ENG-1961 — Page 106

INDUSTRY AND TRADE

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States on the practical implementation of the short-term agreement so far as they affected United States/Hong Kong trade fell short of meeting Hong Kong's wishes, the Hong Kong Government requested Her Majesty's Government to accept it on the Colony's behalf in November. This acceptance was qualified by the reserva- tions mentioned in the preceding paragraph. Having already been accepted by the other participants at the July Conference, the short-term agreement thereupon came into force for the year ending 30th September 1962.

The last months of the year were occupied with discussions with the United States authorities in Hong Kong on the implementation of the short-term agreement, insofar as it affected the export of cotton textiles to that country. The reaction of the Colony's textile industry to the arrangements proposed in these discussions was influenced by concern over the effects of a directive sent by the United States President to the Tariff Commission in November, requesting an investigation into the advisability of imposing an equalization fee on all cotton textile imports, to offset the export subsidy granted to American growers to promote export sales of raw cotton. Such a fee, if imposed, was considered locally to be contrary to the spirit of the recently concluded Geneva Agreement. In these circumstances, Her Majesty's Government in the United Kingdom was requested to transmit on Hong Kong's behalf a strong protest against the proposals to the United States Government. The influence that the President's directive to the Tariff Commis- sion could have on Hong Kong's attitude towards long-term textile arrangements was also brought to the attention of the Sub- Committee at GATT which had commenced the study of such arrangements in Geneva.

During the earlier discussions in London in May, the British Government also raised the question of a possible extension of the existing voluntary undertaking to limit exports of cotton textiles to Britain for a three-year period ending in January 1962. As the year proceeded, the British textile industry was increasingly in- sistent that such an extension was essential if it was to survive and the British Government's investment in re-equipment was not to be thrown away. The Secretary of State for the Colonies trans- mitted proposals for an extension of the existing agreement but with an increased quota, and these were published in Hong Kong