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14. The developing countries (who form the majority in G.A.T.T.) will argue that the opportunities provided for them under the L.T.A. were inadequate in principle and that they have often been frustrated in practice. But they may well see an extension of the L.T.A., on a more generous basis and perhaps for three years, as in practice their most promising line of further advance. They may reckon in particular that if the L.T.A. were brought to an end the U.S.A. would be unlikely to abolish the complex quota arrangements which they have developed over the 1960's, but would continue to operate them in contravention of the G.A.T.T. If they did, there is very little that the developing countries could do about it. It is hardly open to them to retaliate against the United States on trade matters. As the United States supplies getting on for half of the total aid provided by developed countries as a whole, most of them would be chary of acting in a manner which lost them the goodwill of the U.S.A.
The United Kingdom line
15. The United Kingdom interest is in getting other developed countries to accept a much larger share of the burden of low- cost competition. The L.T.A. has not done this. We should like to see it brought to an end, at any rate after the end of 1971 when our recently announced tariff policy would come into force. (So long as the L.T.A. remains in being we shall be at a disadvantage compared with most other developed countries: they will be operating both tariffs and quantitative restrictions.)
16. The question is what practical prospect we have of achieving this result. In the light of the foregoing forecasts of the attitude of other countries the chances seem slender unless we think that there is a hope of persuading other countries that we shall all work towards a tariff-based solution related to the philosphy and terms of the G.A.T.T.
17. The argument for such a solution would run as follows. Quotas are in principle a less satisfactory technique of control than tariffs. They freeze the existing pattern of trade, they are administratively expensive and often involve contentious and inconveniently detailed legislation, they give rise to frequent friction between the donor and recipient countries and they often put profits into pockets other than those intended by the originators of the scheme. The market disruption that they are designed to prevent would be better dealt with under Article XIX of the G.A.T.T., which is by definition the internationally accepted instrument for this purpose. The essential features of Article XIX are described in the Annex to this memorandum. The fact that action taken under this article has to be non-discrimina- tory and temporary and may involve retaliation or compensation tends to deter importing countries from taking action under it that is over-hasty or unjustified.
18.
Those who support this argument recognise that Article XIX has been used rarely, partly because the domestic pressures in importing countries have often stemmed more from local political considerations than from serious economic justification. They think it essential to establish the primacy and effectiveness of Article XIX in relation not only to cotton textiles but to non- cotton textiles for fear that if this is not done worse is likely
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