OYAL KINISTRY FOR
FOREIGN AFFAIRS
1
Memorandum
With reference to Article XXII of the General Agreement on Tariffs and Trade (GATT) and Article 4 of the Long-Term Arrangement regarding International Trade in Gotton Textiles, Sweden requested in April, 1968 consultation with Hong Kong in view of the rapid increase in Swedish imports of knitted
After consul- goods and ready-made clothing from Hong Kong. tations lasting throughout the summer months, measures were introduced to control the Hong Kong exports to Sweden of certain textile goods.
The Swedish Government stressed at the time that the textile. industry in Sweden was facing great difficulties due to a necessary process of rationalization and structural reform. The situation was aggravated by the additional strain of an excessive and simultaneous increase of low-priced textile imports (mainly knitted goods and ready-made clothing) with the result that unemployment in the textile sector threatened to get out of hand.
Against this background, the Government considered it necessary to adopt temporary measures in order to get the development under control. For this purpose negotiations were initiated with certain countries to reach agreement on temporary export limitations on low-priced textile goods to quantities that could be considered more normal.
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This was not an easy decision to take because Sweden has always tried to apply a very liberal trade policy. Among all nations of the world, Sweden is probably having some of the lowest tariffs and the country has less quantity restrictions than most other industrialized areas. It should be stressed that this policy was not changed by the action taken by the Govern- ment on textile imports. Sweden still considers it right and proper to import those productą which can be more favourably produced abroad, and firmly believes in the advantages of an international division of labour.
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When, in spite of these liberal trade traditions, the Govern- ment found it necessary, to act in temporary support of the Swedish textile industry, this decision in itself was a strong indication of the seriousness of the situation on the home market.
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The principal sources of the market disturbances in 1968 were and unfortunately still are Hong Kong, Portugal and Yugoslavia, and consultations were held throughout the year with the respective Governments. Purther talks have been held this year.
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