TNAG-0245-FCO40-281-Exports-of-textiles-from-Hong-Kong-to-Sweden-1970 — Page 102

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177. Baron de Geer enquired whether by the statement (see para. 5(a) of Appendix II) that 'there should be no cut-back in the level of trade' Mr. Ho meant that Hong Kong would now object to the roll- back formula in Annex B of the Agreement regarding International Trade in Cotton Textiles. Mr. Ho said that the roll-back formula was reserved for cases where market disruption or an actual threat thereof existed; but to take for example woven dress shirts of discontinuous synthetic fibre (ex 841.764), which was originally put under an E/A system in 1968-69, this item was subsequently restrained in July 1969 on the grounds that Hong Kong exports had caused disruption in the Swedish market. The restraint limit was fixed at 625, which was actually lower than the export authorisation level achieved at that time, disruption as it turned out had not taken place as Swedish production in this item had risen from 400 in 1968 to 736 in 1969, despite imports

It was from Hong Kong in calendar year 1969 being over the 1000 mark. therefore reasonable to expect that Sweden would give due recognition to this fact if a new restraint level were to be fixed.

But

178. Mr. Dorward added that under an E/A system Hong Kong was obliged to suspend licensing further exports with immediate effect when called upon to do so. The level at which Hong Kong was called should logically represent the level which was tolerable to Sweden. This idea was implicit in the E/A system and any cut-back on this level was unjustified. He referred to the preamble of the Cotton Textiles Arrangement which stated that importing countries should provide growing opportunities for exports in products under restraint so that there would be no disruptive effect on production in both the importing and exporting countries.

179. Baron de Geer recalled that Sweden first approached Hong Kong for export restraint in 1968 with a view to suppressing the growth rate of textile imports to about 5% p.a.; the present growth rate of about 35% was certainly not acceptable. Since the existing restraints had failed to contain imports, he was of the opinion that perhaps a more comprehensive coverage was called for. Mr. Ho reminded Baron de Geer that the 35% increase in Hong Kong's textile exports to Sweden in 1969 compared to 1968 was in terms of value only. Mr. Dorward noted that the acceptable overall increase in textile imports to Sweden at the rate of 5% p.a. had never previously been mentioned by Sweden.

180. Baron de Geer replied that to restrict the growth in imports was the underlying objective of Sweden's requests for restraint from some of her trading partners. He said that Sweden would be able to ̈ justify a request for comprehensive restraint if it was felt to be

necessary.

181.

Mr. Ho observed that restraints had to be examined in the light of Article 3 of the C.T.A. on an item-by-item basis; or, in the case of non-cottons, it was for Sweden to invoke Article XIX of the G.A.T.T., in which case restraint had to be applied on a non-discrimina- tory basis; or to seek to make, as it had done with Hong Kong in the past an item by item case in Article XIX terms for voluntary export restraint. Mr. Dorward added that Article 3 of the C.T.A. stated in its paragraph 7, that the measures envisaged should be limited to the precise groups or categories of products causing or threatening market disruption. There was no justification for comprehensive restrictions in the C.T.A. Baron de Geer replied that individual countries must have the right to decide where and how damage to their home industry occurred. He went on to say that Sweden was ever ready to abide by the terms of international agreements in conducting trade negotiations; but would use every means available to counteract the alarming upward trend of textile imports into the country.

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