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INDUSTRY AND TRADE

behalf and on 8th October a Norwegian delegation arrived in Hong Kong for discussions. They made it clear that their concern was only with woven cotton shirts for work, sport and leisure, and woven cotton nightwear.

Protracted negotiations, during which the Cotton Advisory Board was consulted on several occasions, resulted in agreement in prin- ciple. Hong Kong recognized the exceptional circumstances arising from the fact that its share of the Norwegian market in shirts and nightwear had increased to 35 per cent and 48 per cent respectively in 1961. Accordingly the Hong Kong Government agreed to restrict exports of these two products during the period of the Long Term Arrangement in return for certain undertakings by Norway. The result of the discussions in Hong Kong was embodied in a draft memorandum of agreement which the British Embassy in Oslo handed to the Norwegian Government in December. At the end of the year it was not known whether the text was acceptable to the Norwegian authorities.

On 17th September, Dr Daniel, deputy head of the Department of Foreign Relations in the West German Ministry of Economics, visited Hong Kong, and called at the Commerce and Industry Department. He indicated that his Government sought the Colony's agreement to restrain exports of woven cotton shirts to West Germany at a level of 700,000 dozen. The West German Govern- ment had evidently contemplated the application of this level of restraint to the period of the Short Term Arrangement (which had by then barely a fortnight to run), or to the calendar year 1962 which would be appropriate neither to the Short nor the Long Term Arrangement. The department suggested to Dr Daniel that any request for restraint should relate to the first year of the Long Term Arrangement and should be supported by evidence of disruption.

Early in October some confusion and uncertainty arose among traders when it became known that the West German Government had introduced a system of import licensing for cotton 'underwear' of Hong Kong origin. It soon transpired that licences were being granted freely and that this was purely an internal measure to enable the German Government to watch the flow of trade. On