Annex A
Canadian Imports of Hong Kong
Blended Fibre Garments.
Earlier negotiations between Hong Kong and Canada on Polyester/Cotton Garments
Canada attempted unsuccessfully in 1965 to take action against
Hong Kong woven synthetic shirts, on the grounds that, contrary
to Article 6(b) of the Long Term Arrangement on Cotton Textiles,
exports had been increased deliberately to circumvent the
controls on woven cotton shirts. Hong Kong was able to show that
her cotton shirt quota was under utilised (as is still the case),
and therefore substitution as defined in the LTA could not be
taking place.
Hong Kong rejected the Canadian suggestion in the autumn of
1966 that the cotton garment quotas should be grossed up to
include garments of synthetic fibres. However, consultations were
held in the spring of 1967 to determine whether Hong Kong
polyester/cotton shirts blouses and slacks were disrupting the
Canadian market. At that time the Canadian authorities made much
of the political pressures exerted by their domestic producers in
the Prairies. They said that if agreement could not be reached
they would bring Hong Kong's trade to a stop by imposing a penal
duty even though this would have been contrary to the G.A.T.T.
We had grave misgivings about allowing Hong Kong to set a
precedent by entering into a restraint agreement outside the
cotton field and obtained a month's grace to consider the various
policy issues involved. At the end of this period, we agreed
W
reluctantly because we saw no other way out of the impasse
that Hong Kong should announce that she had decided unilaterally
to restrict exports to Canada of the three types of polyester/
cotton garment. At our insistence, in informing the Canadians
that restraints would be in operation for the year commencing
1st October, 1967, the Hong Kongers stipulated that the decision
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