CONFIDENTIAL
I take it that our quotas would not apply to imports from developing members of the Commonwealth just as EEC quotas will not apply to Associates. On this assumption the third course has obvious attractions. The first would hardly be consistent with the positive line we have taken on the preference scheme. An offer of, say, a 50% cut in the m.f.n. tariff would be considered quite inadequate by non-Commonwealth developing countries because of the extent to which the Commonwealth and EFTA already enjoy duty-free entry to our market. If, on the other hand, we were to rely on excluding sensitive products completely we would undoubtedly find it difficult to satisfy all the interests concerned. We would probably reach a situation in which Commonwealth countries were aggrieved because we had not agree to exclude every item of interest to them, while non-Commonwealth countries were equally aggrieved at the extent of our exceptions list. The more products we exclude completely, the more risk there is that we might deprive particular developing countries of any benefit in our market.
4.
We here see the following attractions in the duty-free quota system :-
(1) a short and apparently simple offer with the
minimum of exceptions could have presentational advantages in UNCTAD and the benefits to developing countries, though limited, would be widely spread;
(2) in the longer term there are obvious political and practical advantages in adopting a policy which would not need to be changed substantially in the 'event of our membership of the EEC;
(3) more immediately it could provide a general reassurance to Commonwealth suppliers, both developed and developing, about their position in our market (a point you have already made) and so help to discourage action by them to diminish In particular, our own preferential advantages. developing members of the Commonwealth would be given something to offset the limited duty-free access offered to them by the EEC.
How far Commonwealth countries would be satisfied that we had really taken their interests into account would of course depend, amongst other things, on the generosity of the quotas and the extent to which they were enforced. I take it that we would seek to have available the power to enforce the quota ceiling at the request of a Commonwealth supplier even when a product had not been included initially in the list of sensitive items.
5.
I am not convinced that a duty-free quota system would be an
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CONFIDENTIAL