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RECRIVED IN
RECICILY No.51
22 APR 1969
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THE FINANCIAL TIMES
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FRIDAY APRIL 18 1969
Fixhite Corrige Reffort File
X
The Financial Times Friday April 18 1969
HUGH O'NEILL discusses some of the malpractices in textile trading and the new threat from low-cost man-made fibre goods
Textile industry: need for 'adequate' import safeguards
T
HIS week-end the Lanca duties and without the present shire textile industry gets pattern of quotas; but only together in Nottingham to with "adequate measures against stage a two-day post-mortem on dumping and subsidising (which) the Textile Council's produc- must be known to all and shown tivity and efficiency study, pub- to all (to) be speedy and fished three weeks ago. Mr. decisive"; and with adherence Anthony Crosland, President of to any international plans in the Board of Trade. will have relation to exports from develop his first major confrontation ing countries to avoid being at with the Lancashire moguls en the receiving end of a distorted masse tonight when he addresses trade flow. the opening dinner.
It is becoming clear that what the Textile Council and Sir Frank regard as adequate safe- guards will have to include a measure of quantitative restric tions, or the ability to apply them. This would go some way beyond the current international rules for fair trade.
By Sunday they hope to have come to some conclusions or, at the least, aired their views on the main findings of the report concerning structure, produc- tivity, marketing and profita- bility. They will also shake hands across the Pennines with Mr. James Shaw, chairman of However good the intention the Wool Textile Delegation, may be, the effective operation who will give his views on the of dumping legislation in textiles wool textile industry in the is particularly difficult. 1970s.
people say it is unworkable, Under the GATT rules the im porting country has to prove that there has been damage to its industry and that the exporting country has been selling below its domestic price.
But of most importance there will be a lot of discussion and lobbying about what steps the Government intends to take to replace the current quota arrangements for cotton textiles which come up for renewal at the end of next year.
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International
agreements
er Furthermore, this week-end Mr. Maurice Stans, the US. toCommerce Secretary, will be eir half-way through his European tour discussing future inter- national trade in textiles. He is to complete this visit in Lon- by don at the end of next week.
The two events will be vitally eir connected, for what the US, manages to achieve in inter- rnational agreements controlling trade in low-cost textiles will ly bear heavily
on the U.K. TS. Government's decisions regard. ing future tariff and/or quota ot restrictions.
ja.
ho
ns
The Textile Council's report,
Some
The investigations needed are often long and drawn out; to prove that it was the merchan- dise involved that caused the market damage, and not other imports. is difficult; and even where the Board of Trade has finally decided that dumping has been proved, it is often too late. It is quite easy for end-of-season ranges and the end of long runs from North America to enter under these conditions with serious effects.
It is a fact that no anti- dumping duties have been im- posed on textile products under the 1957 dumping Act. There
GATT, but the alternative of a they can enter the UK, under now feel that without the imple- prices is very significant. One substantial devaluation would the Commonwealth preferential mentation of а have been just as bad for the rate of duty. Ireland is another quantitative restrictions, whether LTA, which apply to fabrics con- backstop of suggestion is that the existing importing countries.
loophole where cheap Asian under international agreements taining 50 per cent. of cotton or There are many more subtle fabrics can enter the British or not, the idea of tariff protec- more, should be extended to ways of subsidising exports. It market in garment form and tion on its own is highly opti- cover fabrics containing 20 per was difficult for Courtaulds to duty-free--a particular source of mistic--and reading between the cent., or even 5 per cent, of prove that export rebates in irritation to the Manchester lines that is what both the Tex cotton or more, to include the Austria amounted to damping rainwear manufacturers.
tile Council and Sir Frank secm man-made fibre blends which are of rayon fabrics. This case even Within this free-for-all, the to be saying. There is also a rapidly penetrating into the considerable amount of sceptic traditional markets for cotton ism about the accuracy of the textiles. international cost comparisons used in the Textile Council's report. They were the major piece of evidence on which the conclusion was reached that the Lancashire industry would in due course become viable behind a moderate tariff.
Mvelopment
Maurice Stans, U.S. Commerce Secretary: European tour.
are always other considerations a step which assisted in the involved, including the fear of introduction of voluntary restric- retaliation. "You can get over tions. all the hurdles except the national interest" is a common
There is also a well-used Lancashire sentiment.
device known as third party But it dumping. An example was where must also be said that the UK's Japan was suspected of dumping dumping legislation has had a rayon staple in Taiwan, which an which courageously recom- deterrent effect. Lancashire
tends to feel that unless a dump ruinous prices in Europe. The ing duty has been imposed it growing investment by the Japa- has not had its pound of flesh.
Equally difficult to control are low-wage Asian territories of nese textile industry in the really the "other malpractices" which the productivity
to South
Korea. Thailand and efficiency referred.
g
10 mended a massive contraction of 2s the Lancashire textile industry over the next five years, con- is cluded that it could make itself r internationally competitive by a the mid-1970s, when it would be Y come viable behind a moderate tariff and without the present quota restrictions: but "only," the report emphasised. if effec. F tive measures were taken to stop dumping and unfair trading, and to prevent undue distortion of trade and the channelling of low cost exports specifically to the U.K.
0
th
V
n
was used to make fabrics at
The authors of the report were careful to qualify those costings A5 "illustrative rather than definitive," but current inter- national prices do not always reflect a relationship similar to that in the cost estimates. According to the report's figures the U.S. textile industry should have little to worry about behind its present tariff of over 20 per cent, on imports of Asian man- made fibre fabrics. In fact U.S. manufacturers, despite their long runs and high productivity, which could not be equalled in Europe, are currently very con- cerned about low-cost imports from the Far East.
On
For the U.S.. where imports of man-made fibre textiles are only at 4 per cent. of consump tion at present, such an extension of the LTA would be very effec- tive. Although imports of man- made textiles into the UK. are up to 20 per cent. of consump. tion, that proportion which comes from the low-cost coun- tries is still relatively small.
In the case of most developed countries it will be a question of... bringing under control a poten- tial threat to the reorganisation of their own industries. That the U.K. already imports a high proportion of these fabrics from other developed countries despite a tariff is an indication of just how far it has to catch up. This comes out clearly enough in the Textile Council's illustrative" costings.
Synthetic fibres
In the first few months of this year there are signs in the U.K. that despite the tariff on man- made fibre fabrics, which is also There are now indications that over 20 per cent,, Far East im- same form of extension of the ports are beginning to penetrate GATT arrangements to man. this very fast growing market. made fibres (while the Lanca- reached the stage where Cour U.K. is considered to be a bit beginning to switch production make its major transformation The low-cost producers are shite industry is altempting to taulds had to remind the "soft" as far as dumping or Austrians of the possible conse- quences of its own selling power, It is thought that the Board of
into man-made fibre textiles and from being a cotton industry to "malpractices " are concerned.
are offering fabrics in these becoming a multi-fibre textile Trade has played the rules on
areas. A significant proportion industry) will be of growing too gentlemanly a basis. When now being used in workwear in
of the polyester/cotton fabrics significance.
There is still a body of opinion, Sir Frank talks about speedy the U.K. are being imported.
largely represented by the and decisive action it can be pre- sumed that he means a much Europe is to whip up support that by innovation in the pro- Mr. Stans' main objective in Viyella group, which believes more aggressive approach. The for voluntary restrictions duction of new fabrics and with productivity and efficiency study wool textiles exports to the UK. strongly branded merchandise, rather charmingly referred to But he is also hoping to arrange there is little need for tariff pro- ments by some other countries summer to discuss the renewal Courtaulds, which aims to have "certain administrative arrange a meeting for later in the tection let alone quotas. But
believed to have an inhibit-
of the GATT Long Term a rate of production of more ing effect on imports."
Arrangements (LTA) on cotton than 300m. square yards a year A recent example of how these textiles.
by the early seventies, will have "administrative arrangements" work was when the captain of for an orderly expansion of production of the more vulner- These Arrangements aimed to rely to a certain extent on the a shipload of cheap textile pro- trade, enabling developed coun- able commodity-type fabrics. ducts was simply and firmly told tries to impose quota restrictions While the supposition that the by the Customs in a Continental on imports where they were industry should be viable behind country to sail away to another causing market disruption, but a moderate tariff is reasonable, port." (It is not known whether at the same time allowing any there is likely to be increasing this turned out to be Liverpool.) quotas imposed to increase at a pressure for the Government to French and Italian authorities minimum of 5 per cent. a year. take a tougher attitude towards are well known for interpreting The UK had its own quota those "adequate safeguards": In slightly the same context their import controls there is the perfectly legitimate
very scheme increasing at 1 per cent. "firmly."
and although adaptation of international trad- account for the fact that their
the Yorkshire This may partly a year.
wool textile industry may not ing agreements.
The developed countries would like what Mr. Stans is up to multiple store group is
A major UK. imports of cotton textiles from like to see the LTA, which termi- this week, any US. inence now developing countries and Japan nate at the end of next year, not behind the extension of GATT understood
be polyester/cotton
buying are respectively only 1.4 per only renewed but also extended to man-made fibre textiles is Japan and having them
shirtings, cent. and, per cent. of home, to cover man-made fibre blends, going to be very relevant to the up in Hong Kong, from where
particularly in garments where progress of the Lancashire Many textile manufacturers the effect of cheap labour on industry over the next five years.
and Taiwan is the cause of consider study ambiguously able
apprehension in many These include avoid countries, including Hong Kong, ance of the origin rules which are extremely difficult to police; where, for example, East Euro- pean cloth at "political" prices may be "renationalised" in an- other European country.
There is also widespread sub- sidising in most Asian countries. Sir Frank Kearton, chairman particularly in Pakistan, where of Courtaulds, recently put this export rebate schemes and the point more clearly when he value of import licences issued stated that his company was against exports enable manufac quite prepared
to have its turers to sell at 30 per cent. or efficiency judged by international more below production costs. standards, subject to normal This situation was looked at by
Loopholes galore
10
consumpt
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