TNAG-0154-FCO40-190-Exports-of-cotton-textiles-to-Canada-1970 — Page 46

Annex A

Canadian Imports of Hong Kong

Blended Fibre Garments.

Earlier negotiations between Hong Kong and Canada on Polyester/Cotton Garments

Canada attempted unsuccessfully in 1965 to take action against

Hong Kong woven synthetic shirts, on the grounds that, contrary

to Article 6(b) of the Long Term Arrangement on Cotton Textiles,

exports had been increased deliberately to circumvent the

controls on woven cotton shirts. Hong Kong was able to show that

her cotton shirt quota was under utilised (as is still the case),

and therefore substitution as defined in the LTA could not be

taking place.

Hong Kong rejected the Canadian suggestion in the autumn of

1966 that the cotton garment quotas should be grossed up to

include garments of synthetic fibres. However, consultations were

held in the spring of 1967 to determine whether Hong Kong

polyester/cotton shirts blouses and slacks were disrupting the

Canadian market. At that time the Canadian authorities made much

of the political pressures exerted by their domestic producers in

the Prairies. They said that if agreement could not be reached

they would bring Hong Kong's trade to a stop by imposing a penal

duty even though this would have been contrary to the G.A.T.T.

We had grave misgivings about allowing Hong Kong to set a

precedent by entering into a restraint agreement outside the

cotton field and obtained a month's grace to consider the various

policy issues involved. At the end of this period, we agreed

W

reluctantly because we saw no other way out of the impasse

that Hong Kong should announce that she had decided unilaterally

to restrict exports to Canada of the three types of polyester/

cotton garment. At our insistence, in informing the Canadians

that restraints would be in operation for the year commencing

1st October, 1967, the Hong Kongers stipulated that the decision

/would