TNAG-0142-FCO40-178-Long-term-policy-on-International-trade-in-textiles-1969 — Page 76

R&R K6131

Reference..

International trade in textiles

Nr. Stewart

SP2)

I have no attempted

To unravel the arquitet S take it that this is a follow-up of the corespondence with th-Jones.

5-27/00

Thank you for sending me a copy of lr Sellers letter, dated 9th October, to my namesake in the FCco. I hope that the Hong Kong authorities are not arguing that the figures in the tablet attached to Mr Sellers' letter demonstrate that Canada, durile Germany, Norway and Sweden had a better case than the U.K. for imposing restraints on shirts, etc., but in case they are I think it would be as well if I draw attention to the lack of any pattern in the figures. In the first column (imports from Hong as a percentage of production) the figures for the different items range from 13 to 639 per cent: in the second (percentage of total imports) from 7 to 97 per cent: and in the third (percentage of consumption) from 5 to 69 per cent. Which, if any, of these is the right figure for comparison with the U.K. position? The figures for the same item are also markedly different as between different countries. In the case of polyester/cotton shirts, for example, imports from Hong Kong as a percentage of consumption were 16 per cent in the case of Canada and 46 per cent in the case of Sweden. For blouses, the corresponding figures were 11 per cent for Canada, 45 per cent for Norway and 64 per cent for Sweden (where the item was only put on E.A.!). And there are also cases where the figures for virtully the same item are different within the same country. In the case of women's and girls' knitwear, imports from Hong Kong as a percentage of consumption in Sweden amounted to

5 per cent in the case of synthetic and 69 per cent in the case of wool. The combined figure was 16 per cent. Which of these is the "right" figure for comparison with the U.K. and are they "better" or "worse" than the corresponding Norwegian figures of 41, 11 and 21 per cent?

2.

I think that we are both agreed that what matters in deciding whether an Article XIX type of situation exists is the likely effect of imports on the production of like or directly competitive products. It is therefore significant that the table does not include a column showing what happened to domestic production in each case. If it had it would have shown that production of polyester-cotton shirts, for example, increased from 242,000 th. doz. to 831,000 th.doz. in Canada between 1966 and 1968 - the Canadian restrictions were imposed in 1967 and no growth was allowed in 1968 and from 242,000 to 400,000 pieces in Sweden. I know you take the view that the importing country does not have to show that production has fallen before it can invoke Article XIX, but I think you would agree that both countries would have had difficulty in convincing the GATT that they had got a reasonable case for restraint if the argument had been restricted to trade in polyester-shirts. We were not aware of what was happening to production when we agreed to the Canadian restraint in 1967 otherwise we might have taken a different view and in the case of Sweden we (and Hong Kong) accepted that it was reasonable in the circumstances to look at what had been happening in the whole of the shirt market (including woven cotton and knitted nylon) in establishing whether or not the Swedish shirt industry had been injured by imports. The fact that in both cases production of all kinds of shirts had fallen made it possible for us to agree that the importing country had at least a prima facie case for imposing restrictions.

3. Countries like Canada, Norway and Sweden have always imported a large part of their requirements of consumer goods and for this reason they cannot reasonably claim that they have been more virtuous than e.g. the U.S.A. and the U.K., in cases where they import a higher proportion of their requirements from the developing countries. The Canadians, for example, have been making some play with the fact that in 1968 their imports of textiles and clothing totalled $22.81 per head compared with