TNAG-0152-FCO40-188-Exports-of-cotton-textiles-to-Canada-1969 — Page 27

Reference....

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f)

E)

Profine

provinces

4.

The Hong Kong quota for polyester-cotton shirts was put at 11-12 per cent of consumption in 1967. We cannot make the same calculation for 1968 because we lack import figures, but the Hong Kong quota for 1967/68 was equivalent to only 9 per cent of Canadian production of blended cotton/m.m.f." shirts in 1968, and we know that imports from other sources had risen markedly.

Why cannot the Canadian shirt industry compete behind a 27 per cent tariff (i.e. 10 percentage points higher than our tariff). Is it because of the 40 per cent tariff on imported cloth? Mr. Rodney Grey admitted in 1967 that a wide variety of short runs in a small market made polyester/cotton cloth production uneconomic in Canada and within the past few days the Canadian Tariff Board has been asked to enquire into the position and make recommendations. Canadian shirt manufacturers have meanwhile been allowed to import part of their require- ments duty-free.

In 1967 the threat to employment was said to be in the 2 Praing proces

Praine^UCESS. Now the talk is only of Quebec and Ontario. The 45 firms between them appear to have employed only some 1,600. What is this in a population of 20 million. We are expecting to get rid of another 55,000 in the U.K. cotton industry.

would

My judgment is that the Canadians/have very considerable difficulty in dealing with this line of attack, particularly in view of the fact that both conditions attached to the unilateral restraint arrangement have been breached: that it was claimed as a precedent by Sweden and that/other countries have taken advantage of the position to increase their trade at Hong Kong's expense.

5.

Incidentally, you should know that on 30th May 1968 Mr. Robin Grey wrote to Dorward about the surcharge which Canada had imposed (under the old legislation) on Singapore, saying :-

The

2 I do not myself think that you need worry about Canada applying this kind of treatment to Hong Kong, and I think you will make a grave mistake my underlining if you let this kind of possibility weigh your decisions. Canadians chose to act against Singapore because they thought they could get away with it. I know that, apart from possible retaliation against their exports, they fear that they may have whetted the appetite of their textile industry

But again, I and recognise that they have taken some risk. don't think that they will lightly try it on you. were very surprised that there had been no reaction of any kind from Singapore up to the date when I saw them."

And they

My predecessor here had a lot of experience in this field, including a spell in C.R.E.1, and I suggest that rather more importance should be attached to this advice than to the hurried comments of Mr. Tola Rogers, who seems to have become so heavily engaged in the trans- former affair that he is unlikely to have had time to study this matter in any great detail. As you know, the Canadians have already mooted the possibility of taking this to the G.A.T.T. under Article XIX and Ir. Robin Gray told me the other day that he thought there would be no difficulty about this if we wanted to engineer it; he could drop a personal line to Mr. Rodney Grey.

MR. DUNNETT (CRE)

P.T.0. for circulation list

S. STEWART,

Ind. 1 Div. 13th August 1969