SHOULD ACTION BE TAKEN TO RESTRICT IMPORTS OF NON-COTTON TEXTILES?
18. There are basically two arguments in favour of impsoing restrictions on imports of non-cotton textiles. The first is that we
face a risk of diversion of non-cotton textiles from the four main
Asian suppliers which have just entered into agreements to restrain their exports of non-cotton textiles to the USA. The second is that
man-made fibre textiles are now so directly competitive with cotton textiles, especially in the field of garments, that it makes no sense and may in fact be ineffective to impose restrictions against the one without restricting the other, particularly since, after the imposition of the new tariff on Commonwealth cotton textiles at the beginning of 1972, there will be very little difference between the tariff treatment of these products. These arguments are considered
separately.
19. There is undoubtedly a risk of diversion of Asian non-cotton textiles to Europe since the new American restrictions are set at levels which we know are below the productive capacity of the countries concerned. But the UK is already protected against any increase in imports of non-cotton textiles from Japan since these are still subject to quotas under the Anglo-Japanese Trade Agreement which we have no intention of removing at least until 1 January 1973. As far as diversion from Hong Kong is concerned, there are no present quotas but we are reasonably confident that as a quid pro quo for our acquiescence in their making an agreement with the USA, Hong Kong recognise some obligation not to flood our market with these products and would be amenable to approaches from us voluntarily to restrain exports should the need arise. Imposition of quotas against Hong Kong by us, however,
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