Hon. Donald M. Fleming (Minister of Finance):
On Wednesday, Mr. Speaker, the Leader of the Opposition asked me a question concerning the long term textiles arrangement. I said then that I would make an announcement on this subject on Friday.
The house will recall that an international short term arrangement on trade in cotton textiles was negotiated in Geneva last July. Canada signed the arrangement on September 5, and it came into force on October 1 for the period of one year. The short term cotton textiles arrangement was aimed at expanding export opportunities for the less developed countries which produce cotton textiles in substantial quantities, while at the same time preventing disruption in the domestic markets of importing countries.
Negotiations have been going on intermittently in Geneva since last October for the purpose of drafting a long term international arrangement on cotton textiles which would replace the short term arrangement when the latter expires on October 1, 1962. These negotiations have been carried out in the cotton textiles committee which was established for this purpose by the contracting parties to the GATT. Nineteen countries, including Canada, are represented on the cotton textiles committee and, taken together, these countries account for the bulk of world trade in cotton textiles.
At the last meeting of the cotton textiles committee which was concluded in Geneva on February 9, agreement was reached on the text of a five year long term cotton textiles arrangement. This text was made public today. It will now be submitted to the governments of the participating countries and, if approved, will become effective on October 1, 1962, the date on which the short term arrangement will lapse.
Like the short term arrangement, the long term cotton textiles arrangement is aimed at the orderly growth of international trade in cotton textiles. To this end it provides that countries now maintaining restrictions on the 26207-1-59J
importation of cotton textiles shall progressively relax these restrictions over the life of the arrangement. On the other hand, countries such as Canada which do not impose restrictions can, under the terms of this arrangement, request an exporting country to apply restraints on exports to their markets of cotton textile products when imports of such products cause or threaten to cause disruption in the domestic markets of the importing countries. These provisions are, of course, broadly similar to parallel provisions in the short term arrangement.
Because of its five year life, however, the long term arrangement departs in one important respect from the short term arrangement. It provides that if restraints are requested along the lines I have just explained and if such restraints are maintained for more than one year, the level of imports shall be increased automatically in each of the following years.
The cotton textiles committee recognized, however, that certain countries which are already importing a large proportion of their requirements of cotton textiles are in a special position, and cannot be expected to commit themselves to automatic increases of imports of sensitive cotton textile items without regard to the situation in their markets. As far as Canada is concerned, we have made it clear on many occasions that we accept the principle of orderly growth in imports of low cost textiles. This does not, however, mean automatic increases in every item every year whatever the state of the domestic economy or of our own industry.
Whether or not the long term cotton textiles arrangement is accepted by the principal countries concerned, we shall continue to pursue a policy which, while avoiding flooding and disruption of our market for sensitive cotton textile products, will permit an orderly expansion of trade on fair and reasonable terms. This is the principle of orderly growth in trade in cotton textiles to which we subscribe and which the long term arrangement on cotton textiles seeks to apply internationally. If all countries will play their proper part the aim of the arrangement, which is to increase export opportunities of cotton textile producing countries while at the same time avoiding disruption in the markets of importing countries, will have been achieved.
Subtopic: STATEMENT ON WORLD AGREEMENT FOR REGULATION