0003230 G.F. 323
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2
Encl.3
Encl.4
Encl.5
Encl.6
Department's Comments
5.
(a) Australian invocation of C.T.A.
This is not only the first request made to Hong Kong but, as far as can be ascertained, the first made to any exporter (by Australia under either the Cotton Textiles Arrangement or the
Long Term Arrangement which preceded it.
6.
(b) Statistical reconciliation
It has not proved possible to reconcile the figures quoted in the Australian note with Hong Kong trade statistics (being in the Scheduled Territories no textile export licences have been required for shipments to Australia) because the Australian tariff position given appears to cover only constructions weighing between 6 and 15 ounces a sq. yd. and containing less than 20% by weight of wool or man made fibre, grey or finished. According to Hong Kong trade statistics, exports of all cotton denim, jean and drill to Australia in the 4th and 5th Long Term Years were 2,119,612 sq. yds. (1,067,200) and 3,666,479 sq. yds. (1,337,700) respectively. The figures in brackets are those in the Australian note. Exports to Australia represented 3% and 4.5% of total Hong Kong exports of such fabrics in these two years.
7.
Statistics showing imports from Hong Kong of all denims, drills, dungarees and jeans in Australian fiscal years July to June 1965/66 and 1966/67 are given in Enclosure 3. While the Australian request alleged that imports of the constructions which form the subject of the restraint request increased markedly (see paragraph 2(a) above), Enclosure 3 indicates that the total import market declined slightly while Hong Kong's share of it declined relatively and absolutely over a roughly comparable period. This trend is not, however, reflected in Hong Kong export statistics for the same periods. They show (see Enclosure 4) a substantial increase in the second period over the first.
8.
The Department is unable at this stage to offer any ex- planation of this discrepancy, but the Hong Kong figures appear to be more in line with the general trend of cotton fabric exports to Australia which is examined below.
9.
(c) Australian import market
To put the Australian request and its possible consequences into perspective, Enclosure 5 gives a broad breakdown of Hong Kong/ Australia trade in 1966 and 1967. It indicates that the balance in Australia's favour has been pared down, despite a 25% increase in Hong Kong imports; and that our exports of cotton fabrics increased by $23.5 million which, being of the order of 55%, was commensurate with the overall increase in exports. Exports of cotton denims, drills and jeans represented 8.8% and 7.9% by value of total cotton fabric exports to Australia during these two years. It is noteworthy that exports of all (not only cotton) clothing increased by $15 million, or roughly 75%, in the same period.
10.
Enclosure 6 contains a very imperfect table which tries to show the shares of the Australian import market for cotton fabrics and all clothing enjoyed by Hong Kong and Japan. The figures, which are drawn from different sources, indicate that Hong Kong has been gaining at the expense of Japan in both sectors, although in absolute
/terms
CONFIDENTIAL