spinning, doubling, weaving and finishing should fall from 125,000 to about 75,000 and the number of mills should falls from 715 to some 300. It was argued that tariff protection would provide a more stable and predictable framework within which the industry could plan and invest for the future than was provided by the quota restrictions. The change in import policy was announced two and a half years in advance in order to give the industry time to adapt itself to the changed conditions.
JUSTIFICATION FOR CONTINUING WITH THE NEW TARIFF
19. Although we are now proposing not to end quota restrictions at the end of this year, DTI Ministers have agreed that the tariff should still be imposed from 1 January 1972 for the following reasons:-
a)
b)
c)
CONFIDENTIAL
a)
we would still regard the tariff as a necessary long term form of protection for the Lancashire industry because it will help to offset the price disruptive effects of low-cost imports (even though in the short term certain overseas suppliers may cut their prices to absorb some of it).
many of the more progressive firms in Lancashire have undertaken improvements and investments designed to make them competitive within the tariff framework, and would suffer from a decision not to introduce it;
the smaller firms which are at present lobbying for greater protection wish for both tariff and quota protection and would not be satisfied by the continuation of the present quotas alone which have not prevented their present difficulties from arising;
the imposition of the tariff is a step towards alignment with the EEC. The EEC have tariffs and quotas; thoy also have some duty free entry under their UNCTAD offer but this only covers a limited proportion of their imports from developing countries.
EXPECTED EFFECTS OF NEW TARIFF
20. The new tariff should act to reduce the price difference on the UK market between products from the CPA and home produced goods. This price difference is one of Lancashires main complaints and there is some evidence to suggest that since devaluation overseas suppliers have held their prices steadier than UK producers whose prices rose by about 20% between 1968 and 1970. However, some of the more efficient CPA suppliers are expected to be in a position to absorb some or all of the new tariff themselves. The new tariff will bring the tariff treatment
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