TNAG-0152-FCO40-188-Exports-of-cotton-textiles-to-Canada-1969 — Page 41

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G.F. 323

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App.VI

It cannot be invoked in cases where the substitution of directly competitive fibres has been due to commercial or technical factors. The department doubts if the Canadians were able to present a case which satisfied the stringent requirement of Article 6(b), and considers that Taiwan's acceptance has created a possibly damaging precedent. In this connection it should be noted that an earlier Canadian request to Hong Kong under Article 6(b) was rejected by Hong Kong on the grounds that the

requirements of this Article had not been met, and that it was later tacitly dropped. Instead the problem was subsequently dealt with on an ad hoc basis outside the Cotton Textiles Arrangement (see last sentence of paragraph 1 above).

4.

Canada's agreements with Singapore and Malaysia, which cover both cotton and polyester/cotton garments, were notified to the G.A.T.T. as being pursuant to Article 6 of the C.T.A. The Canadians are believed to regard these agreements as being both under Article 6(b) and 6(c) but in the department's view action could only be properly taken under Article 6(c) of the Arrangement and then only in respect of the cotton items involved. (Article 6(c) refers to action taken against non- participants to the Arrangement: Singapore and Malaysia are non-participants.)

5.

A comparative table setting out the respective restraint levels stipulated in Canada's agreements with Hong Kong, Taiwan, Singapore, Malaysia, Japan and South Korea is at Appendix VI. The rest of this Memorandum examines each of these agreements in turn with a view to determining whether Hong Kong would appear to have been penalised in the Canadian textile import market in relation to its main competitors as a result of its undertakings to restrain exports.

Restraint Agreement with Taiwan

(a) Restraint on Cotton and Ravon

6.

The Canadian cotton and rayon restraint agreement with Taiwan for the year ending 30th June, 1969 (Appendix App.II() II(A)) remains unchanged from that for the previous year,

except for the restraint limit on cotton knitted shirts which was increased from 47,586 dozen to 49,014 dozen.

App.VII

7.

The restraint limits and the coverage of the Taiwan agreements on cotton fabrics and cotton and rayon garments are compared with the Hong Kong agreements on cotton fabrics, garments and towels at Appendix VII. It will be noted that, where an item is restrained in both Hong Kong and Taiwan, the restraint limits for Hong Kong are in all cases considerably higher than for Taiwan. The following points are noteworthy:

(i)

Cotton blouses are restrained by Hong Kong but not by Taiwan;

(ii) cotton knitted shirts are restrained by

Taiwan but not by Hong Kong (they were de-restrained from 1st October, 1967);

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CONFIDENTIAL