099$230
G.F. 323
CONFIDENTIAL
3
9.
The Department proposes to ask the Australians to provide a detailed breakdown of imports by country of the fabrics in question. And as the figures for Australian production quoted in the penultimate paragraph of the Memorandum at enclosure 1 refer apparently to all drills, denims, dungarees and jeans, production figures for the allegedly sensitive constructions will also be requested.
10.
(c) Coverage
Apart from the problem of statistical reconciliation, it appears that any restraint agreement based upon the narrow de- finition of fabric on which the Australians have requested restraint might create administrative control problems. On the strength of Australian figures, however, it would seem that the sensitive con- structions represent only something like half of total exports to Australia of cotton drills, denims etc.; and so to suggest for the sake of precise export control that restraint might be applied to all such fabrics, if a case for restraint can in fact be substantiated, would seem excessively restrictive. Bearing in mind, however, that the trade involved is relatively small from Hong Kong's point of view, but that this restraint request might be the forerunner of others, members are asked to advise on any difficulties they envisage restraint on the fabrics con- cerned entailing. It would obviously not be in Hong Kong's longer term interests to enter into a restraint agreement which, by being difficult to administer and control, might bring the entire export control system into disrepute. In particular, members' advice would be welcome on the likelihood of evasion of control by a variation in fabric blends.
Conclusion
11.
Members are invited to note the further Australian Memorandum and to advise whether Hong Kong should respond in the Encl.2 terms of the draft Memorandum at Enclosure 2. Members are also invited to advise on the possible difficulties envisaged in the preceding paragraph.
Encls:
Commerce and Industry Department, 11th March, 1968.
CONFIDENTIAL