TNAG-0152-FCO40-188-Exports-of-cotton-textiles-to-Canada-1969 — Page 130

0003230

.G.F. 323

CONFIDENTIAL

12 -

Encl.2

Section C

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C.T.A. Article 4 Bilateral Agreement

on Cotton Fabrics (Enclosure 2)

Statistical Position

Encl.10

37.

Encl.11

Enclosure 10 shows Hong Kong's share of the total import market in Canada in the years 1966, 1967 and 1968 for cotton fabrics under restraint and also the shares enjoyed by competitor countries, both restrained and unrestrained. Total imports into Canada of these fabrics dropped in 1967 by 4% and in 1968 by 24%, while Hong Kong's share of the import market increased from 6% in 1966 to 7% in 1967, but dropped to 4% in 1968.

38.

In 1968, Hong Kong sustained a loss of over 40% of the total decrease in imports from restrained suppliers. This was the largest decline among the restrained and unrestrained suppliers, with the exception of the United States. General performance against quota in the three-year period has been poor;

the utilisation percentage amounted to 70% in 1966/67, 40% in 1967/68 and only 24% in the period 1st October, 1968 to 30th June, 1969. In non-grey corduroy, no shipment has been made for two consecutive years. (See Enclosure 11). Although other specific categories, including the basket category, had average performance in the first and second years of the agreement, their performance has been poor during the current year. On the whole, only the first of the three years under restraint saw a reasonable utilisation of quota.

So far in the current year only one category, fabrics, other than grey, n.e.s., has reached an export performance against quota exceeding 50%, partly due to exports of cabinet towelling in continuous lengths (see paragraph 28 above). Swing potential between categories is hardly used and utilisation of the unallocated quota has been poor.

Problems

39.

Apart from poor utilisation, the only problem which has arisen with the fabrics bilateral this textile year has been that connected with exports of cabinet towelling. This problem is dealt with in Section B above.

Assessment

40.

The three-year bilateral agreement on cotton fabrics expires on 30th September, 1969. Although doctrinally, there appears to be little justification for continuing the restraint agreement on fabrics, the Department believes there may be advantages in maintaining the status quo for a further year for the reasons set out in paragraph 6 above. The Cotton Textiles Arrangement will expire in 1970 and, before the terms of any further extension of it become known, there may be advantage in having a portion of the import market, expressed in terms of restraint limits, preserved for Hong Kong so that, in negotiating future agreements, Hong Kong would be able to argue for limits similar to those currently in force. The Department feels that, from a practical point of view, little or nothing would be lost by continuing restraints in this field for a further year.

41.

In view of the poor performance under the bilateral, however, should the Canadians express the wish not to renew the agreement the Department believes Hong Kong must accept the position for doctrinal reasons, but on the understanding

/(a)

CONFIDENTIAL