4.
-2-.
In November 1964 South Africa did not object to the imposition of the temporary import surcharge and even supported the U.K, in the G.A.T.T. on this issue although the surcharge contravened her contractual rights. However, the surcharge was temporary and did not apply to foodstuffs and raw materials and therefore did not affect about 90% of South Africa's exports to the U.K.
5.
An additional reason why South Africa raised no objection to the temporary import surcharge was that it was non-discriminatory. South African officials, however, cbjected very strongly in 1965 to
1965 to our imposition of quotas on imports of South African cotton textiles largely because they were discriminatory and were not applied to the U.S.A., Western Europe, Australia and New Zealand. It is assumed that any tariff imposed on cotton textiles and allied products imported from Commonwealth countries, will apply to Australia, and New Zealand. If it does not, South Africa's reaction will be very adverse indeed and she may refuse to agree to waive her contractual rights. She will accept that we cannot impose tariffs on
on cotton textile imports from E.F.T.countries and the Irish Republic but even this discrimination will strengthen her resistance, especially as she will be placed at a competitive disadvantage in the U.K.
6.
疲
In spite of her strong resistance to giving up her rights under the Ottawa Agreement and her strong opposition to anything that savours of discrimination against her, South Africa may nevertheless feel that the imposition of a tariff under which she would still have a preference in the U.K. against non-Commonwealth countries other than E.F.T.A. and the Irish Republic, would give her a better prospect of in- creasing exports than the present quota system which provides for an increase of only 1% annually. After initial resistance she might therefore be prepared to agree to the imposition of a tariff but she would certainly demand full compensation for · giving up her contractual rights. This compensation would probably take the form of a demand that we agree to give up some of our contractual preferences in South Africa and perhaps that we accept further unbindings. We might have to pay a heavy price for her consent.
7.
South Africa's attitude might be affected by the prospect of our joining the E.E.C. if that appeared likely in the near future when she would lose the right of free entry under Article 1 of the Ottawa Agreement. I think, however, that this can be disregarded at present since the decision on the imposition of a tariff.on cotton textile imports from Commonwealth countries must presumably be taken years before British membership of the EC is in sight
SIR J. NICHOLLS
FILES:
COMMODITIES DEPT.
S.ASIAN D.
AMERICAN D.
W.AFR.D.
S.W.PAC.D. TR.POL.D.
E.AFR.D. S.EUR.D.
H.K.D.
GIB.& S.A.D.
SIR A. SNELLING MR. GALLAGHER
ING
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