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eroded; and the second proviso to her 1967 undertaking has undoubtedly been breached.
Precedent set by Hong Kong's restraint on polyester/cotton exracts to Canada
have sine 1967 persuaded Hong Kong
We
Two other countries Sweden and Norway
-
to place restraints on exports to them of certain non-cotton garments. ? →understand W. Germany is considering a similar approach. The precedent set by
Hong Kong's undertaking on exports to Canada has been widely quoted, notably by the Americans in support of their argument that other countries, unlike the U.S.A., do not provide an open market for man-made fibre and wool imports. first of the two conditions in Hong Kong's undertaking has therefore been breached, as well as the second.
The present negotiations between Hong Kong and Canada
The
The
The restraints on polyester/cotton shirts run to the 30th September, 1969. Canadian Government wishes not only to renew them, but also to bring woven polyester/polynosic shirts under restraint immediately. They argue that polynosic is a direct substitute for cotton; and that Canadian shirt manufacturer: are being damaged by imports of polyester/polynosic shirts from Hong Kong. The Hong Kong Commerce and Industry Department does not accept the Canadian argument on the substitutability of polynosic with cotton.
In consulting its Textile Advisory Board about the negotiating line to be taken on polyester/polynosic shirts, the Commerce and Industry Department (a) suppressed the fact that they had statistics of Canadian shirt production (figures which are, in fact, damaging to the Canadian case); and
(b) talked in general terms about the effect of imports (not specifically imports from Hong Kong) on the Canadian shirt industry, and of the political pressures on the Canadian Government for increased protection. The Department expressed the view that "irrespective of whether the Canadians can fully substantiate their claim of damage as a result of imports of polyester/polynosic shirts", the Canadian Government would take steps to protect domestic producers.
Analysis of the Canadian case
Annex A to this paper may help to put this problem into perspective. Between 1967 and 1968, Canadian imports of all shirts (except T shirts) rose from 1,509,000 dozen in 1967 to 2,058,000 dozen in 1968. But Hong Kong's share of the import market fell from 31% to 20%; the quantity too showed a significant drop. Canadian imports of polyester/polynosic shirts from Hong Kong amounted to 41,000 dozen in 1968; we have no separate import figures for polyester/cotton shirts in 1968, but assuming that the 75,000 dozen quote was filled, Hong Kong polyester/polynosic plus polyester/cotton shirts would have totalled 116,000 dozen less that 6% of Canadian shirt imports.
In considering whether Canada has a legitimate case for seeking restraint on either or both types of polyester blend shirts, we can either
or
(i) consider the market for polyester blend shirts in isolation
(ii) look at the shirt market as a whole.
If we look at polyester blends alone, the Canadian case falls down because she cannot maintain that imports are causing serious injury to domestic producers of this type of shirt. The production figures given in Annex C show that Canadian output of woven shirts of cotton/man-made blends rose by 55% between 1966 and 1967 and by no less than 121% between 1967 and 1968.
We would agree however that given the present degree of interchangeability, in the consumer's eyes, of shirts of different fibres and different methods of production, it would be reasonable to consider the Canadian case from the stand- point of the market for all cut and sewn shirts. The Canadians however insist that a distinction should be drawn between woven and knitted shirts; they maintain that the two types are not made-up in the same factories (which is surprising, and at variance with the practice in other countries). They have not yet provided up-to-date statistics of knitted shirt production; the indications are that output is growing but from a comparatively low base; on the other hand, however, in 1967 imports were almost five times production, and showed a further substantial increase in 1968. Given their protectionism on
woven shirts, it seems strange that restrictions on knitted shirts are
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