9. It was suggested that, rather than growing unemployment, there was actually a labour shortage in the industry, and a recent speech by the President of A.T.M.I. was quoted to that effect. Mr. Blackman admitted that there were tight spots, but said that unemployment was a serious problem among the unskilled minority groups, and it was higher in this industry than average. For example the level of unemployment had been 11.4% in 1961, and was still 6.1% in 1968 as against 3.3% in manufacturing industry in general.
10. At this point Mr. Ridley pointed out that these figures showed an improving trend and that this undermined the case put forward by Mr. Stans earlier, which had been based on a trend of deterioration in the industry. The Americans avoided answering this directly, and said that investment in the textile industry had risen from $500 billion when the cotton LTA was introduced to $1,100 billion in 1966, but had been declining since and was only 8750 billion in 1968. When they were asked how these figures were compatible with the Department of Commerce statement that investment had increased.overall by 14%, whereas in the textile industry was up by 36%, Mr. Nehmer said that these figures were for publicly owned firms only, and did not include small private enterprises. Furthermore,
the Business Investment Office always tended to estimate high, and he thought the next set of estimates would be lower..
Profits
11. Mr. Hughes asked how the American case was compatible with the growth in profits in the textile industry being higher than in the manufacturing industry as a whole. The reply was that the profits were lower to start with. While profits in manufacturing industry (after taxes) were 5.1% in 1968 (up from 5.0% in 1967) profits of textile mills were only 3.1% in 1968 (up from 2.8% in 1967) and in the apparel and finished goods industry were only 2.4% in 1968 (compared with 2.3% in 1967). There was some discussion of the differences between the U.S. figures and ours, and whether gross or net profits or the rate of return on capital were the most significant measure of health. Apart from details, however, Mr. Ridley pointed out again that the picture was one of improvement in the relative position of the industry; this conflicted with the American claim that the trend indicated future disruption of the industry. There was no reply.
Hong Kong and the l.d.c.'s
12. Sir Arthur Snelling emphasised that, although the United States might regard Japan and Hong Kong as being in a separate category from the less developed countries, we regarded Hong Kong as a l.d.c. Any agreement envisaged would have
it was hard to believe that Singapore and India could be excluded for long; had the United States given thought to the problems it would create in UNCTAD and what they would offer the 1.d.c.'s?
to cover all l.d.c.'s
13. Mr. Nehmer said that these were among the reasons for wanting a multilateral solution; in any case bilateral solutions would require legislation. This would be the only way to assure Hong Kong that other countries would not steal their share of the market. The U.S. would "offer their credentials" in the fair operation of the cotton L.T.A.; the alternative would be unilateral restrictions. He was not sure which sectors of the industry were being disrupted by imports from Hong Kong, but he thought that it was of m.m.f. and wool apparel.
14. When pressed on how the U.S. saw itself acting in accord with Part IV of the GATT, which prohibited restraints against the l.d.c.'s "save in compelling circumstances", Mr. Katz said that they regarded this phrase as a major qualification, and that an L.T.A. would permit growth of imports. As a result of the cotton LTA many 1.d.c.'s now had a share of markets they would otherwise have been unable to enter.
Conclusion
15. Mr. Nehrer summed up the American case by saying that they were seeking.
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