TNAG-0172-FCO40-208-United-Kingdom-Productivity-and-Efficiency-Study-effect-on-H-1969 — Page 83

J Roevale Office Mr. Carter 7 14

Kr. Gooden

U.K. Textile Council Report

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Lord Shepherd, having seen the Board of Trade memorandum to the Cabinet Ministerial Committee on Commercial Policy about cotton textile imports, is aware that HMG is considering its policy towards the Lancashire cotton industry in the light of the recommendations of the Textile Council's Report. The chief proposal of the Textile Council is that existing quantitive restrictions should be withdrawn at the end of 1971 and replaced in the case of Commonwealth supplies by a tariff at the rate of 85% of the existing MFN rate. We understand that a decision on this is likely to be taken by Cabinet tomorrow. I have arranged with Mr. Whitehead (Commodities Department) for a copy of the Secretary of State's brief to be sent to you.

Impact on Hong Kong

2. A definitive analysis of the probable effects on Hong Kong, if it were decided to impose a duty on Commonwealth cotton textiles, is expected to reach us within the next few days. The Governor, who has been consulting his industry about the recommendation of the Textile Council, has told us that as a final stage in his analysis he has arranged a meeting of his Textile Advisory Board for today, 15 July (allowing for the time difference between the Colony and ourselves it will have been held by now). He will undoubtedly telegraph his considered views without delay, but it is doubtful that these will be received in time to be reflected in the Secretary of State's brief for

tomorrow.

3. In the meantime, we have the Governor's tentative assessment that the trade in cotton textiles might hold up overall but that there would be changes of pattern probably towards increased trade in garments and away from fabrics. The acting Director of Commerce and Industry visited London during June and from discussions with him then we judge that detailed consultation with the Hong Kong industry may not produce a very different

assessment. The Governor's main fear is that the withdrawal of

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