Free & Easy Trade

The threat of economic exclusion from Western free-trading areas last week forced Japan and the crown colony of Hong Kong to take a close look at their trade policies. Worried by warnings of retaliation from the U.S., the Japanese Ministry of International Trade and Industry announced that by April 1961, Japan would free 70% of its imports from trade restrictions. Twenty-four items ranging from buttons to smoking accessories were put on the automatic approval list while the entire schedule is being worked out.

In Hong Kong, the newly formed Hong Kong Garment Manufacturers (for the U.S.A.) Assoc., fearful of U.S. tariffs against their ever increasing garment exports, set up a voluntary three-year quota system for shipments of cotton goods to the U.S. (TIME, Dec. 14). With the blessing of the colony's government, the new restrictions limit 1960 exports to the U.S. to the 1959 figures plus a 15% increase; in each of the next two years, there would be an additional 10% increase.

Hong Kong's quota restrictions raised a furor in both the crown colony and the U.S. Many of the garment manufacturers are bitterly opposed to the restrictions set up by the Garment Manufacturers' Assoc., which, however, does include 85% of all the manufacturers exporting to the U.S. But, says one exporter realistically: "Put us out of work with high tariffs and you hand the colony to the Reds."

U.S. garment manufacturers are not impressed by Hong Kong's voluntary quotas. "We're interested in U.S. control, not what Hong Kong tells us that they are going to ship," said one garment-industry official. The U.S. garment industry feels that other low-wage countries will follow Hong Kong's earlier example in sending quota-free cotton goods to the U.S., knocking the bottom out of many products of the U.S. textile industry. Thus, despite Hong Kong's restrictions, U.S. garment makers will continue to lobby for tighter legislative restrictions on garment imports into the U.S.

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