CONFIDENTIAL
ANNEX
Reviews will be carried out every three months by the Uni ted Kingdom Government in consultation with the United Kingdom Cotton Board, at which representatives of the Hong Kong Government or the Board may participate if they wish. The first review will take place towards the end of November 1961.
2.
The object of the reviews will be to provide supplementary quotas, over and above the basic quotas, for the three Commonwealth countries (Hong Kong, India and Pakistan) so far as may be necessary to enable them to maintain their share of imports into the U.K. at a level which appears to be fair, without endangering the re-organisation and re-equipment of. the United Kingdom cotton industry.
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3. The volume of retained imports of cotton textiles (including the cloth equivalent of made-up goods will be established for the latest three months for which figures are available. A yardage amounting to 20 per cent of the imports of piecegoods other than grey cloth imported in this period together with 85 per cent of the imports of other cotton textiles (i.e. grey cloth and made-up goods) will be regarded as the "target share" in the imports of the three Commonwealth countries, taken as a group. Imports of made-up goods from third countries will be assumed to be 2 million square yards per quarter. If the "target share" established in this way exceeds the amount of the basic quotas for 1962 (i.e. 106 million square yards a quarter), a supplementary quota, equal to the difference between the "target share" and the "basic quotas", will be issued pro- vided that if the average length of weavers' order books in the U.K. cotton industry, at the latest available date, as calculated by the U.K. Cotton Board, is less than 20 weeks, the supplementary quota will be reduced in accordance with the following scale :-
+
Order Books
20 weeks*
19 weeks
18 weeks
< 17 weeks 16 weeks
15 weeks
Abatement
0%
5%
15%
25%
50% 100%
As regards intermediate decimal points, abatement will be on the basis of a straight line connecting consecutive points above. If, for any two consecutive three-monthly periods, supplementary quotas were to be reduced by 50% or more (because weavers' order books had fallen to 16 weeks or less) the U.K. Government will discuss the situation with the Hong Kon authorities.
4. If, at three consecutive reviews, a supplementary quota has be due and actual imports from the three Commonwealth countries have exc ed the "target share" no supplementary quota will be issued at the review.
3
India
5. The supplementary quota will be shared between Hong Kong, and Pakistan in the same proportions as their basic quotas for 1962.
6.
The yardage by which supplementary quotas may be reduced on account of weavers' order books falling below 20 weeks can be carried forward and may be utilised when weavers' order books are again 20 weeks or more. If, however, imports from the three Commonwealth countries in any period are in excess of the "target share", this excess will be deducted from the amount of the deficit. The amount of the " carry forward" that can be utilised in any period of three months will be decided by the U.K. Govern ment after consultation with the Government of Hong Kong.
7.
If there is evidence that the foregoing arrangements are pro- ducing results inconsistent with their objects, consultation will take place at the request of any of the authorities concerned,
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Private notes are available after approval.