TNAG-0165-FCO40-201-Export-of-textiles-to-Norway-and-Sweden-1969 — Page 33

0003230

G.F. 323

CONFIDENTIAL

3.

Continuing, Mr. Jordan recalled that during the 1968 consul- tations Hong Kong was given the impression that the restraints requested were temporary only. He was therefore rather surprised by the present requests from the Swedish Government which indicated protectionist moves towards its textile industry by imposing further restrictions on imports, rather than by rationalising the industry and moving it into those lines where it could compete with other suppliers. He noted that in some lines Hong Kong was not very competitive, as she was by no means the cheapest supplier to Sweden. In many cases, European manufacturers sold their goods at much cheaper prices than Hong Kong. The fact that Hong Kong had a share in the Swedish market was not because Hong Kong products were cheap but, because, generally speaking, the average Swedish consumer went for quality. Mr. Jordan stressed that even when restrictions were imposed on imports from Hong Kong, they were not of much benefit to the Swedish industry: he referred to cotton underwear, where imports from Hong Kong were under restraint, but that only induced Swedish importers. to turn to Finland for their supplies. That clearly showed that restraints merely resulted in the switch of demand to other suppliers. Citing the example of the severe French restrictions against Hong Kong exports, Mr. Jordan said that those restrictions also retarded the development of natural trade links. As a result French exports to Hong Kong were also insignificant, except for items like wines and perfumes.

4.

Mr. Jordan said that it would not be irrelevant to mention that the basis of international trade was the international division of labour, with each country setting out to produce what it could produce best. As an example he quoted the building in Sweden of 4 super-tankers each of over 220,000 tons and worth a total of over US$60 million for a Hong Kong firm. Hong Kong simply could not produce those tankers, and was happy that Sweden could. Hong Kong was also glad that the Swedish firm of Sentab could contribute their specialist expertise to the Plover Cove Reservoir Scheme by their securing, through open tender, several of the tunnelling contracts worth some US$19 million.

Thus

5.

A Swedish economic survey published in January 1969 indicated that industrial output was increasing and that Swedish industry was planning further increases in production to meet brisk demand for Swedish goods, particularly in Europe. In presenting his 1969 Budget to Parliament, the Swedish Minister of Finance, also said that he expected Swedish experts and imports to increase by 7% in 1969. it was not surprising that increasing prosperity in Sweden should lead to increased demand, especially for consumer goods. In all those circumstances, Mr. Jordan said Hong Kong expected that the restrictions agreed a year ago would indeed be temporary. He was, therefore, surprised to receive the Mote from the Swedish Consul-General requesting the suspension of issue of Export Authorisations for all three non- cotton garments, just before the arrival of the Swedish delegation. (Hong Kong export classification number ex 841.849, ex 841.739 and ex 841.764.) He further pointed out that one of those items had been discussed at length in Geneva, and the rate of issue of export authorisations had actually declined since December 1968. Thus he could not understand why the Swedish Government had asked for the suspension of issue of export authorisations for those non-cotton garments.

"

6.

In concluding his opening statement, Mr. Jordan reiterated that Hong Kong was prepared to enter into consultations to consider the extension in time of certain of the temporary restraint measures which were due to expire shortly. However, he would be unable to discuss the extension in scope of those restraints, such as the placing under restraint of items currently subject to export authorisation schemes.

CONFIDENTIAL