31.
5.
Howarth then withdrew his proposal that p/p be
2% included in the p/c limits and revived his proposal of growth. When I said this would not be sufficient to cover the trade already done in 1968/69 he suggested a Singapore- type arrangement (debiting 'excess' from future limits). rejected this as being unfair on people who had developed a perfectly legitimate trade.
I
32.
When Howarth said that the Canadians were particu- larly concerned about the 50,000 doz. p/p on order from Hong Kong, I pointed out that this was due to the clamp down on the people who had supplied shirts in 1968. Importers had developed the market in Canada and had now to turn to an alternative source Hong Kong, whence trade in p/p had developed because cotton and p/c were already under restraint.
33.
Valen
I had been suggesting all along that there wasn't really much we could do in the current year (to 30 September 1969) and that we should meet soon (we had proposed July) to conclude arrangements for the coming year, but it now began to appear that Howarth was thinking of retrospective pro- visions to cover p/p shirts for the current year, dealing with them separately from other issues. He reiterated his doubts about being able to get a team together to come to Hong Kong in July and said he had hoped we could settle towels and p/p shirts by correspondence, "otherwise we may have to consider. what action we must take on p/p shirts in the mean- time".
34.
He suggested that if we proposed acceptance of his 2% in principle (but this would be only 1,500 dozen shirts and see paragraph 36 below) but said it was impossible for the current year, he believed this would be sympathetically considered. He was trying to avoid a situation where, owing to Canadian inability to field a team in July, this situation could become a difficult political issue in Canada.
35.
I asked him whether by 'action' he meant imposing a surcharge. He said another thing they could do would be to withdraw m.f.n. treatment. [Note. We believe this would
be contrary to Article I of the G.A.T.T.)
36.
At this point we broke off for lunch, which was given by the Canadians. During lunch I brooded on the problem and eventually, after some more conversation on how we could deal with it, said I would present the following proposal to the Hong Kong Government :
(a)
(b)
(c)
흐흐
(a)
p/p to be included in the p/c restraint;
basic level to be not less than Hong Kong exports in year ending 30 September 1968 (Howarth said these were the only statistics available since Canadian import statistics don't show p/p separ- ately but Annex H to Analysis of Canadian Shirt Industry does show them separately);
excess over this level would have to be accepted in current year to 30 September 1969;
trade to be put under E/A's for
1
remainder of
current year so that only shirts covered by con- firmed contracts as at date of agreement would continue to be shipped.
RESTRICTED
37./