TNAG-0153-FCO40-189-Exports-of-cotton-textiles-to-Canada-1969 — Page 101

.. muntell

taken under the Agreement are not to be considered as lending themselves to application in other fields. Any attempt to do xx a package deal covering cotton and non-cotton would be a matter of legitimate concern to the United Kingdom.

8.

It should be mentioned in passing that imports of "cabinet towelling" is also causing us considerable concern.

We have not had time to study the details of the issue between Hong Kong and Canada, but in our case we have recently discovered that, because these fabrics are generally less than 18" wide, they have come in free from control as being "narrow fabrics". It was certainly not our intention that they should escape narrow hand towels are not free of control and we may have to amend the import licences to bring them under control.

9.

St

It appears that Hong Kong is reconciled to the possibility of a surcharge being imposed on imports of non-cotton shirts, since she is putting forward arguments for excluding those made predominantly of cotton. My own view is that the Canadians would be in difficulty under Article 7(1) of the L.F.A. if they imposed a surcharge on goods falling within the ambit of theAgreement.

10.

There are two reasons why the Canadians might do nothing in the present situation :

11.

(1) they have not reached agreement with the Japanese, and (ii) they have remitted to their Tariff Board the question of the duty on polyester-cotton cloth. I suggest that in these circumstances, there is no danger of the Canadians acting precipitously so long as Hong Kong is prepared for the time being to take steps to ensure that exports do not rise much abae the level of recent months. The United Kingdom happens to be in the same position vis-a-vis Portugal on cotton textiles where the Agreement has been abrogated but we have decided that, unless the position gets out of hand, we had better lie low and say nothing.

Incidentally, would we mind if the Canadians raised the tariff against Hong Kong by invoking Article XIX in such a way that the duty was related to the price of the imported shirts? This is in line with what we have done on cotton and seems to me

The Americans, for a very sensible way out of the difficulty. example, have a specific duty on shirts costing less than a certain amount. A minimum specific would, of course, hit imports from Japan and the Canadians would obviously have to exercise great care in fixing the ra.e of duty. We might even persuade the Canadians to ask their Tariff Board to look at the duty on shirts along with the duty on polyester/cotton cloth.

S. STEWART,

21st August 1969.

KR. DUNNETT (CRE)

c.c. Mr. Kemmis (CRE),

Mr. Whitehad (FCO),✓ Mr. Jupp (1.1) Mr. Toms CRE) Miss Welch (I.1)