EXPORTS OF HONG KONG COTTON TEXTILES TO THE UK IN 1971
As we are getting towards the end of the period covered by the 1966-70 Heads of Agreement, and your exporters are no doubt looking ahead to the trade prospects
for 1971, I think you will agree that it is not too early to settle the arrange-
ments which will operate next year.
I am sure you are fully aware of the background to H.M.G's decision to cease to operate quantitative restrictions on cotton textile imports as from the end of 1971, and to introduce a tariff on Commonwealth cotton textiles on 1 January 1972.
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Our belief which seems to be shared by some at least of your exporters
that Hong Kong is well placed to compete over the tariff, and may indeed increase
Be that as it may, the volume of her exports, particularly of cotton made-ups.
the UK industry has only another 15 months to improve its efficiency to the extent
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that it can survive in competition with unlimited imports from the countries now
under restriction with the protection of only a moderate tariff.
Our industry
has stressed that during this intervening period, zhen it will be in an exceptionally vulnerable state, it is essential that there should be no weakening in the existing degree of quota protection; and H.M.G. has accepted that this is
a reasonable request.
Referring back to the Heads of Agreement, I see that there is a footnote under the paragraph C to the effect that if the growth of UK domestic consumption of
cotton goods increased markedly in cxcess of the expected rate, we would under-
take to consider the possibility of allowing increased growth to all restricted
suppliers. No growth in consumption has in fact taken place, not even the modest amount we expected and which led us to offer 1% annual growth in the quotas. In 1964 our apparent consumption of woven cotton cloth and made-up
amounted to 1,855 m. sq. yds.; by 1969 it had fallen to 1,580 m. sq. yds. and in
the first half of 1970 to 739 m. sq. yds. In proposing the extension of the
present quota controls for the period up to the end of 1971, the most therefore
we can allow to any of the restricted suppliers, including Hong Kong, is a
further 1% growth.
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