D N March Esq OBE
CONFIDENTIAL
4 August 1977
4.
The
In November/December 1976 the GATT Textiles Committee, consisting of representatives of all countries participating in the MFA, met to review the MFA and consider its future. US, along with most other participants, wanted the MFA to be extended unchanged whereas the EEC wanted modifications. Further meetings this year revealed that EEC Member States had difficulties in reconciling their different interests.
5. EEC Members eventually agreed on a mandate for the Commission to negotiate. This empowered the Commission to seek to fix internal global ceilings prior to bilateral negotiations in accordance with their assessment of products with high import penetration. The total of all the bilaterals then negotiated would fall below this ceiling and leave potential room for new producers to enter the market. A major consequence of sharing out the cake in this way would allow only token growth rates for particularly sensitive imports.
UK Political Angle
6. Over 800,000 workers are employed in textiles in the UK and the UK's position is designed to protect those sections of the textiles industry which are suffering severely from low cost imports at a time of deep recession. Quite a number of Labour MPs with small majorities represent constituencies where textiles are important. The TUC and the British Textiles Confederation (which includes both unions and employers) continually express their concern at the damage done to the industry and strongly support the revision of international arrangements (whether or not through formal changes to the MFA) to provide better protection.
EEC Angle
7.
The conflict of interests of Member States in the EEC caused difficulty in reaching agreement on the Community's mandate. Whereas Germany, supported by Denmark, adopted a free trade approach, the UK, France and the Netherlands have demanded better protection. France, especially, has continued to speak and act strongly in her own national interest. It is important to remember that under the EEC treaties the Commission has sole responsibility for negotiating on behalf of the Community.
US Interests
8. The US is in favour of an extension of the MFA as it stands because the Administration wishes to fend off protectionist pressure from the American textiles industry. It also fears the bad effect of a row over the MFA on the North/South dialogue.
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