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1 Ⅰ Letter from Mr.Walter T.Smith, Counselor of American Embassy for Economic Affairs, to Mr.K.T.Li, Vice-chairman of the Cou- ncil for International Economic Cooperation and Development of China February 3, 1964 American Embassy Taipei, Taiwan Republic of China Dear Mr. Li: I refer to your letter of December 4,1963, proposing that the c-eiling for category 50 (trousers, slacks and shorts [outer,] notknit, men's and boys'), presently set at 122,000 dozen for thetwelve-month period beginning October 1, 1963, under the provis-ions of the United States-Chinese bilateral agreement concerningtrade in cotton textiles, be raised to 155,182 dozen, and thatcompensatory adjustment in the amount of the square yard equiva-lent of the increase of 33,182 dozen be made in category 63 (we-aring apparel, not knit, not elsewhere specified). I am authorized to inform you that the United States Government,after giving careful consideration to the Chinese Government'sproposal, would be in principle prepared to agree to the onet-ime admission of 33,182 dozen men's and boys' trousers and sh-orts (category 50) in the period October 1, 1963 through Sepe-mber 30,1964. However, in place of the proposed compensatory adjustment in category 63, my Government wishes to propose th-at compensation be effected by charging against the agreed le-vels of category 50, 16,591 dozen in each of the second and t-hird years of the agreement. Furthermore, at the same time, the United States Government w-is hes also to present for the consideration of the Governmentof China the proposal that, within the present agreed level f-or category 26 (woven fabric, not elsewhere specified, other, carded) for the twelve-month period beginning October 1,1963, a subceiling of 1,800,000 square yards be imposed on shipmentsof cotton duck fabric from Taiwan to the United States. This proposal isimpelled by pressing difficulties in the domestic market for co-tton duck which arise in great part from the increasing proport-ion of duck in category 26 imports over recent months. The United States Government would be pleased to receive the ag-reement of the Government of China to the proposed revisions to the bilateral agreement as outlined in this letter. Sincerely yours, (Signed) Walter T. Smith Counselor of Embassy for Economic Affairs Mr. K. T. Li Secretary General of the Council for International Economic Coo-peration and Development 118 Hwaining Street Taipei, Taiwan, China Ⅱ Letter from Mr. K. T. Li, Vice Chairman of the Council for I-nternational Economic Cooperation and Development of China, to Mr. Walter T. Smith, Counselor of American Embassy for Ec- onomic Affairs March 18,1964 C2-64-0486 Mr.Walter T. Smith Economic Counselor American Embassy Taipei, Taiwan Dear Mr. Smith: Reference is made to your letter dated February 3,1964 regardingour proposal for revision of the ceiling for category 50 underthe United States-Chinese Cotton Bilateral Agreement concerning trade in cotton textiles. I wish to inform you that the Chinese Government is willing toaccept the counterproposal made by your Government that the exc-eeding portion of 33,182 dozen men's and boys' trousers and sho-rts exported to the United States under category 50 during theperiod October 1,1963 through September 30,1964 will be compens-ated by charging against the agreed levels of category 50,16,591dozens, in each of the second and third years of the agreement. The Government of China also agrees to the United States Govern-ment's proposal that, within the present agreed level for categ-ory 26 for the twelve-month period beginning October 1,1963, asubceiling of 1,800,000 square yards be imposed on shipments of cotton duck fabric from Taiwan to the United States. Sincerely yours, (Signed) K. T. Li. Vice Chairman cc: FETCC 2nd Div.