XN000022-1979-12-18 — Page 7

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TUESDAY, DECEMBER 18, 1979

HIGHER IMPORT DUTY ON HK'S WEARING APPAREL TO CANADA

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THE CANADIAN AUTHORITIES HAVE ADVISED THE HONG KONG GOVERNMENT THAT AS FROM DECEMBER 14 THE VALUE ON WHICH DUTY IS CALCULATED ON IMPORTS OF WEARING APPAREL FROM HONG KONG HAS BEEN INCREASED BY 25 PER CENT ABOVE THE SHIPPER'S SELLING PRICE.

COMMENTING ON THIS ACTION THE DIRECTOR OF TRADE, INDUSTRY AND CUSTOMS, MR. WILLIAM DORWARD, SAID HE WAS BOTH SURPRISED AND DISAPPOINTED.

+ I WENT TO OTTAWA IN OCTOBER FOR URGENT DISCUSSIONS WHEN WE FIRST HEARD THAT SOMETHING OF THIS KIND WAS CONTEMPLATED,+ MR. DORWARD SAID.

+AT THAT TIME WE WERE TOLD THE INCREASE WAS LIKELY TO BE ABOUT ONE-THIRD.+

DISCUSSIONS HELD IN OTTAWA THEN BROUGHT ABOUT A DELAY IN THE DUTY INCREASE. THE HONG KONG REPRESENTATIVES ARGUED THAT THE BASIS FOR THE ACTION WAS UNSOUND.

+ THE CANADIAN AUTHORITIES WERE PREPARING TO ACT ON DATA WHICH HAD BEEN COLLECTED IN HONG KONG OVER A YEAR AGO. I ARGUED THEN, AND STILL MAINTAIN, THAT IT WAS HOPELESSLY OUT-OF-DATE AND IN ANY CASE DID NOT JUSTIFY ANY SUCH ACTION.+

THE DEPARTMENT OF TRADE, INDUSTRY AND CUSTOMS HAD CO-OPERATED WITH CANADIAN CUSTOMS OFFICIALS WHO VISITED HONG KONG IN 1978. THE INFORMATION THEY COLLECTED RELATED TO TRADE WHICH HAD BEEN CONDUCTED SEVERAL MONTHS BEFORE.

MR. DORWARD SAID HE HAD POINTED OUT IN OTTAWA THAT TRADING CIRCUMSTANCES HAD CHANGED SUBSTANTIALLY SINCE THEN. FOR A START, HE SAID, THE IMPORT CONTROLS CANADA OPERATED IN 1978 WERE REPLACED THIS YEAR BY EXPORT CONTROLS AND THAT ALMOST

INVARIABLY HAS THE EFFECT OF INCREASING SELLING PRICES. AND THERE HAVE ALSO BEEN CHANGES IN EXCHANGE RATES, RAW MATERIAL PROCESS AND SO ON. DATA COLLECTED ON TRADE WHICH TOOK PLACE UP TO TWO YEARS AGO IS OBVIOUSLY AN UNREALISTIC BASIS FOR DUTY ASSESSMENT.*

THE HONG KONG GOVERNMENT IS TO ASK CANADA TO DO AN URGENT, UP-TO-DATE ENQUIRY ON HONG KONG EXPORT PRICES.

A GOVERNMENT SPOKESMAN SAID THAT IF SUCH AN ENQUIRY IS DONE WITH FAIR REGARD TO THE TRADING CIRCUMSTANCES OF HONG KONG THERE SHOULD BE AMPLE EVIDENCE TO JUSTIFY THE REMOVAL OF THIS ARBITRARY INCREASE IN VALUATION.

+THE ABSENCE OF SUBSIDIES, TAX REBATES AND THE LIKE MEANS THAT THE HONG KONG EXPORT PRICE REPRESENTS THE TRUE MARKET VALUE AND SHOULD BE RECOGNISED AS SUCH IN CANADA OR ANYWHERE ELSE,+ HE SAID.

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