CONFIDENTIAL
17.
In reply to Mr. Carey's contention that, under the post -1972 system Hong Kong would acquire a larger share of the U.K. market, Sir J. Cowperthwaite doubted whether Hong Kong would be permitted further growth in garments (even if that were possible given the share of the market she already enjoyed).
18.
Mr. Carey denied that the decision was intended to reinforce protection. H.M.G. considered that one consequence might well be that U.K. imports from developing countries would rise while those from Commonwealth developed countries Canada) and non-Commonwealth developed countries too expected to fall.
i.e.
were
Both the previous and the present governments had taken the view that duty free imports as such were a major element in the difficulties experienced by Lancashire, despite quantitative protection over the last twelve years. He denied that the original intention was that quotas should eventually be re-imposed, although he admitted that, on joining the EEC, the U.K. would have to adapt the new policy to conform to the C.C.P. He thought, however, that there was no reason to suppose that cotton quotas would continue indefinitely and pointed out that the
U.K. had been ready to see the C.T.A. phased out. The circumstances laid down by the previous President of the Board of Trade for the re-imposition of quotas were very limited in that there would be no return to comprehensive quotas. An upsurge of imports of garments from Hong Kong would not necessarily lead to the re-imposition of quotas, even on a
selective basis.
19.
Sir J. Cowperthwaite replied that the U.K. would not be able to avoid quotas on joining the Community and, therefore, the philosphy underlying the tariff policy would be undermined and logically textiles should be treated on the same basis as other products in the imposition of the C.R.T. Mr. Carey argued that Lancashire expected tariff protection only and had planned its investment programmes accordingly. To suggest that quota protection would also be enjoyed would reduce the pressure for change, while to fail to impose te tariff in one step would
-8- CONFIDENTIAL
TIA