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be exercised over Hong Kong's exports and particularly at the impracticable suggestion that p/p shirts should be in- cluded in the p/c limits, when this decline had occurred despite our shipping about 40,000 doz. p/p in 1968.
16.
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Howarth said that the situation in the shirt industry' and in the industry providing shirting (I made the point some- where that this industry can't provide the full range of shirtings required for the shirt manufacturers) had deteriorated very badly in 1968. He admitted that this was not due to Hong Kong. It stemmed from the heavily increased imports from Malaysia, Singapore, South Korea and, to some extent, Taiwan. Import surcharges had been imposed on Malasia and Korea and had stopped the trade (importers were now protesting about this), negotiated agreement with Singapore had been reached last year and negotiations were proceeding with Japan and Taiwan. They were seeking a considerable reduction in all shirts from Taiwan.
He also mentioned unemployment. I said I expected 'unemployment' or rather a reduction in the numbers required in textile industries everywhere. It was a part of necessary rationalisation. I instanced the German industry (reduction of labour force by 140,000 to 500,000 between 1962 and 1968, to produce an efficient industry, spurred by the competition of imports). I referred to Annex A-1 handed over by the Canadians and said I thought most of the factories were far too small to be viable and had to close soon anyway.Howarth | maintained that a small shirt manufacturer could still be viable. I said Yes, in the high price small volume end of the market where we don't compete.
17.
18.
Howarth maintained that the Canadian Government too expected employment in the textile industry to decline but was concerned at the pace of this change. (We had been interrupted by a message that Courtaulds had just announced the closure of a 600-job filament rayon plant. I was unim--- pressed and I think Howarth realised that the announcement was probably intended to increase the pressure: Courtaulds is now a 'political' firm if ever there was one.)
19.
Howarth then gave us a general talk on the political situation vis-a-vis the textile industry. The Canadian Government has been under heavy pressure from the textile industry generally and the apparel sector as a whole. The shirt manufacturers had become particularly vocal from early 1969 (when they began to get the figures on what had happened in 1968 see paragraph 15).
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The Manufacturers had asked for global quotas. had got the subject to a high political level, involving the Quebec Government, whose Premier had written to the P.M. in strong terms.
21.
Federal Ministers had resisted these pressures as something they had to live with, provided that the situation didn't get out of control but the shirt manufacturers claimed that was just what had happened.
22.
All this was relevant to the Canadian attitude to the U.S. policy as pursued by Mr. Stans. On this the Canadian Government's line described by Howarth was identical with our
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