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CONFIDENTIAL
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DSA 11C
7. In most cases primary producers and NICs are unlikely to
resort to trade discrimination against developed nations.
They need access to Western markets and Western investment
in their own countries. Moreover, the developed nations
enjoy comparative advantage in numerous goods and services
which they require. Action against them will thus be
detrimental to most LDCs' own interests. But there is
also scope for purely opportunistic resort to economic
/that their commercial importance to the UK far outweighs levers where, for example, LDCs perceive the UK's
importance to them. Such opportunism in bilateral relations
is particularly difficult to counter since other OECD
nations will regard it as providing an opening for
their own exports, rather than an issue over which to make
common cause with the UK. If an appreciation grows that
Western countries can be picked off without risk of
retaliation, discriminatory action may become more
frequent. Indeed, there are already signs that this may be
be happening: the weak EC response to Indonesia's action
against the UK encouraged Mexico to threaten the UK with
similar trade discrimination over textiles. The strength
of Malaysia's recent outburst against the UK may also owe
something to theperception of UK weakness in the face of
Indonesia's challenge.
Vulnerability
8. Is the UK more vulnerable to trade discrimination
than other developed nations? At first sight it appears so.
Trade represents a higher percentage of GNP for the UK
compared with the US, Japan, France
CONFIDENTIAL
and
the FRG
/It
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