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that subsidising or protecting every threatened sector, in the
end saves jobs. It does not. It merely perpetuates inefficiences
and, in the process, reduces standards of living. Further, any
widespread resort to protection in whatever form would run counter
to our aim to strengthen the supply side of our economy and to
overcome inflation by monetary and fiscal economies. From an
international angle too, subsidy and credit races are not in our
interest. Those races and indeed any trade wars would be
CHER
won by the most powerful economic nations, and our Gross National
Product does not place us in these ranks.
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Sixth, we recognise that ultimately our trade can only flourish if we create the conditions at home that make enterprise
worthwhile. We have sharply reduced the rate of tax for managers and, I believe, that this will also encourage back to the UK,
those men of talent and experience who were driven abroad to work for foreign companies. At least our managers are now taxed on a more or less comparable basis to our competitors in
the EEC. We have made a start at freeing resources for more
industrial investment and this can only be achieved by restraining public spending. The Chancellor is reviewing the whole range of capital taxes which have fallen so heavily on family firms.
It is the numerical strength and vitality of the small firm in
the US, Germany and Japan which stands out so sharply in contrast
to the UK. Altogether we have begun to remove the controls - price control, pay controls and dividend controls which were stifling enterprise, limiting flexibility and denying the flow of skills
and resources to the natural areas of high market demand.
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What then are the particular trade problems which face us in 1980? First, there is of course a particular problem about textiles and clothing. I know you have strong feelings about the
agreement which the EEC negotiated with you under the MFA. It was a tough agreement which involved your accepting cutbacks from the levels of trade and from rates of growth to which you
would have been entitled under the MFA and the concept of "reasonable
6