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Mr Hart (CID(2))
RESTRAINTS ON COTTON YARN
1.
HK16/548/17
cc: Mr Tarlton (conomists;
Mr Murray (SAD)
Mr Nixon (NENAD) Mr Goodfellow (UKIOD)
(o.f.)
I attended a useful and constructive meeting of the textile working party this morning to discuss the DTI draft submission for continued restraints on cotton yarn. Chemicals and Textiles Division, UTI, accepted that it was necessary to liberalise imports; what was in question was when it should be done. We were not in dispute about objectives.
2.
As a result of the meeting, CT Division is to circulate a revised draft submission which will bring out the following additional points:
(a)
(b)
Restraints should be phased out over the next three years (not as in the original paper, continuing for three years before being cut). This will not be inconsistent with the textile policy which we have been advocating in the Community in which we have said that existing restraints which cannot be justified under the strict injury requirements of the new GATT textiles agreement should be phased out over three years.
If we were to abandon restraints now on cotton yarn there would be a major row with the spinners who have political influence. There are some 20 marginalities in the spinning areas of Lancashire where the government majorities are less than 5,000. Such action could be very politically embarrassing and would give a field day to the anti-marketeers. The DTI maintain further that the EC industry (which has the ear of the Commission) is closely in touch with our own and share their view that restraints on yarn are necessary.
(c) Although cotton is on the liberalisation list
imports are by no means liberalised in eg France and Italy. The common liberalisation list is by no means sacrosanct among our partners (Benelux recently introduced quotas on electronic goods which are on the CLL; these have had to be accepted by her partners).
(d) It might be possible to use yarn as a bargaining
point with the Community, ie to point out that it does not match up to the safeguard provisions which we are advocating in the new GATT agreement; we are therefore willing to phase it out (as we recommend that they should do also to their restraints which they cannot justify). If we are pressed to liberalise quickly by our partners this would strengthen our hand in urging them to do likewise.
3.
Both CRE and I reserved our positions but promised to give the new paper sympathetic consideration when it emerges probably at the beginning of next week.
K
Muzie
Trade Relations and Exports Department
Y
DD 145177 219242 500M 4/73 GM 3643/2
1 November 1973
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