1
0003230
G.F. 323
}
I
CONFIDENTIAL
App. I
3
in
textile industry in Sweden in 1969-70 were about 30%; production in 1969 of ready-made clothing decreased by 3% in volume in comparison to 1968. Simultaneously, total imports of garments rose by 25%; the knitted garment sector the figure was 36%; Hong Kong's increase in this sector was about 43%. A marked decrease in the number of orders received by Swedish firms so far in 1970 also gave rise to serious concern.
8.
Baron de Geer went on to report that in 1969, a large number of firms were forced to close down, creating serious social as well as economic problems. One factory was expected to close down later this year, putting more than 850 people out of work. In Norrkoping he said, there were some 7,000 people engaged in the textile sector in 1950 but the number now had dwindled to 1,000. The total number of workers in the Swedish textile industry decreased by 7% between January 1968 and January 1970. So far in 1970 28 textile plants had indicated their intention to close down. The Royal Commission recommended in their preliminary findings to promote exports and to improve vocational training but the final conclusions of the Commission had yet to be completed.
9.
To sum up Baron de Geer referred to Hong Kong's exports of clothing to Sweden last year which, in percentage terms, exceeded the increase of Hong Kong's total exports of these items. According to Hong Kong statistics, the figures were 37% and 27% respectively while corresponding 1968 figures were 8% and 26%. He claimed that the figures spoke for themselves and showed that export restrictions during 1969 had only a limited effect; in the circumstances Sweden had to ask for an extension of the restrictions. Baron de Geer's statement is attached as Appendix I to this record.
10.
Mr. Ho questioned whether Macao whose export of textiles to Sweden showed a marked increase in 1969, would be asked to exercise restraint. Baron de Geer replied that the Swedish Government had already approached Portugal for discussions on this matter.
11.
Mr. Ho suggested that the increase of Swedish imparts was due to the buoyant state of the Swedish economy as not 'only Hong Kong but also Denmark. Finland, Portugal, Italy and the U.K. had improved their exports to Sweden.
12.
Baron de Geer commented that Sweden was very concerned over imports from low cost suppliers, such as Hong Kong, South Korea, Portugal, Taiwan and Yugoslavia. Sweden welcomed competition but not from countries whose wage structures were much lower. Mr. Ho countered that many Hong Kong prices were comparable to those of other suppliers. In any event, the question of wage levels in different countries was not relevant to the issue. He could not accept the premise that it was not overall imports but imports from certain sources only that were causing damage to the Swedish industry.
13.
Baron de Geer said that Swedish industrial output had increased by 10% in 1969 over 1968, but in the textiles sector production decreased by 3%; this, according to Swedish opinion, was proof of damage. If Hong Kong prices were at the same level as those of other countries, he might agree that Hong Kong was not the cause of market disruption. Mr. Ho pointed out that Hong Kong's products generally belonged to the lower price range, whilst Swedish production was geared to the upper end of the market. It followed that competition between Hong Kong and Swedish products did not exist and if the Swedish industry was suffering damage it was from those countries which competed with the Swedish industry in price, quality and fashion.
/Baron de Geer
CONFIDENTIAL