would offer a margin of protection that was both stable and
predictable, so enabling the industry to plan ahead with
confidence and to undertake the investment needed to make it
more competitive.
The industry has had 23 years to adjust to
the decision to switch from quotas to tariffs and most of the
present fuss is coming from the smaller and weaker (but
vociferous) firms of the BTEA which are becoming more nervous
as 1 January 1972 approaches. The DTI recognise that the level
of unemployment in Lancashire is mainly due to factors other
than the level of imports: the general state of the economy;
the combination of static demand and production; continuing
low efficiency; the structural shifts away from cottons to mmf
and from woven to knitted fabrics; the relative failure of
firms to contain prices.
5. It is true that imports in cotton textiles have risen in
1971 but these have been within the limits of current restrictive
arrangements. Bunching and upsurge was expected (indeed this
was the justification for providing as recently as 5 July in the
Finance Bill for relief from the new tariff for the first 3 months
of 1972). The increase in 1971 over 1970 can be traced to the
roll forward of unused 1970 quotas plus the expected full use of
the 1971 quota. It is possible that the restraints placed on
exports of Asian non-cotton textiles to America may lead to
diversion to other markets, but this is much more likely to be in
non-cotton textiles for which the DTI are not seeking changes in
our current policy.
6. It was always expected that the period of disturbance would
last until the middle of 1972 and that the market would then
settle down to better and more stable prices thanks to the tariff.
/WHAT SAFEGUARD
CONFIDENTIAL