CONFIDENTIAL
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5. THE PROPOSED RATES OF DUTY ARE ABOUT 6 1/2$ FOR YARN, 15% FOR CLOTH, AND 17% FOR GARMENTS. THESE RATES ARE NOT FAR OUT OF
LINE WITH THOSE OF THE E.E.C. AND MOST OTHER DEVELOPED COUNTRIES.
6. WE INTEND TO ABOLISH THE QUOTA SYSTEM WHEN THE TARIFF IS
INTRODUCED BUT YOU WILL NOTE, THE PRESIDENT'S RESERVATION OF THE RIGHT TO RE-IMPOSE QUOTAS ON PARTICULAR PRODUCTS FROM INDIVIDUAL COUNTRIES ONLY IF THE LEVEL OF IMPORTS OF COTTON TEXTILES OVERALL INCREASES ABOVE PRESENT LEVELS CAUSING DISRUPTION IN OUR MARKET IN THESE PRODUCTS.
7. AS YOU ARE AWARE, THE U.K. QUOTA SYSTEM HAS BEEN STRONGLY CRITICISED BY MANY OF THE DEVELOPING COUNTRIES, INCLUDING A NUMBER OF COUNTRIES IN THE COMMONWEALTH PREFERENCE AREA, MAINLY BECAUSE IT DESCRIMINATES AGAINST COUNTRIES WHICH HAD NOT FULLY ESTABLISHED THEMSELVES IN THE MARKET IN 1962-64, THE BASE PERIOD FOR THE QUOTAS. THE PATTERN OF CATEGORISATION IS ALSO BECOMING INCREASINGLY
OUT OF DATE. MOREOVER THE TEXTILE CYCLE IS EXPECTED TO TURN
DOWNWARDS IN 1979, A YEAR IN WHICH IT WOULD HAVE BEEN EXTRAORDINARILY DIFFICULT FOR H.M.G. TO HAVE LET THINGS GO ON AS THEY ARE. IT IS IN
THIS CONTEXT THAT YOUR ATTENTION IS INVITED TO THE ASSURANCE OF THE
PRESIDENT OF THE BOARD OF TRADE THAT WE ARE NOT SETTING A PRECEDENT
FOR TARIFFS ON OTHER COMMONWEALTH PRODUCTS: COTTON TEXTILES ARE, BY INTERNATIONAL CONSENT, A SPECIAL CASE.
ENDS.
STEWART
FILES
COMMODITIES DEPT.
H.K. DEPT.
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CONFIDENTIAL
COPIES TO:
MR. A.F. TOMS
MR. S. STEWART
B.O.T.
B.O.T.
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