ENG-1964 — Page 70

INDUSTRY AND TRADE.

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cotton night-wear exported to the Federal Republic of Germany were negotiated at a reasonable level with a 10 per cent growth factor.

Restraint on exports of cotton woven night-wear and cotton woven shirts (except dress shirts) to Norway were continued under a five-year bilateral agreement entered into in 1962.

Outside the Long-Term Cotton Textile Arrangement, Hong Kong's exports of cotton yarn, cotton piecegoods and clothing to Britain have been limited, under an undertaking originally entered into in 1959 but revised in 1962 and extended to 31st December 1965, to a maximum equivalent to 185 million square yards in terms of cloth and 6.3 million pounds of yarn. Within this overall quota there are four broad divisions, now sub-divided into 34 product categories, each of which may be subject to a separate restraint level. By agreement formalized early in the year exports under 19 of these categories were limited to what has been effectively little more than notional restraint during 1964, with markedly tighter restraint levels in a number of categories for 1965. The undertaking provides for a six-month carry over, and also includes a provision for a supplementary quota to Hong Kong (and to India and Pakistan) if it can be shown that these countries have lost ground to unrestricted non-Commonwealth suppliers during the period of the undertaking. In July, the supplementary quota provisions were exchanged on a once-for-all basis for an additional quota in the case of Hong Kong of 14.5 million square yards to be used during 1964 and 1965.

The undertaking with Britain has restricted expansion of the textile industry in the last few years, but has had a beneficial side effect of encouraging better quality goods which has partly com- pensated for this. This effect has been assisted by a scheme whereby quotas for made-ups and garments are issued on the basis of com- petitive applications which have regard to high Hong Kong cost content rather than past performance.

Pressure during the year for restrictions was not confined to cotton textiles. At the end of 1963 it became clear that the increase in woollen knitwear exports to the German Federal Republic was causing alarm in that country's industry, and a request for restraint was received from the German Government. Following inter- governmental consultations and a visit by a delegation from the