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INDUSTRY AND TRADE
developing countries settled definitively the question of Hong Kong in these negotiations.
United States of America: Exports of cotton textiles to the United States continued to be restrained under a three-year agreement which commenced on October 1, 1970. The restraint limit for the textile year 1970-1 represented an increase of five per cent over that of the previous year.
In May 1971 Mr David M. Kennedy, US Ambassador-at-large, visited Hong Kong in the course of a world tour to hold talks with Hong Kong officials on financial and trade matters, including textiles. The tour included the three other major Asian suppliers of textiles to America-Japan, Taiwan and South Korea. Following these talks, further consultations were held between Hong Kong and American officials in June, September, and October, culminating in Hong Kong sending a negotiating team to Washington in October. The team was accompanied by 11 members of the Textiles Advisory Board. A tentative agreement, subject to ratification by the Hong Kong Government, was subsequently initialled on October 15. Under it, Hong Kong agreed to restrain its exports of wool and man-made fibre textiles to the United States for a period of five years. It was expected that the formal agreement would be signed early-in January 1972.
On August 15, President Nixon announced certain economic and fiscal measures designed to curb inflation, reduce unemployment and correct the balance of payments situation in the United States. Of particular concern to Hong Kong was the imposition of the tem- porary 10 per cent import surcharge. Exempted from the surcharge were imports which were currently not subject to import tariff, as well as those already subject to mandatory quotas. Cotton textile imports were therefore exempted from the surcharge. At the same time it was announced that once the restraint agreements reached with Hong Kong, Japan, Taiwan and South Korea were ratified, the surcharge would be lifted retroactively to October 1, on man-made fibre and wool textiles. Following the agreement on exchange rates reached at the Group of Ten meeting on December 18, President Nixon announced the complete lifting of the 10 per cent surcharge.
Beginning on October 1, the United States re-introduced a tariff- rate quota for imports of certain low-price stainless steel flatware. The quarterly tariff-rate quota for Hong Kong was fixed at 1.5 million pieces, with a small annual growth. Whilst there was no quantitative limitation, imports in excess of the quota were subject to rates of duty which were expected to prove prohibitive.