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have, however, been heard recently in Lancashire advocating that a tariff as high as 25-30% would be needed to provide adequate ̈ protection for the British industry. In the unlikely event that this were to happen the consequences for Hong Kong would obviously be more severe. But it hardly seems worth analysing this option further.
(v) Import. Controls
Certain groups in the U.K. have also been agitating for the use of import controls, perhaps by including all existing quotas in one big global quota. This course, if adopted, would put very considerable bargaining power into the hands of U.K. importers. Importers would be able to buy from the cheapest source and they would probably hawk their quotas around seeking the lowest price. As a consequence of this it is possible that import prices (but not market prices) in the U.K. would be driven down to low levels and perhaps even lower than in a free market situation. Importers would then be making very large windfall profits (quota premia). The situation for Hong Kong, with commercial bargaining power completely reversed from the present situation, would obviously be very bad. Although this solution possibly finds favour among certain elements in the U.K. Treasury, who wish to reduce the import bill and save on the balance of payments, it is probably opposed by the Board of Trade and the U.K. industry due to the danger of price disruption. It is also completely contrary to the provisions of the GATT and the C.T.A.
(vi) Imposition of a tariff, removal of quota with Hong
Kong having the option of a duty free quota
This was a possible option for Hong Kong that was mentioned at one stage at a low level in the Board of Trade. Whether it would be available in practice is a different matter; and there is also the question whether, if so, it should also be available to India and perhaps other Commonwealth countries. It would not produce the same results as the present system because quotas would be removed on other suppliers, including those in the global quota, and the tariff would be paid by Commonwealth countries not limited by quotas. It may also not be such a good option if the retention of quota for Hong Kong implied also the retention of full categorisation whereas other suppliers, who paid the tariff, would not be subject to either quota or categorisa- tion.
Conclusions
23.
It is very difficult to draw conclusions from the above analysis. What does appear to emerge, however, is that, if a tariff of 15% were to be imposed and quotas removed in conditions where the U.K. industry had improved its competitive position, the situation would probably be more difficult for Hong Kong's exports of yarn and fabrics, and perhaps Le de-ups, than it would be for garments. In fact there would probably be scope in this situation for an increase in Hong Kong's garment exports, with a swing towards cotton/mmf mixes and blends. On the other hand, if the quotas were removed before the U.K. industry had been nade sufficiently competitive, there would be a danger of a speculative rush of inports and a rapid reimposition of quotas.
/The
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