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the US special representative on trade, Senator Brock had been in Europe recently advocating moderation. Mr Haig said that the present US administration was strongly free-trade oriented and would certainly use its influence. He realized textiles were Hong Kong's life-blood. Europe was, however, in economic trouble and a protectionist mood was developing both in France, following the election of Mitterand, and in Germany, which for the first time in years time was feeling the economic pinch.
The US had focussed principally on Japan and the auto-industry and a satisfactory agreement had just been reached.
9.
Mr. Shoesmith said that in the textile field the EEC would probably focus on Japan and the US. HE said that HK would agree that this was where the EC's real problems lay. He wanted to avoid Hong Kong becoming the whipping boy for either. He thought that the UK Government would be more liberal than when the MFA was first negotiated; but unemployment would impose strong pressures.
World Affairs
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Mr Haig was nervous about the situation in Poland. It appeared to be reverting to the level of tension experienced in December; but with less room to manoeuvre by either side. In Afghanistan the Russians had found things far more difficult than they had anticipated. Factionalism with the puppet government made it difficult to erect an effective command structure and control of the countryside eluded them as it had the Americans in Vietnam. He noted with concern a recent incursion by an Afghanistan Air Force Plane over the Pakistan Border.
11.
Mr Haig said he would discuss the situation in Cambodia with the Chinese. He felt that the Vietnamese would have gone much further than they had were it not for the Chinese press on the border. He understood that the Vietnamese had recently had to pull back from Montagnard territory. He did not anticipate any dramatic change unless the Vietnamese moved towards Thailand. If this happened,
the Chinese would slap them down. Geng Biao had told him
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