TNAG-0142-FCO40-178-Long-term-policy-on-International-trade-in-textiles-1969 — Page 170

CONFIDENTIAL

Korea and Portugal, and Italy is a low-cost exporter of sweaters. (It should not be forgotten that in American eyes the U.K. is a low-cost exporter to the U.S.A.).

22. As for the importing countries the U.S. have a genuine problem, but only on shirts and sweaters. Imports into the U.K., especially from Hong Kong and Portugal, are growing fast: for example half of the slacks sold here are imported. And Canada, Norway and Sweden have in recent years felt strongly enough about the effect of some imports on their home industries to exact "voluntary" restraint agreements from, - in the main Hong Kong, Japan, Korea and Taiwan. These agreements have tended to increase the pressure on our own market.

23. Future developments are hard to forecast. Developing countries will certainly see an expansion of trade in non-cotton textiles as an essential feature of their economic development. But the problem of preventing serious injury to domestic pro- ducers in importing countries might well not increase at all quickly to major proportions if those countries were prepared to apply strict and objective economic criteria. The main risk

is that they will use their power in the world to protect them-- selves, sometimes over an unjustifiably wide range of products, so as to satisfy over-hastily domestic pressure from parts of their textile industries that are relatively inefficient but politically influential.

U.K. policy and interests

24.

Our general policy hitherto has been not to establish quantitative restraints on non-cotton textile imports into the U.K. Ohly last month Ministers reaffirmed this policy to the clothing industry. Moreover we have just offered to remove quota restrictions on imports of non-cotton textiles from Japan after 1972 if the Japanese will remove restrictions on our trade. We have also played a quite prominent part, along with other countries, in resisting various protectionist proposals by the U.S. Minister for Commerce, including one for an extension of the L.T.A. to cover non-cotton textiles. Finally we have felt inhibited about protecting ourselves against imports from Hong Kong and because of Article 20 of the E.F.T.A. Convention (which is more tightly drawn than Article XIX of the G.A.T.T.) there would be legal difficulties about imposing restrictions on imports from Portugal.

25. Because of the importance of the textile trade to many 1.d.c's at this stage of their economic development and the growing overlap between cotton and non-cotton textiles they cannot equitably be denied a reasonable continuing rate of expansion in their export trade in these products. Our aims should be, so far as is practicable:-

(i) to see that the expansion is not so fast as to be

unreasonably disruptive to the economies of developed countries;

(ii) to ensure that the burden of imports is shared more

equitably than it is at present between developed countries;

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CONFIDENTIAL