:
restriction.
The tariff that we are imposing will still incorporate some
element of Commonwealth Preference, and, with the removal of categorised
quota ceilings, we believe that developing countries, and in particular
one with the competitive enterprise of Hong Kong, will enjoy greater
opportunities for diversification of their trade in textiles with this
country. As you know, sections of our own industry are claiming that
the substitution of tariffs for quotas will leave them with too little
protection.
4. In (a) and (b) of your paragraph 7 you make the point that much of the
time since the announcement was made in mid-1969 has been taken up by the
completion of the survey and that an insufficient interval now remains for
the necessary adjustment by the Hong Kong industry to be carried out without
severe disruption. We were and are equally concerned, of course, that our
own industry should bring about the necessary changes in its operations as
smoothly and rapidly as possible in order to meet the changed conditions
of trade effectively. But the early announcement of the date of the change
in policy was intended to stimulate our own industry into rationalising
its operations and those firms which have increased their rate of re-
equipment and other investments on the strength of the impending change in
import policy may reasonably expect to derive some advantage over any of
their competitors which have not. A postponement of the change would amount
to a breach of faith on the part of HMG towards such firms and reintroduce
uncertainties about future policy on cotton textiles which the 1969 announce-
ment was intended to remove. The advance notice of the change was the same
for our overseas suppliers as for our domestic industry and we would not
agree that it placed any section of either at an especial disadvantage in
respect of timing which would justify any postponement. Furthermore, I
must repeat that we would not regard a continuation of the existing quota
restrictions beyond the end of this year as a course which would have a
neutral effect as between the competing interests involved since it would
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