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particular types of cotton textiles if total imports increased above present levels and if there was market disruption in those types of textiles. This was on the assumption that the Long Term Arrangement, or some similar agreement, was in force after 1972.
7. The question for decision, therefore, is whether we should advocate that the Long Term Arrangement should be extended beyond 30th September, 1970, whether we should advocate its termination, or whether we should avoid playing a leading part in the negotiations.
8. Given that the proportion of our market supplied by low cost cotton textiles is very much greater than that of any other major developed country, it might well suit us best to see the Arrangement terminated altogether once we have removed
our quotas. We should then be in more or less the same position as any other importing country in that the only form of protec- tion available to the domestic industry would be the tariff.
9. Moreover it can be argued that the L.T.A. has been a cloak under which a number of countries have been able to pursue a distinctly protectionist policy on cotton textiles, and a number of importing countries have taken advantage of its pro- visions to keep imports from the developing countries down to a very low level. The main weaknesses are that the importing country is allowed to be judge of its own case: that the restrictions are almost always discriminatory: and that Article 4, providing for bilateral agreements, has sometimes been used to deny the exporting countries their basic rights under the Agreement. The effect has been to increase the pressure on countries like the United Kingdom which did not impose restrictions until imports had taken over a large share of the market.
Attitude of other countries
10. Japan is likely to fight hard against an extension of the L.T.A., partly in order to buttress her defence against United States proposals to extend restrictions to other textiles.
11. Hong Kong will take the same line, but her attitude will not count for much at the negotiating table.
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On the other hand the U.S.A. will want to see the L.T.A. extended in more or less its present form. If they feel obliged under pressure to be a little more generous to the developing countries they might perhaps agree to increase the percentage by which their quotas are increased annually (at present 5 per cent); but we have no information about this.
13. The E.E.C. as a whole are likely to continue their strongly protectionist policy and to see an extension of the L.T.A. as the best means of achieving this. Any proposals for relaxation on their part would probably take the form of duty free entry for cotton textiles imported from countries who are signatories of the L.T.A. (although they may adopt a less forthcoming attitude towards Hong Kong). The Germans may be less attached to the extension of the L.T.A. than their fellow members of the E.E.C., as their textile industry is reasonably competitive and they have a strong interest in selling to the developing countries.
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