INDUSTRY AND TRADE
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available to the Government through the Cotton Advisory Board, that the British industry faced a difficult situation arising from rapidly increasing imports, particularly from Commonwealth coun- tries with their duty free entry into Britain under Commonwealth preference arrangements.
Had the voluntary restrictions entered into in respect of cotton textiles exported to Britain remained the only barrier to further expansion and development of the Hong Kong textile industry, the economic effect might not have been too serious, since other lucrative and potentially large markets remained open to Hong Kong textiles. Unfortunately, the United States Government, alarmed at the apparent danger to its textile industry presented by increasing imports of textiles, took the initiative of proposing dis- cussions in Geneva between all interested countries to find ways and means of regulating the growth of the trade by international agreement under the aegis of the GATT. The result of these dis- cussions was the Geneva Short Term Cotton Textiles Arrangement to which 18 countries acceded including Hong Kong. This arrange- ment was effective from 1st October 1961 for one year and enabled importing countries to request the exporting country or itself to apply restraints on imports of specific categories of cotton textiles in certain circumstances. During the course of the Short Term Arrangement, the United States Government requested the applica- tion of restraints on 30 categories of Hong Kong cotton textiles representing over 90 per cent of Hong Kong's exports. The Canadian Government also requested restraint on four categories of Hong Kong textiles during the course of the year.
Following further discussions in September 1962 at Geneva, 22 countries, including Hong Kong, acceded to the International Long Term Cotton Textiles Arrangement which succeeded the Short Term Arrangement and which became effective on 1st October 1962 for five years. Acting under the terms of this arrangement, the Hong Kong Government agreed to continue restraint in the first year on exports to America on the 30 categories of textiles restrained during 1961-2. Subsequently, during the course of the first Long Term year the United States Government sought restraint on a further eight categories, in some of which Hong Kong's export performance was negligible.