Hon. Donald M. Fleming (Minister of Finance):
Mr. Speaker, 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 a period of one year. On February 16 I tabled in the house a copy of a long term arrangement which was being submitted to the governments of participating countries for approval. It is envisaged that the long term arrangement would come into effect on October 1 of this year, when the short term arrangement expires.
These arrangements are aimed at expanding the export opportunities of less developed countries, while at the same time preventing disruption in the domestic markets of importing countries.
Hong Kong is a substantial supplier of very low cost cotton textile goods to Canada. Early this year there was a noticeable increase in Hong Kong's exports to Canada of one important category, cotton slacks and shorts. The colony's exports of this category to Canada had more than doubled between 1958 and 1959. They then increased by a further 80 per cent in 1960 to a level of about 300,000 dozen. This was, by quantity, about 18 per cent of the total market. In 1961 there was a slight decline, which was part of the general falling off in Hong Kong's exports of textiles to Canada. However, shipments of cotton slacks and shorts in December and in January of this year gave every 26207-1-155
indication that exports would rise rapidly and cause further disruption in the Canadian market.
In February the Canadian government requested Hong Kong to impose export restraints under the terms of the short term arrangement. This arrangement provides that an importing country may request an exporting country to apply restraints at a level not lower than actual shipments in the year ended June 30, 1961. Last week Mr. H. A. Angus, director of Hong Kong's department of commerce and industry, visited Ottawa and held discussions with Canadian government officials. As a result of these discussions Hong Kong has agreed to impose export restraints, in accordance with the provisions of the Geneva agreement, totalling 255,000 dozen cotton slacks and shorts, divided as follows: men's 70,000 dozen; women's, 55,000 dozen; children's, 130,000 dozen, for the period ending October 1, 1962.
The United States government has also requested Hong Kong to impose restraints on exports of a number of cotton textile items. On March 19 the United States government announced that it would prohibit the importation for consumption of certain shipments from Hong Kong. This naturally gave rise to some concern in Canada lest large quantities of goods ordered for the United States market be diverted to our market. This possibility was discussed with the visiting Hong Kong officials in connection with their future licensing arrangements. Both sides agreed that it was unlikely that serious problems of this kind would arise for Canada.