CONFIDENTIAL
E
tariff cuts, it would have some drawbacks. As the PCO paper recognises (paragraph 8) it will be necessary to make exceptions and this would almost certainly get us into difficulties with developing countries. It would be very difficult to satisfy divergent interests and we could reach a situation in which Commonwealth countries felt aggrieved because we had not exeluded items of interest to them, while non-Commonwealth countries felt equally aggrieved at the number of our exceptions. Secondly, much would depend on the depth of cut. The Board of Trade paper does not go into this in any detail and the point might be made that a 50% out in the s.f.n. tariff would be considered quite inadequate by non- Commonwealth developing countries because of the extent to which the Commonwealth and EFTA already enjoy duty-free entry en our market.
6.
On the other hand, we must concede that a tariff out system would have the merit of doing away with a potential reverse preference problem. (Under the original proposals, duty-free entry for all developing countries would have created a position in which foreign countries were treated more favourably than Commonwealth countries under some tariff headings and the same would apply under a duty-free quota
scheme. It would not apply under a schemo of tariff
reductions.)
CONFIDENTIAL
/FEC Considerations
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