CONFIDENTIAL
share of the market has risen from 15 per cent to 30 per cent between 1958 and 1968. Annex 2 shows that the production of spun and filament cloth has fallen from 2,226 m. sq. yds. in 1958 (the year preceding the Cotton Industry Act, 1959) to 1,445 m. sq. yds. in 1968. Within the total the production of cotton cloth fell by half. The Textile Council's forecast is that, even if the import-export balance improves by 200 m. sq. yds., production of spun and filament cloth will remain at about this level between now and 1975, but that the share of cotton within the total will continue to decline. Employment in the industry is expected to fall by 55,000 to approximately 70,000. The number of mills is likewise expected to fall by some two-thirds, if labour and machine productivity increase as rapidly as expected. The growth in consumption has been and will continue to be concentrated in knitted etc. products, whose share of the market is expected to rise to 43 per cent by 1975 from the present figure of 30 per cent.
4. The decline in production has been accompanied by an increase in total imports of cotton and man-made fibre cloth and cotton made-ups from an extimated 500 m. sq. yds. in 1958 to 1,114 m. sq. yds. in 1968. Retained imports of cotton cloth and made-ups in 1968 amounted to 853 m. sq. yds., or 53 per cent of consumption, and of the total some two-thirds consisted of imports from developing countries. The proportion imported duty-free was also very high: 63 per cent from the Commonwealth and 15 per cent from Finefta and the Irish Republic. Only 14 per cent of consumption i.e. rather more than one-quarter of total imports from the developed countries and no less than one-third of this originated in Canada and the Irish Republic.
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5. There have been very considerable changes in the industry in the past two years. The number of independent firms has fallen by nearly half and there have been major changes in structure and organisation. The big groups now control nearly half the output; and although a good deal more investment is required to bring it up to continental standards of efficiency, the industry is now in a much stronger competitive position than it was a few years ago as a result of the considerable sums which have been spent on modernisation. Production and marketing methods have also been streamlined. These improvements have convinced the industry that it can compete effectively behind a 15 per cent tariff.
This was inconceivable four years ago.
The present tariff position
6.
Textiles and clothing are at present admitted duty-free when imported from the Commonwealth unless they contain 5 per cent or more of silk or man-made fibres, in which case the rate of duty is 85 per cent of the m.f.n. rate. The m.f.n. rate for cotton textiles is and will continue to be 71⁄2 per cent on yarn, 171 per cent on cloth and around 20 per cent on made-ups. If the Textile Council's proposal is accepted the duties on cotton would then be the same as they are on man-made fibres, except that there would still be an alternative specific duty on imports of man-made fibre textiles with a higher incidence on very cheap items.
7. Following limited arrangements to control imports in previous years it was decided to introduce a comprehensive scheme of control on 1st January 1966 to restrict imports from all but a handful of developed countries in Western Europe, North America and Australasia for a period of five years. Imports in 1966 were restricted to the 1962-64 average and were subsequently allowed to grow by only 1 per cent per annum up to the end of 1970. India and Hong Kong each have a
country quota of about 200 m. sq. yds. All the other countries* share in a
*
Except Japan and the Communist bloc, where trade has been regulated under bilateral agreement since 1945.
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