CONFIDENTIAL
56
Brief No 7
R-CEIVED IN
REGISTRY No. 52
- 9 FEB 1972
HKK 6/548/1
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SECRETARY OF STATE'S VISIT TO HONG KONG
FEBRUARY 1972
COTTON TEXTILES
(DEFENSIVE)
British imports of cotton yarn and woven cotton textiles from developing countries have been subject to quota restrictions for a number of years. India and Hong Kong have bilateral quotas and there is a global quota for all other developing producers. In 1969 HMG
accepted a recommendation of the Textile Council to discontinue these quotas with effect from 1 January 1972 and to impose a tariff on imports from the Commonwealth Preference area. It was made clear at
the time, however, that recourse to quotas might be resumed if total imports rose above present levels to the extent of causing disruption of our own production of particular products.
2. On 8 December 1971 (overseas governments were informed on
1 December) Ministers announced that we should have both tariffs and
quotas in 1972. The reasons were the unemployment situation in
Lancashire; the realisation that the UK would be required to
operate quota restraints immediately on joining the EEC; the risk
of diversion of textiles to Britain as a result of American agreements with Asian suppliers of non-cotton textiles; and the evidence of a
large build-up of orders already in the pipeline for 1972 (our current estimate is that this is at least the equivalent of 30% of the yardage allocation for all the restricted countries).
3. We expected that Hong Kong would react strongly to the British Government's decision; and so it proved. The Colony's trade
associations in particular have criticised our action as being a
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