TNAG-0142-FCO40-178-Long-term-policy-on-International-trade-in-textiles-1969 — Page 219

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- 12. As regards the developing countries, the only reason why

they in general (apart from any particular uncompetitive supplier which may have secured a sheltered market under the quota system as India has done in the U.K.) should favour continuation of the CTA would be if they expected that in its absence worse things might befall them. It seems doubtful whether they would include in the clase of "worse things" increases in tariffs unless these were prohibitive, but they might well regard the risk that in the absence of the CTA the majority of the developed countries would eventually resort once more to unilateral imposition of illegal q.r. as being worse than the CTA with its provisions for minimum quotas and annual growth. Unless the developing countries believe this to be a genuine risk, their first objective will presumably be the complete abolition of the CTA.

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13. Hong Kong as a very competitive supplier can be expected to gain from genuine liberalisation of trade in cotton textiles. As against this, since Hong Kong has a lead over Taiwan, Korea and Malaysia in penetrating certain markets, she might consider that in some circumstances restraint arrangements which preserve the present pattern of trade give her advantages, especially if the control is left at the exporting end.

Suggested U.K. Line on Prolongation of CTA

14. Thus, in so far as the discussion at the GATT Textile Committee is confined to the question whether the Cotton Textile Arrangement should be prolonged, we can expect a confrontation between the EEC., U.S.A. and most other developed countries on the one hand, and the developing

countries plus Japan on the other. Our own interests as explained above lie somewhere in between, though perhaps in the longer term closer to those of the developing countries. We could accept without great concern the victory of either side i.e. if the CTA is prolonged for another three years (as it was in 1967) we would be glad to have the first two years of this extension, and our interests would probably not be greatly damaged by a third year in which we would experience somewhat greater pressure on our market from low-cost imports, but would have the remedies of the CTA available to us.

If, on the other hand, the CTA is not extended, we could probably secure the acquiescence of GATT in the continuation for one more year of our own quotas on imports. Thus there seems no reason why we should/susceptible to particular pressure from

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