TNAG-0152-FCO40-188-Exports-of-cotton-textiles-to-Canada-1969 — Page 116

d) S.40A(7)(c) could not be applied to goods which were entitled to entry under the British Preferential Tariff or any lower tariff. Imports from Ilong Kong were not entitled to entry under the British

Preferential tariff. On the other hand, the preference which we enjoyed under the 1958 Act has now been removed. Were we consulted about this under the

Fleming/Eccles Exchange of Letters? The point may be relevant to our position on cotton textiles;

e) S.40A(7)(c) was widely drawn in that a duty could be imposed if the interests of Canadian producers or manufac- turers were prejudiced or injured. The new wording is largely based on Article XIX of the GATT, with the important exception that the words "in such increased quantities" in Article XIX 1(a) have been omitted.

f)

S.40A(7)(c) does not prescribe a limit to the amount of duty which may be imposed, but the new provision states, for what it is worth, that the rate of surcharge should not exceed such rate as in the opinion of the Governor in Council is sufficient to prevent further injury or the threat of injury

This

4.

We must assume that it was not the intention of the Canadian Government to take action under Article XIX which would be inconsistent with the GATT. The new provision clearly goes wider than Article XIX, as does the U.K. anti-dumping legislation, but the Canadian authorities no doubt felt, as we did, that one was entitled to take wider powers to deal with imports from c.g. Eastern Europe. The more important question, perhaps, is whether the new provision can be applied to imports from all countries, as would be required if action were to be taken under Article XIX. I believe it could be argued, and indeed it must have been accepted by those who believe that Article XIX must be applied non-discriminatorily, that, e.g. a shirt is a shirt is a shirt and that in practice the Governor in Council ought properly to XXXX reach the conclusion that where serious injury was being caused or threatened to the Canadian producers, the determination ought to apply to imports from all countries without exception. evidently did not happen when action was taken against Malaysia, which is a de facto member of the GATT, but I do not think it precludes us from saying to the Canadians that a surtax which was imposed on imports from long Kong and not on other countries was inconsistent with the GATT and would not be acceptable to G. In other words, we would be free to retaliate on behalf of Hong Kong. This might be strictly speaking illegal, but of course the Canadians would not be able to raise the matter in the GATT because their own action *xx would be illegal: the GATT does not provide for the Malaysian type of case where the Canadians want to impose a penal duty on imports to compel the exporting country to agree to voluntary restraint. I suspect that it might have been open, in this particulaycase, for an importer to claim that the Governor in Council had exceeded his powers in imposing a penal rate in tuis case, but that is a secondary issue and of course much more difficult to establish.

MR. DUNNETT (CR1

C.

.c. Mr. Kezumi.9,

Mr. Toms

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1

Mr. Jup

Astewart.

S. STEWART

Ind. 1 Div. 7/8/69.

Min be cart lint where will it fat

دان

Hr: Hehead (FCO) Kr. Carter (FCO) Thin Welch (I.1)