In Goodfellow (HICIOD)
PERCHILE
MME. 51/6
Mr Hazle (TRED)
IMPORT RESTRICTIONS ON COTTON YARN
Thank you for your minute of 24 October with enclosures, which I have discussed with Miss Harvey. We fully agree with you, and with Miss Elliott's minute of 25 October, that CT Division's proposal for extending quantitative restrictions beyond the end of 1973 should be rejected.
2. As CRE1 points out, 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 employ- ment 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.
3.
CRE1 have refrained from commenting on the extraordinary argument that the threat of increased imports (of cotton yarn) would add to the textile industry's current difficulties in recruiting labour. If labour supply is short the industry might welcome the release of 700 hands from the cotton spinning sector. CT Division might also give more thought to the question of adjustment assistance. The prospects of redeploying labour usefully and rapidly should be much better in the present conditions of tight labour supply.
4.
The EEC considerations set out in
Mr de Fonblanque's letter of 25 October are also most relevant. We would also be exposed to heavy fire from further afield if we continue with quantitative import restrictions against countries with close UK ties in favour of their competitors such as Spain and Turkey.
26 October 1973
13. A. Tance
B A Tarlton
Economists Department
Copied to:
Mr Murray (SAD) Mr Goodfellow (HKIOD) Mr Hart (EID(E))
DD 145177 219242 500M 4/73 GM 3643/2