CONFIDENTIAL
session in the Foreign Affairs Council which will mean departure from those rules. We in the FCO, together with the DOT and the ODM will have an important voice in Whitehall on this since the
Department of Industry are much more concerned about the UK's
total imports rather than the source from which they come.
7. There would be considerable political advantage for the UK in the context of the North/South Dialogue to give some demonstra- tion that in its need to protect its own textile industry, it has not forgotten the interests of the poorest developing countries. I therefore believe the UK should offer to take a fairly high share of any increases to be offered to India and Pakistan. the figures, particularly for India, are small, such a demonstra-
tion of flexibility could pay high dividends at relatively low cost to the UK industry.
Since
8. The case of Brazil is much more difficult. The initial offer
to her was considerably more generous than that offered to other major suppliers to the Community market. The generosity of that offer was one of the reasons why such a tough agreement had to be sought from Hong Kong. Extra generosity to Brazil would therefore exacerbate our already strained relations with Hong Kong in the textiles field. On the other hand it would be seriously damaging to our considerable trading interests in Brazil (where, unlike some other Member States, we are dependent on orders from the Brazilian Government) if we were to refuse to allow the Community
to make an improved offer. I do not think that other Member States would agree to the unilateral measures against Brazil which would be the logical consequence under the Community's agreed mandate of such a UK veto. We might therefore be left with no protection at all against Brazilian imports, a position which the Department of Industry would be most anxious to avoid. I therefore believe that the right course on Brazil is for the UK to say that it regrets the generosity of the Community's treatment of Brazil, particularly in contrast with that meted out to Hong Kong. But the UK would not want to veto an agreement with Brazil. We would be prepared to let
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