TNAG-0154-FCO40-190-Exports-of-cotton-textiles-to-Canada-1970 — Page 26

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2.

6.

(c) on trousers there was a political as well as an

economic problem with the Canadian polyester fibre producer;

(d) in keeping with its policy of not taking the

initiative, the Canadian Government did not propose any broadening of the scope of the trouser restraint despite large imports from Hong Kong; (e) on shirts, there was the political problem with

Quebec;

(f) the shirt industry was one which the Canadian

Government had to protect;

(g) Canadian producers were losing their share of the

market; many had closed down;

(h) Asian prices were comparatively low;

(i) a shirt was a shirt irrespective of fibre and

any significant increase in low-cost imports of woven shirts of whatever fibre contributed to the present disruption of the Canadian market; (j) hence the need for polyester/polynosic shirts to

be brought under restraint.

Against this background Mr. Howarth proposed for the year 1st October 1969 to 30th September 1970:

7.

(a) 11% growth on trousers,

(b) 3% growth on blouses,

(c) 2% growth on shirts with the restraint extending

to polyester/polynosic shirts, and

(d) no action in respect of polyester/polynosic shirts

shipped in the current year.

Mr. Jordan said that if any new restraints were to be introduced, Hong Kong would wish to see some of the existing ones removed and argued that there was no need to continue restraints on polyester/cotton blouses and trousers since a large proportion of Hong Kong's exports were outside the restraints and this showed that the effective limit on exports of these blouses and trousers was the market demand and not the restraint levels.

8.

The Hong Kong team then used Canadian anxiety for a cutback on polyester/polynosic shirts to extract concessions on other items and Mr. Jordan counter-proposed as a package:

(a) removal of restraint on blouses and trousers, (b) a limit of 125,000 dozen for polyester, polyester/

cotton and polyester/polynosic shirts (75,000 polyester and polyester/cotton plus 50,000 polyester/ polynosic based on a roll back figure),

(c) an allowance of 25,000 dozen polyester/polyno sic

for hardship cases arising from suspension of export licensing in respect of these shirts.

19.

CONFIDENTIAL