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we recognise that Portugal's competitive position in the UK market will be improved following the introduction of the CPA tariff and that she is likely to increase her trade. We do not, however, expect her to benefit at the expense of efficient Commonwealth producers like Hong Kong. At present, she sends us only 12-15 million square yards a year of made-ups, much of it household textiles. It is difficult to believe that she could expand this trade sufficiently to take over a large slice of Hong Kong's great trade in made-ups. Hong Kong's 1971 quota for made-ups (the bulk of which is for garments) is nearly 90 million square yards.
Hong Kong could hardly expect us to take action against Portugal alone in the post-1972 situation, when all other low-cost suppliers are free of control. If it became necessary to take action to restrict particular products, under the Crosland formula, we should need to consider in the light of the circumstances obtaining at that time whether to include Portugal in the scope of the controls. We could not enter into any commitment now; nor could we disguise the difficulty we should experience in taking such action against an EFTA partner. We did not however dismiss the possibility of another secret bilateral restraint arrangement covering the same product or products as the controls on other suppliers, if Portugal was contributing significantly to the problem on those products.
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f.
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