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that a tariff would lead to. a reduction in their exports and this would cause us considerable difficulty in UNCTAD and to a lesser degree in the GATT (by reason of Part IV). We have so far been able to claim in both institutions that our policy is much more liberal than that of other developed countries. A tariff would also be attacked as inconsistent with the support we have given to generalised preferences. However, non-Commonwealth developing countries would benefit in the absence of quotas from the imposition of a tariff on Commonwealth suppliers and some of the Commonwealth developing countries might be able to expand their trade above the present restricted level.
(a) other sections of British industry (for example the wool textile,
cutlery and rubber footwear) affected by (or afraid of) similar competition from the Commonwealth would probably press for similar treatment, but we would resist any such claims.
(e) there would be problems of Customs Administration.
Conclusions
13.
We have indicated the great difficulties of a tariff solution; and the balance of advantage from the international standpoint would seem to lie in a continuation of the present quota system for another three to five years. This, however, is not without its own difficulties. In the next textile recession
the Government will come under severe pressure from the industry to reduce the quotas and increase categorisation, a move which would be bitterly resisted by the supplying countries. Moreover, if the quotas were to be extended after 1970 a number of countries, e.g. Israel, Spain and Mexico, would claim that the restrictions should not be applied to them. Nonetheless, the maintenance of the status quo would probably be negotiable and would at least avoid the serious problem which would be likely to arise if we deprived the Indians of the privileged position which they enjoy in our market under the present quota arrangements.
14.
However, the balance of advantage must take into account domestic considera- tions as well. As the Textile Council have said in their Report, successive Governments have failed to solve the Lancashire industry's problems. The quotas were originally conceived as a temporary measure to give the industry a breathing space to enable it to re-organise and re-equip to meet competition. However, the breathing space has now lasted for ten years and there is no reason to believe that an extension of the present scheme until 1973 or 1975, if that were negotiable, would succeed in restoring the industry's confidence in its own future.
15.
The Textile Council believe and their belief is supported by the analysis in their Report that a moderate tariff of only 15 per cent (i.e. 85 per cent of the m.f.n. rate on cloth) would enable the industry to compete more successfully with imports than would be the case under the quotas. Above all, they believe that it would restore confidence and stability in the industry. If the Government turn down the Council's recommendation pressure is bound to mount for a substantial reduction in the quotas, as advocated in the Minority Report, or for the setting up of a regulating Commission on the lines put forward by the Parliamentary Labour Party jointly with the Unions in 1955, endorsed by the Prime Minister in 1957 and in a modified form Mr. George Brown in July, 1963. However, the Prime Minister's support for the 1955 proposal was limited to the situation which would have arisen if agreement had not been reached with India on a voluntary restraint and Mr. George Brown's modification of it was also overtaken by events. A reduction in the quotas would be contrary to the Long
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