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participation in the open trading system, as her $37bn surplus with the US and
$10bn surplus with the EC testify.
The Multi Fibre Arrangement (MFA):
9
The MFA is sufficiently important to deserve further comment. It will expire
in July 1986, and a decision has to be taken in the GATT by July 1985 whether to
extend, modify or discontinue it. Neither the UK nor the EC collectively have
yet decided what line to adopt on the question of a successor regime (if any).
HMG will clearly be under strong pressure from producers to retain protective
barriers, although this will to some extent be offset by pressures from UK
consumers' organisations, some other developed countries and the exporting
countries themselves.
10
One input to UK thinking will be the recently published independent study
(commissioned by this Department) by Professor Silberston. This report concludes
that the MFA restrictions raise the UK retail price of clothing by perhaps 5%
(more for lower cost clothing); that the benefits of these higher prices accrue
mainly to foreign suppliers; that employment in the textile industry may gain as
a result but that UK employment overall would be likely to be higher without these
restrictions: and that the cost per job of the employment safeguarded thereby
greatly exceeds average earnings in textile and clothing and the costs of other
employment creation schemes. It emphasises that the relative advantages of
production, particularly in clothing, lie with the developing countries and that
liberalisation is probably the best available method of encouraging a growth in
their exports. It does, however, point out that UK exports also face formidable
barriers in most overseas markets.
P
Ministers have welcomed the Report, but the
textile industry has disputed its conclusions, underlining the uncertain nature of
assumptions on which the calculations are based.
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