TNAG-0135-FCO40-171-Tariff-preferences-for-developing-countries-1969 — Page 176

CONFIDENTIAL

alternatively, in order to prevent applicants from grossly overstating their requirements, it might be necessary to relate allocations to eligible applicants' returns of their trade in a base period, certified by independent accountants. Both these devices may in some sense be unfair to importers who have just or are about to set up in business. Such a system would be possible to administer but at a cost of a con- tinuing burden of difficult and time consuming case work, Parliamentary Questions, Ministerial correspondence and Parliamentary Commissioner's cases. The manpower and related costs of a licensing system would be considerable both for Government and industry. It is impossible to estimate them accurately without knowing what the quotas or the demand for them would be.

8.

The following general conclusions may be drawn about the legal and administrative implications of using duty quotas for the UNCTAD preferences scheme:-

(i) New legislation and administration machinery would be required.

(ii) Duty quotas should be applied only to products where it was considered absolutely necessary, for whatever reasons, set and enforce the observance of an upper limit on duty free imports under the scheme.

(iii)

(iv)

to

Pre-allocation of duty quotas, although involving serious administrative problems, would avoid the bunching of imports, and also uncertainty for importers, which could result from a cut-off system.

For those goods where the level of beneficiary imports is unlikely to worry domestic industry or the developed Commonwealth, perhaps the most practical technique would be to authorise the grant of preference (for eligible 1.d.c. goods) for a year at a time, and to indicate that the Government would be prepared to consider putting selected items on duty quota in subsequent years if beneficiary imports of the item reached a specified 'target Figure', and if in addition domestic industry or the developed Commonwealth could show reasonable evidence of damage due to this level of preferential imports.

3

28th August, 1969