12
SUMMARY NOTE
RESTRAINTS ON COTTON YARN
Reference.
PA
2
3-X11
The latest draft DTI submission is attached.
You will see that this proposes a phasing-out of the UK quotas on cotton yarn over the next three years. This is in line with our proposals in the GATT and in the Community. The 1973 quotas for cotton yarn are as follows (in metric tonnes);
1.
2.
RECEIVED IN REGISTRY Po, 5 -3 DELIS5
HKK 6/548/1
India
5593
Hong Kong Pakistan
3065
931
277
attached
3.
Egypt
Under the DTI proposals these quotas are to be increased by 25% in 1974, by 50% in 1975, by 80% in 1976 with complete liberalisation in 1977.
4.
We
Hong Kong
Hong Kong has not been consulted about these proposals which are basically an inter-EEC matter. can be sure, however, that Hong Kong will support liberalisation in principle. In practice, however, they are very likely to lose out by liberalisation. is no longer competitive by her own admission and Pakistan in particular is held at artificially low levels by the quotas. Instant liberalisation would be likely, therefore, to enable Pakistan and Egypt and other countries to make in-roads into Hong Kong's quota. Phased quotas will help Hong Kong since her trade over the next three years will be protected but the spinning industry in Hong Kong will have an adequate to adjust to the new conditions they will face in 1977. From an EEC angle of course there is no question but that we shall have to liberalise sooner or later so that this phased liberalisation would appear to be the most practical solution from Hong Kong's point of view.
W
5. In view of the time limit I have agreed to the submission and I am told all geographic departments also concur. EID are resisting it however and their resistance has been reinforced by UKREF Brussels telegram number 5782. As of today, I am told there is no intention to submit within the FCO.
6.
It is likely that EID will lose out to DTI who have a respectful case for retaining restrictions on a phased-out basis both in respect of the UK industry and the policy of our partners in the EEC who in similar circumstances would insist on phasing-out. The DTI submission is the result of a consensus between C & T Division (who favour continuation of restraints more or less as at present) and CRE (who want complete liberalisation as soon as possible
/SPEAKING NOTE
DD 145177 219242 500M 4;73 GM_3643/2