to a country requesting restraint
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that had the advantage of Commonwealth preference naturally got into the market early on, before the LTA came into existence. But after they came under restriction (Hong Kong 1959, India and Pakistan 1960) there was no relief for the British industry because the imports then flowed in from other countries, and Britain eventually felt obliged to introduce the global' quota system in 1966 (but even that is not in fact global because it doesn't include the 'developed countries'). The earlier restrictions on Commonwealth suppliers (we were the first) pre-dated the LTA and the global quota restrictions were imposed in contravention of it.
6.
So Britain had a 'burden' of low-cost cotton imports (no burden but a boon to the consumer) before the LTA came into existence and it continued to grow, but one can hardly blame the situation on the LTA, which in any case was not designed to re-distribute the 'burden'. Indeed it specifically protects exporting countries against a cutback in exports.
It seems unreasonable to us that a country which has never, so far as we know, invoked Article 3 of the LTA should criticise it for failing to do whatever it was never intended to do.
7.
propositions:
(a)
The 'Article XIX policy' proposal rests on two basic
that the LTA has failed;
1
(b)
that Article XIX of the GATT is the internationally accepted instrument for dealing with 'market disruption'.
and we believe neither of them to be sound.
8.
HKK 6/331/1 109 of his letter of 8 September to Shaun Stewart.
17.5m,
The BOT paper to my mind does not make it sufficiently clear that the British import situation as regards cotton and cotton-type mmf is different and that the total picture is misleading without the breakdown. In this connection Derek Jones sent Bunny Carter a copy
In this letter he expanded in detail on para. 24 of my Preliminary Comments. The remark in the BOT paper that half of the slacks sold in Britain are imported is positively misleading, appearing as it does under a heading that refers to the threat from non-cotton textiles. As Derek pointed out only 1.2 m. of the 18.8 m. prs of slacks imported into Britain in 1968 were mmf. 188. were cotton under quota. There are similar figures on other items which are said to pose this threat. In short Derek's letter seems to me to demolish the suggestion that imports of non- cotton garments pose any immediate or potential threat to British industry, and this is surely largely because you already have an effective tariff with a very small Commonwealth preference margin.
9.
In these circumstances it is surely also misleading to suggest, as is done at another point in the BOT paper,that the British policy of having no q.r. s. on mmf imports has inhibited Britain from protecting itself against imports from Hong Kong. Such imports are at such a low level that no such protection is needed. Indeed, as Derek's letter indicates, on the evidence Stewart has presented, every one of his cases is one which, if it were presented by anyone else, he would insist that Hong Kong ought to reject - and we would agree.
10.
Whether a threat is developing or will develop as
a result of the EFTA arrangements is another matter but, even if it does, can it be dealt with under the GATT? It is my understanding that EFTA members can't use Article XIX of the GATT against each other. They have bound themselves to this free trade area concept and must abide by
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