TNAG-0139-FCO40-175-Effect-of-EEC-common-commercial-policy-on-Hong-Kong-exports-1969 — Page 25

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general change of system which might be required by our entry

into the E.E.C.

The effect of the new arrangement should be to reduce

imports from the developed countries which have benefited markedly

from the existence of quota restrictions on imports from the

developing countries. There is no reason to think that, with the

possible exception of India, the developing countries of the

Commonwealth generally will be able to export less to Britain over

a tariff of this amount than they would under a continuation of the

quota system.

So far as India is concerned, the Government will, when the

time comes to determine the level of aid to India after 1972,

take into account, against the background of India's general aid

requirements at that time, any adverse effects on her exports from

the tariff.

I turn to the question of financial assistance in the

industry.

The Textile Council proposed that firms in the

traditional textile areas should be offered the 40 per cent. rate

of investment grant which is payable in the development areas.

The Government have decided against this both on general grounds

of regional policy and because in present circumstances, including,

in particular, the position on public expenditure, we would not be

justified in singling out this industry for financial assistance

on such a scale.

The Council also proposed that plant worked on a multi-

shift basis should qualify for a higher than normal annual

allowance for depreciation. The Government attach importance

to any proposal which might increase the utilisation of new

/machinery

CONFIDENTIAL