JONES AND, IN PARTICULAR, THAT THE EXTENSION OF OUR UNILATERAL RESTRAINT TO THE BENELUX WOULD ENABLE YOU TO RESIST THE WIDENING OF ANY RESTRAINT TO THE COMMUNITY AS A WHOLE BEYOND OUR POLYESTER/COTTON ARRANGEMENTS WITH YOU, INCLUDING THE ACCEPTANCE AND APPLICATION OF THE ONE-MARKET CONCEPT.

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