increased trade opportunities, particularly in the made-ups sector,
following liberalisation.
Our view has always been that the new policy
would lead to some changes in the pattern of our imports of cotton textiles
exfect
in which Hong Kong could reasonably anticipate gains in some sectors to
balance and may be outweigh - losses in others. For this reason we
believe that calculations of future profitability based on present patterns
of trade may be misleading. Equally, we would not be entirely confident
that a comparison of present landed prices was an accurate guide to future
performance, particularly as we note that this part of the survey does
not cover cotton garments.
3.
In paragraph 7 of your Saving Despatch you set out your reasons for
believing that a postponement of the introduction of the tariff would be
justified. Before replying to the points you make, I feel bound to say
that whilst we remained mindful of Hong Kong's trading interests in the
considerations leading up to the tariff decision, we had also to give due
weight to our other legitimate interests, in particular those of the UK
domestic cotton textile industry. One of the chief conclusions of the
Report of the Textile Council published in March 1969 was that the
existing system of quantitative restrictions had failed to provide a
framework of stable and predictable conditions in the UK market within
which the UK industry could operate and plan confidently for the future.
We know of no changed circumstance which has invalidated this central and
widely accepted finding and we cannot therefore view favourably suggestions
that the existing system of quota restrictions should be extended beyond
the end of this year. In deciding to rely thereafter solely on the
protection afforded by a moderate tariff, HMG believed and still believes
that it will be pursuing a policy which is basically more liberal and
more in the interests of the developing countries among our suppliers
than our present system combining both a quota and (for some) a tariff
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