CODE 18.77
Mr Carter, T.
3
Reference............
14
COTTON TEXTILES: TRANSITION FROM QUOTAS TO TARIFF
1.
CT are seriously concerned at the transitional problem which will arise when a tariff is imposed on Commonwealth cotton textiles as from 1 January next and quota restrictions cease. The problems as CT see them are set out in Mr Ridley's minute of 8 March to me at doc.24.
2.
The difficulty over the transition arises from the fact that the country quotas for the particular year are based on the date of shipment and not of arrival whereas the tariff will, of course,
This will apply to all goods imported on and after 1 January next. mean that the more distant countries such as Hong Kong and India will need to ship their whole year's entitlement in the first 9 or 10 months of the year if they are to get the goods in duty free. Mr Ridley says that CT are not objecting to this (paragraph 4 of his minute) but that the effect of removing licensing restrictions on "goods arriving from 1 January 1972 onwards will be that it will be impossible to prevent the countries concerned continuing to ship over and above their 1971 quota goods intended to arrive in 1972, and that there will thus "be no respite from the higher rate of imports in the early months of 1972."
3. CT Division urge accordingly that import licensing restrictions should be continued for the first quarter of 1972 with import licences being issued for goods shipped before the end of 1971 only if they are accompanied by the necessary export certificate to show their date of shipment and are within quota, goods shipped after the end of 1971 being freely licensed if the accompanying export certificate shows that they were shipped after the end of the year. CT have also considered whether, to ease the transition for the countries concerned, it would be possible to exempt from the import duty cotton textiles shipped within the quota before the end of 1971 but arriving in 1972, but they have accepted that this is not a practical proposition, a conclusion with which I am sure that we would fully agree.
4. The proposition is thus a "heads you win, tails I lose" arrangement under which shipments from the restricted countries in 1971 would be kept strictly within quota but any such shipments which arrived after the end of the year would have to pay the duty. The countries concerned would also have to continue the burden of
I do not issuing export licences for the first quarter of 1971. find this proposition easy to reconcile with Mr Ridley's own state- ment, with which I agree, at the beginning of paragraph 3
"In principle the change from quota protection to tariff
should be brought about in such a way that no goods from the Commonwealth are subject to both forms of protection;"
5. I would expect this proposal to meet with strong resistance from the countries affected who would appear to have nothing to gain and everything to lose by it... The, proposal also seems to me difficult to reconcile with the natural interpretation of public statements which have been made about, the changeover from quotas to tariff protection. For example, the then President of the Board of Trade (Mr Crosland) said in the House on 22 July 1969, referring to the introduction of a tariff on Commonwealth cotton textiles from 1 January 1972
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"From that date the existing general quota system would
be terminated;"
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