0003230
G.F. 323
CONFIDENTIAL
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Mr. Stewart replied that the information was used for "purely statistical purposes" and that it was his department's practice not to encourage complaints, but rather to wait for the industry to take the initiative. Expressing surprise at this pronouncement, Mr. Jordan said it was Hong Kong's view that, within a "basket" category, the basic purpose of E.A.s was to provide an early warning system. As the B.0.T. had indicated their concern over imports of wide sheeting almost a year previously, he found it difficult to understand why they had not used the information at their disposal as the basis for an earlier formal approach for substantive consultations. Since certainty was one of the basic advantages of a long term agreement and the B.O.T., possessed of all relevant information, could have requested consultations sooner, he stressed that the idea of a cut-back on export opportunities would be neither easily accepted nor understood in Hong Kong. Mr. Stewart repeated that it was only the B.O.T.'s liberal attitude that had permitted Hong Kong to boost its performance to the present abnormally high level.
54.
Commenting on the B.O.T.'s proposed cut-back to 12. million square yards for Category 7 (Loomstate sheeting), Mr. Jordan pointed out that, if this were accepted, the Hong Kong industry would face serious difficulties as Britain and the U.S.A. combined took over three quarters of Hong Kong's grey sheeting production. As Hong Kong was already restrained in the U.S.A., a cut-back in the British market could cause serious hardship.
55.
Mr. Stewart then explained his proposals for the re- categorisation of wide finished sheeting. Category 12(15) would be taken out of the 'basket" and given a specific limit of 3 million square yards. The description of this category would also be amended to include all finished cloth 60" and over in width. This would naturally entail a reduction in the combined limit for Categories 3 and 10 which would, in future, be confined to narrow yarn-dyed fabrics. Mr. Jordan enquired what provision the B.O.T. now intended to make for wide loomstate yarn-dyed piecegoods. Mr. Stewart replied that, as all yarn-dyed fabrics were regarded as finished for tariff purposes, it was his intention that the new category in Group III should cover all such fabrics.
56.
Mr. Jordan said that, while he would wish to consider this particular point further, he felt bound immediately to point out that the proposed limit of 3 million square yards for finished sheeting was some 8 million square yards less than performance in the first eight months of 1968. As would be readily understood, the cut-back suggested would be quite unacceptable to Hong Kong. Mr. Stewart once again referred to Mr. Ord-Johnstone's letter of October 1967 and added that the limit of 3 million square yards proposed was, as he had explained earlier, based on the annual average of imports in the three-year period 1964-1966.
57.
Mr. Stewart then asked whether the warning conveyed in Mr. Ord-Johnstone's letter had been made known to the Hong
In the Kong industry. Mr. Jordan replied that it had not. first place, his Department did not accept that the letter gave any clear indication as to the B.O.T.'s intentions, and in the second, if the trade in Hong Kong had been advised of the situation, there would undoubtedly have been a substantial speculative upsurge in shipments, and this would not have helped the B.O.T. in any way.
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CONFIDENTIAL
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