industry or from sections of it for the reimposition of quotas under the CTA; which would be particularly embarrassing if the conditions laid down in the President's statement were
not fulfilled.
7. If the markets of all developed countries were, like that of the U.K., open to low-cost imports subject only to tariff protection and to anti-dumping or countervailing duties, it may be assumed that there would be large increased exports to
of in it will
not happen. I markets other than the U.K. by low-cost exporters whose trade
in these markets has hitherto been severely restricted; this would have the desirable result of reducing pressure on the U.K. market and of spreading the burden of taking cotton textiles from the developing countries. It is true that in the absence of the CTA the EEC would be free to raise the CET on a number of textiles by various amounts from the Kennedy Round to the pre-Kennedy Round levels, since they stipulated that certain Kennedy Round reductions on textiles should be
valid only for the duration of the CTA. But even if the EEC made full use of this freedom the result would not be likely to be as restrictive of imports from developing countries as is their present very restrictive quota system.
8.
Another point which must be borne in mind is that of the interests of Hong Kong. Hong Kong is the most successful of the low-cost textile producers and we should do all we can to
keep the door open to her exports of textiles, to the U.K. and
to all other developed countries alike. The aim should be to
increase the size of the trading cake, even if Hong Kong's
share falls, rather than to accept a smaller cake in which Hong Kong's share would be relatively large.
9.
The foregoing points lead to the conclusion that the interests of the U.K. as well as of Hong Kong lie in the
eventual abolition of the CTA. We do not want to see the CTA
discontinued on its present expiry date of 30th September 1970;
our own restrictions will remain in force until 31st December
1970 and we shall then need to maintain them for one more year
until the tariff comes into force. After 31st December 1971
we have no interest in seeing the CTA maintained.
10. On the other hand, Her Majesty's Government have agreed to consider the reimposition of quotas on particular products under the CTA or any successor. arrangements as stated in paragraph 1 above. In these circumstances we should find it
/difficult