+
1
5. In explaining the increase in imports of woven cotton cloth this
year, there are special factors to be taken into account. Late
shipments against 1970 quotas arriving in 1971 swelled the import
figures at the beginning of the year while the ending of duty free
imports from the Commonwealth at the end of this year must be
encouraging traders to make the maximum possible use of this year's
quotas. Nevertheless there is evidence to suggest that in the period
since devaluation in 1967, which put up the price of imported cloth and
may have contributed to the fall in imports in 1969 and 1970, overseas
suppliers have held their prices much steadier than UK producers whose
prices rose by about 20% between 1968 and 1970. Since the rise in the
price of raw cotton has probably been much the same for all suppliers,
this must reflect increased costs of production in the UK compared with
overseas. If this is a cause of the present situation, the new tariff
on imports from the Commonwealth next year should provide some relief
although in the longer term the problem might recur if UK production
costs again got out of line. UK manufacturers, however, voice an
additional short term fear that imports are quicker to respond to
increases in home demand and may therefore be expected to increase
further when the expected economic recovery eventually works through
to the textile industry.. We believe that price/volume relationships
may lend some substance to this fear and the tariff could be less
effective in correcting this type of situation if it arose after the
removal of quotas. (We would hitherto have proposed to meet such a
situation by invoking the 'formula' for considering reimposition of
quotas contained in the original statement announcing the new policy.)
•
6. The increase in imports of woven man-made fibre fabrics in 1971 is
substantial but comes mainly from EFTA and the EEC rather than from low
cost sources. Demand on home production of woven mmf cloth has declined
4
2