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obligations. This is not only because of the unique range and impact of the MFA, but also because of the central position of their TC industries to Third World countries seeking to develop and industrialise: it is with these industries that the process of industrialisation usually begins. The LDCs are apt to see themselves faced with a choice between a free-market path to economic development, and a collectivist one. The UNCTAD Secretariat and the Communist Bloc urge the latter on them. West (as they see it) urges the former but then blocks it. West's protectionism, especially of TC, is much invoked by the Group of 77 to justify both the nonsenses they propose in UNCTAD and elsewhere in the UN, and their refractoriness in the GATT on issues such as trade in services and a new MNT round. Nor does it help LDCs in debt. It is a major element (perhaps the major element)in the progressive malaise of the multilateral trade and payments system..
The
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13 For the next renegotiation of the MFA the Third World TC exporters are developing a more united front than last time. will exploit Summit commitments to standstill and rollback. their unity may be fragile since it is the most competitive and entrepreneurial among them (such as Hong Kong) that the MFA hurts most. Indeed the weaker LDC exporters may owe their markets in the developed countries to the MFA, since otherwise they would have had to compete freely with the stronger ones.
•
But
14. A standing aim of UK trade policy is to get the NIC's to liberalise their import regimes. Most of them are very protection- ist, and there are few negotiating levers; but conditional liberal- isation of the MFA offers one such. The MFA already provides that an exporter's own trade and tariff regime can be taken into account in fixing MFA quotas. This provision could be used more seriously than in the past, by providing better access for the TC exports of LDC's whose own import restraints were lowest, and for those prepared to liberalise them.
15. China is potentially a big TC exporter. Her production of textiles has been increasing at about 15-20% per annum with improv- ing quality. She says she will not export more than 15% of production, but this may change. Although a member of the MFA, she. is not at present a member of GATT and any necessary restraints on her exports do not require a derogation from that Treaty.
16. The position of most other developed countries, notably the US, remains undeclared. Within the Community, the Netherlands and Denmark are pressing for liberalisation. The US has recently tightened its TC import regime and thereby undermined the reliabil- ity of the MFA for developing countries: this will clearly have an influence on the negotiations. An important event for the UK industry will be the accession in January 1986 of Portugal to the Community, as the UK's second-largest low-cost TC supplier after Hong Kong, whose exports are expected to grow rapidly as current restraints are removed by 1990.
Conclusions
17. The long period of special treatment of TC imports has eased but not arrested the adjustment of an industry where great advant- ages lie with low-cost countries. On the evidence of the Silberston report however, the benefit of protection, in terms of
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