RESTRICTED
H.K
Ludia
Pakistan,
which, by the paper's own admission, does not satisfy these criteria, can only seriously undermine the credibility of our advocacy of a more liberal Community policy for textiles. Furthermore cotton yarn is the one textile for which all our partners seem to favour genuine liberalisation of imports and for which we could achieve harmonisation of policy at little
To press now for continued restraints would also seem to us to be inconsistent with our recent proposals for progres8 towards a unified Community market for cotton textile importa from the Article IV countries.
4. It also seems to us that the aims of the paper are contrary to the spirit of the Summit Communique and of the Declaration of Intent. And it would be anomolous if we were to be seen to be pressing for continued restraints on cotton yarn at the same time us we are pressing our partners to be able to maintain a nil tariff on jute.
5.
As for the economic aspects, we support the views put forward in Miss Elliott's minute of 25 October. The case made out for extending the present restraints is far from convincing. The estimate of 700 jobs to be lost out of 34,360 can scarcely be regarded as 'substantial injury'. Indeed although one recognises that the cotton spinning sector has already been substantially slimmed down in the past, the overall objective of accelerating economic growth would be quite compatible with a 2% shift in UK employment away from a sector with comparatively low added value and where the competitive odds seem to be heavily loaded in favour of producers closer to the source of raw material.
6. The paper suggests that the threat of increased imports of cotton yarn would add to the textile industry's current difficulties in recruiting labour. It seems to us that if labour supply is chort the industry might welcome the release of 700 hands from the cotton spinning sector. The prospects of redeploying labour use- fully and rapidly should be much better in the present conditions of tight labour supply.
7.
Finally, I suggest we should take into consideration also the point that the three countries principally concerned would be those with close ties with Britain. We shall be seen to be going out of our way to discriminate against them in favour of, eg, Turkey and Spain. In all the circumstances we should be very sorry to see a recommendation of this sort go to Ministers and I would suggest a meeting of the Textile Working Party before a firm decision is reached.
RESTRICTED
GF Finlayson
Trade Relations & Exports Dept
જ