TNAG-0162-FCO40-198-Export-of-textiles-to-Norway-and-Sweden-1969 — Page 5

Reference

telegram No. 9 of 9th January that the Swedes are seeking an exten- sion of the existing restraints and are also considering permanent arrangements for the protection of their textile industry. Sweden is not the only country faced with a substantial decline in employ- ment in textiles in the next few years - this is going to happen in all developed countries and quotas are not the answer to the problem.

7. As you know, this Division has recommended an initiative in the textile field which could have the effect of removing all restrict- ions on imports from the developing countries of non-cotton textiles. At the same time we are working towards a policy on cotton which would substitute a moderate tariff for the present arbitrary quotas. We have not so far had very much support from CRE in either case, unfortunately, although what we are proposing is quite the opposite of what the Swedes are trying to do. We have also refrained from recommending action against Portugal. There is a very real danger that unless we do succeed in going forward, and that means taking the Swedes with us, we shall inevitably have to take a more protectionist line ourselves. The President made it clear on 21st June last year that we would have to adopt whatever measures were taken by the Swedes and I am quite certain that the British industry is only waiting for restrictions to be imposed on an item, such as shirts, which is of interest to them. We are already in consider- able difficulty because other countries are said to be ne under- the-counter methods to keep out low-cost textiles, and so far CRE has taken no action about the one country Austria where we have evidence of malpractice, in the form of minimum prices, versus Hong Kong.

8. In view of the actual and potential difficulties, I hope that you will be able to persuade the F.C.0. to ask Hong Kong to resist the Swedish request on the grounds that

(a) an Article XIX situation does not exist in the case of

woven, discontinuous synthetic fibre (i.e. polyester- cotton) dress shirts and womens' and girls' anoraks made from continuous filament synthetic fibre;

(b) no evidence of "substitution" of womens' for mens' anoraks

has been submitted, but we might be prepared to accept that substitution had taken place if it could be shown that Swedish production of mens' and boys' anoraks has declined substantially as a result of the increase in imports of womens' anoraks from Hong Kong;

(c)

the reduction in production of mens' and boys' knitted wool sweaters etc. is not due to an increase in imports from Hong Kong. We would need to see all the figures for sweaters woollen and synthetic · before we could agree that the domestic industry had been seriously injured by imports.

9. My own opinion is that we should not retreat significantly from this line without the approval of Ministers, in view of the implica- tions for domestic textile policy. We could possibly agree, after the meeting with De Geer, to make a concession on womens' and girls' anoraks to meet the substitution argument, provided the Swedes can show that production of mens' and boys' anoraks has not increased, but in any case we should make it clear that we are opposed to con- tinuing the restrictions in force after July next.

10. I hope, with Mr. Carey's agreement, that Miss Welch can attend

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