CONFIDENTIAL
quantitive restrictions outside the strict framework of
GATT. As other importing countries restrict their trade with low cost producers in this way, so trade will be deflected to the British market, particularly from the Commonwealth producers, leading to pressure from the U.K. textile industry
for import restrictions. The Board of Trade would like to see other developed countries as open to the trade of developing countries as we are, so that the burden of their imports is more equally shared. The proliferation of voluntary restraint
arrangements is seen as a step in the opposite direction.
U.K.'s Long-Term Textile Policy
9. Ministers recently decided to abolish quantitative restrictions on cotton textile imports as from January 1972.
Thereafter the U.K. textile industry, restructured and more efficient, is to rely (both for cotton and non-cotton)
primarily on the tariff for protection. In the field of
international policy the U.K. therefore sees its interests
best served by other countries giving up quantitative
restrictions. This means the eventual discontinuation of the
L.T.A. on cotton textiles and the abandonment of voluntary restraint arrangements; resort to quantitative restrictions should be governed by a strict application of GATT principles, possibly in the form of a more strictly defined Article XIX with provision for its use to be "policed" by GATT. It has been suggested that at an appropriate stage we might propose the establishment of a GATT working party to review the
situation in textiles and use it to steer other contracting
parties towards these objectives.
10. Hong Kong considers this to be an entirely impracticable course to pursue (a view which we in the F.C.0. are inclined to share and to which the C.R.E. Division of the Board of Trade, as distinct from the Industries Division, has some inclination).
CONFIDENTIAL
/In