difficult to avoid a charge of bad faith from the textile industry if we were at the forthcoming meeting of the CTC to take the lead in proposing termination of the CTA on 1st ↑ January 1972. From the domestic point of view our best line
would be therefore to propose the gradual phasing out of quotas perhaps over a period of three years up to 30th September 1973; there might be a complete ban on new restrictions under the CTA and agreement that as many as possible should be removed during the three-year period. After September 1973 GATT members should rely for protection of textile industries primarily on the
tariff
Attitude of other countries
11.
Concession (
Although it might theoretically be expected that other
developed countries would gain from the abandonment of protec-
tion of their cotton textile industrics by q.r. and sole reliance on a tariff the same advantages as we hope to gain ourselves, 1.e. the rationalisation of their industries on a / stable basis, there is no likelihood that they will see it this way; more particularly, since none is in a position to cusțion the immediate impact of their domestic industries by imposing a new tariff ca their main sources of supply. As far as cotton textiles are concerned therefore the other developed countries
can be expected to be anxious for a prolongation of the CTA, ✓It seems certain that the Americans will take this line. The
EEC have linked certain Kennedy Round productions to the continued existence of the CTA and have also said that they are
prepared to include in their offer under the Generalised Preference Scheme duty-free entry for cotton textiles only for those countries which are parties to the CTA and only within limits laid down in the agreements or any bilateral agreements; this indicates expectation of a continued CTA. (We have
recently heard that Germany is not particularly keen on prolonga tion of the CTA, but the EEC as a whole is expected to favour prolongation.) There is no reason to suppose that any other developed country (other than Japan), apart possibly from Canada, will favour discontinuation of the CTA. Japan has, or course, a quite different interest in this context from the other developed countries and will presumably be found on the side of the developing. Japán considers she has lost heavily in the U.S. market as a result of the CTA and can be expected
to oppose its extension.
/12. As