0003230
G.F. 323
CONFIDENTIAL
24.
The consultation levels for the following items were reached on the dates indicated:-
(a) industrial wiper towels
(b) terry towels, jacquard
(c) cabinet towels
24th January, 1969;
18th April, 1969;
24th May, 1969.
The
The Canadian Government has, following the Department's letters of notification, requested consultation in each case. Canadians were in fact unable to consult immediately the levels were reached, because they needed time to collect relevant information from the Canadian industry. The result has been that exports of these items have been frozen at the respective consultation levels since the above dates.
25.
The Canadian Government has now presented its case. It has drawn attention to the general decline in employment in the Canadian cotton towel manufacturing industry from 1,588 workers in January 1968 to 1,331 workers in January 1969; and from 795,000 man-hours worked in the first three months of 1968 to 678,797 in the same period in 1969 and a general decline in production. It has requested that the following sub-limits be imposed for the remainder of the current textile year:
26.
(a) Industrial wiper towels the consultation level
of 200,000 lb. to be confirmed as the effective sub-limit;
(b) Terry jacquard towels the consultation level
of 250,000 lb. to be increased by 71% to 268,750 lb. and this level to be confirmed as the sub-limit;
(c) Cabinet towels the consultation level of
170,000 lb. to be increased by 8,998 lb. (the latter representing one outstanding application for an export authorisation), and the level of 178,998 lb. to be confirmed as the sub-limit.
The towel problem is further complicated by a side issue involving a difference in opinion between the Canadian and Hong Kong Governments over classification. The Department's policy has been to classify huckback or dobby weave towels, 11" to 12" wide and 45 yards long, as cabinet towels. As such they are caught under the Article 3 agreement. Cabinet towelling of similar construction but in continuous longths of multiples of 45 yards are classified by the Department as fabrics, n.e.s., other than grey. This towelling is thus caught under the Article 4 bilateral agreement on fabrics. The Canadians argue that that since cabinet towelling requires only simple cutting and hemming to convert it to cabinet towels, Hong Kong's exports of cabinet towelling should be counted against the cabinet towel consultation level. Hong Kong's position has been that, since towelling is a fabric, towels and towelling are subject to restraint under two separate agreements and the Hong Kong Government has no legal power to refuse a licence to cover towelling if appropriate fabrics quotas are available.
/27.
CONFIDENTIAL