share of the import market and of consumption fell from 1967 to 1968 and her position in volume terms had also worsened. Hong Kong was losing ground in relation to her competitors, in particular the Japanese who were now, in 1969, the leading suppliers. In the case of Japan, despite restraint agreements, the situation seemed to have got out of control; in scrutiniɛing the trade figures we had been unable to reconcile the Canadian import with Japanese export position on a total market basis.
Adopting a fibre by fibre approach for Hong Kong, the Canadian position on polyester blends broke down: imports had risen much more rapidly than production,
The two prinoi- which nevertheless had almost quadrupled between 1966 and 1968.
were both
The
pal factors handicapping the shirt manufacturers the very high tariff on poly- ester/cotton cloth and the high price of Dominion Textiles polyester currently under review by the Canadian authorities, and in the case of the tariff,
Having said that the B.O.T. we expected the position would have improved by 1970. felt the Canadians could not really substantiate a case against Hong Kong on shirte as a whole, Mr. Stewart recognised, however, that for polyester/cotton shirts, at least, the Hong Kong Government would probably have to agree to the Canadian request, since this was being put forward as a result of heavy political pressure. polyester/polynosic case was even more difficult for the Canadians to maintain, As the Hong Kong largely due to the lack of detailed statistical information. Government in their brief to the Textile Advisory Board had already strongly rejected one ofthe Canadians two grounds for seeking this request, viz, that polyester/polynosic is a direct substitute for cotton, they should follow on from this, work through the figures with the Canadians, and try to persuade the Canadians to provide better arguments in support of their injury claim, rather than accept the request on the basis of their feeling that the Canadians would take action, irre- spective of whether or not they could substantiate their claim of damage from Hong Kong imports.
If the Canadians case on shirts was as strong as they had made out to Hong Kong, and which the Hong Kong team seemed for the most part prepared to accept,
It was then the Canadians should take their case to the GATT under Article XIX. likely that if the Canadians did have an Article XIX case, the U.S.A. could put up a caso, too. The U.K. would not object to an airing of the case and a decision in the GATT, but in that want she would probably want to take the opportunity to examine the strength of her own case for restraint.
Hong Kong's View
The
The Hong Kong philosophy on shirts, blouses and trousers was based on the fact that fibre-by-fibre, item-by-item voluntary restraints on exports which left the administration of the controls in the hands of the Hong Kong authorities (1.e. piecemeal restraints which could be of circumvented as had happened in the case of polyester/polynosic garments) allowed Hong Kong the maximum amount of flexi-
Outside the items which bility to expand trade within a system of restrictions. had been specifically made the subject of quotas, it lay within the ingenuity of the Hong Kong manufacturer to sell as he best might in the overseas market. Canadian case of injury as a result of imports of shirts from Hong Kong was accepted by Hong Kong, who saw disruption occuring in 1967 and continuing through 1968. Vr
Jones expected that production in 1969 would be hit by the 1968 imports and that there would therefore be ample room for Hong Kong's polyester/ polyncsic shirts; accordingly, in the negotiations with Canada, they would be aiming at as much growth as possible of the existing restraint on polyester blends and roll-in of polyester/polynosic with polyester/cotton. They would not be dis- lodged from this position, and were not prepared to accept a B.0.T. veto on shirts or on the other garments.
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Blouses
Hong Kong's view
The Hong Kong team could see no prospect of the Canadians agreeing to relax the restraints on blouses, even though in the case of cotton they were virtually meaningless usage was less than 50% in 1968. In the case of m.n.f. blouses,
2.