cloth and (c) made-ups. This systen would permit freer competition between the supplying countries than has been possible under the present quota controls; with tho disappearance of the
categorisation provisions, the developing countrien would Lond to concentrate on the types of textiles they could produce most efficiently, which in turn would compel Luncashire (as the Textile Council's report envisaged) to concentrate on those products in which its relative competitiveness was greatest. However, as under the monitoring system, a watch would be kept over the pattern of imports, and if necessary action taken to restrict particular products within the overall ceiling, if an important sector of the domestic industry was at risk through disruptive.
imports.
33. It is recognised that there would be administrative difficulties in working this system. Bearing in mind that it would be announced after importers had placed their orders for at least the first half of 1972 (in the expectation of complete liberalisation), it would probably be necessary to allocate licences in two stages, in the first round of which licences were earmarked for importers to the extent that they had already placed firm orders (perhaps requiring proof in the form of irrevocable letters of credit); and in the second (assuming that a balance was left thereafter) there would be an opportunity for
importers to state what further orders they intended to place, subject to the availability of licences, the balance then being rationed out in proportion to the size of the various requests. Unless we insisted on irrevocable letters of credit, this system would inevitably give rise to complaints that it favoured the unscrupulous and greedy who submitted phoney contracts and made exaggerated demands.
+
34. This system would not be in accordance with the Long Term Arrangement in that it is global rather than bilateral (but, as we are already operating a partial global system, we are already in contravention of that rule). Like liberalisation, it would favour the efficient producers, who would be in a position to take trado
18 -