CONFIDENTIAL
in the case of cotton textiles, where the quota system will be replaced by a tariff on 1st January 1972. It would be anomalous if we were now to have a duty quota on man-made fibre textiles.
12.
Administratively, there is no doubt that the balance of advantage lies against duty quotas. However, there seems little doubt that the E.E.C. intend to go ahead on the basis that they propose; and it might be argued in favour of our adopting duty quotas that this would show support for the E.E.C. approach and indicate that we were becoming communautaires. In practice, however, our duty quota
system would necessarily differ from that envisaged by the E.E.C. and substantial changes would be needed if we were to join the E.E.C. We have in any case never accepted the principle that, before joining the E.E.C., we should adopt Community policies which would cause us difficulty.
13. British industry might welcome the automatic safeguard provided by really restrictive duty quotas on sensitive items and there would be less need for exceptions; this might make such a system appear more attractive, at first sight, to the developing countries despite the doubt mentioned in paragraph 6 about the real benefit to them. However, if some workable safeguard could be devised that would be likely to be acceptable to British industry and our preferential suppliers, our general disposition would be against duty quotas. It appears that virtually all the other donor countries apart from the E.E.C. take a similar view.
AGRICULTURAL PRODUCTS
14.
Our first offer of preferences in the processed agricultural products field appears considerably more generous than the offers of other countries, and must therefore be scaled down. We have already had strong representations from Australia and South Africa, and a number of the products in our original list are subject to contractual preferences to these countries and others.
15. The Ministry of Agriculture, Fisheries and Food have worked out a revised offer (Annex B) which seems more in line with the one submitted by others and which should go a long way towards meeting the preoccupations of our developed Commonwealth country partners. It reduces the scale of our offer in terms of beneficiary country trade in 1967 from $108 million to $37 million. We need to consult the Australians and others before we put any revised offer on the table, and the authority of the Committee is sought to begin these consultations on the basis of the revised suggestions of M.A.F.F. and, in the light of these consultations, to include them in our second submission. It should perhaps be repeated that the duty-free quota complication does not arise here, since the E.E.C. are not suggesting that processed agricultural products should be subject to such quotas.
BENEFICIARY COUNTRIES
16.
The Committee will be familiar with the "self-election" concept which 0.E.C.D. Ministers endorsed in principle. It is not certain as yet that other donor countries will in the event stick to this principle. It is uncertain, for example, whether Portugal will be accepted as a developing country and whether Hong Kong will be treated in the same way as other countries which are unquestionably developing. Our interest is that both countries should be included, since we accord duty free entry for the most part to their products
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CUTA
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