TNAG-0162-FCO40-198-Export-of-textiles-to-Norway-and-Sweden-1969 — Page 4

Reference

Swedish Imports from Hong Kong

Please see the attached copy of a minute from Miss Welch summarising the statistical position. Your Branch has already had a copy of the very detailed analysis which Mrs. Bretherton prepared.

2. I am sorry that, because of other pre-occupations, I have not been' able to deal with this earlier. I understand that your Branch were initially impressed with the strength of the Swedish case, presumably because of the increase in Hong Kong exports, but I an sure you will agree that the figures which have now been produced show that Hong Kong has no case to answer on dress shirts and con- tinuous synthetic anoraks. Swedish production of these two items rose by 58 per cent and 32 per cent, respectively, in the first nine months of 1968. Words would lose their meaning if Article XIX could successfully be invoked to justify imposing restrictions in these two cases.

3. The problem in the case of mens' woollen sweaters is different. Consumption fell by 25 per cent in the first nine months of 1968, mainly at the expense of domestic production. However, imports also fell and I suggest that it might be difficult to justify action under Article XIX in these circumstances without examining the figures for man-made fibre sweaters. In my opinion the G.A.T.T. cannot justifiably be used to transfer to foreign exporters the burden of a change in consumer tastes. The case against Hong Kong is no stronger than the case against the U.K., Denmark and Italy, in that order.

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4. There is one further point about the Swedish case. The argument for restricting imports of mens' and boys' anoraks is that- these are being substituted for womens' and girls' anoraks, it being suggested that the two are in reality interchangeable. However, the argument which I regard as suspect must cut both ways.

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Has Swedish production of mens' and boys' anoraks fallen even though production of womens' and girls' anoraks has increased by no less than 32 per cent? If not, the conclusion must be that the restriction on imports of mens' and boys' anoraks was unjustified. The Swedes never tried to justify this under Article XIX. Indeed, they admitted they had no case. All they did say was that the increase in production of both mens' and womens' anoraks had gone into stock, an asstation which this year's figure for production of womens' anoraks confirms was untrue.

5. You may also have noticed from the latest figures that Swedish imports of jackets and anoraks from Portugal have been increasing very fast this year, and may be expected to go on increasing because of duty free entry. The danger we have always foreseen is that the Swedes will try to restrict imports from Portugal - if only because of pressure from the restricted countries and that will land us in very severe difficulties because

(a)

(b)

exports will be diverted to this market and

we are already under great pressure to take action against Portugal.

You will also have seen the recent article in The Times complaining about imports of clothing from Hong Kong.

We share

6. In the circumstances we view the situation with alarm. the Hong Kong view that the Swedish figures contain no evidence that imports from Hong Kong have caused serious injury to Swedish cloth- ing manufacturers and we are most concerned to learn from Hong Kong

/telegram