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FINANCIAL TIMES
23 JUL 1969
Cutting dated
19
Aid to textile industry
་་ ། furn to the question of financial assistance to the industry, The Textile Council proposed that firms in the traditional textile areas should be offered the 40 per cent. rate of investment grant which is payable in the develop
ment areas.
"The Government has decided both against this,
on general grounds of regional policy and because in present circumstances, including in particular the position on public expenditure, we would not be justified in singling out this industry for financial assistance on such a scale.
“The Council also proposed that plant worked on a multi-shift basis should qualify for a higher than normal annual allowance for depre- ciation. The Government attach importance to any proposal which might increase the utilisation of new machinery, and the Inland Revenue are prepared to consider an application by the Textile Coun cil for an increase in the deprecia
tion allowances on textile machi-
nery.
In addition, the two consult ants whom I have appointed to advise me On mergers between medium and small sized firms in the industry are in close touch with the IRC. They have seen more
than 70 firms, and enough progress has been made to enable the IRC to begin discussions on prospective
mergers.
by a tariff forms an essential part The proposal to replace quotas of a developing policy designed to help this industry to survive and compete in ап international environment.
* I have already announced decisions on the structure of the
industry which should give the large firms the stability they need to proceed with their internal reorganisation and integration, while encouraging a much-needed process of amalgamation against the small and medium firms.
"To-day's decisions carry the policy a crucial stage further. Successive Governments have failed to come to grips with the industry's basic problems; and the industry itself has failed to adapt sufficiently to changing circum-
stances.
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"I hope that the decisions I have announced, provided they accompanied by clear determination on the part of both sides of the industry to carry out the changes recommended by the Textile Council, will enable the Lancashire textile industry once: again to take its place in the fore- front of British industry."
Sir Keith Joseph Opposition front bench spokesman on trade, said the view of the Textile Council was that a change from quotas to tariffs must be accompanied by stronger action against dumping.
Do you propose any action to protect the British industry from exports from countries which in- dulge in hidden export aids and
he asked other_dumping practices? Mr. Crosland.
Sir Keith also asked whether special depreciation consideration for multi-shift use of textile machinery would be extended to other indus tries whose machinery was used on
a multi-shift basis.
Mr. Crosland said he had told the Textile Council that in his view the
were
powers on dumping, which had been strengthened recently,
fully adequate to deal with any problems met in that field.
On higher depreciation allowances, he said it would be best to wait and see what happened when the industry made its application to the Inland Revenue.
In the Lords, Lord Brown, Minister of State. Board of Trade, said it seemed highly probable that the prices of textile imports from Commonwealth countries which would now have to bear tariff would drop by about the amount of the tariff.
He said it was not expected that there would be a rise in prices as a result of this change.
Reactions abroad to change
manner in which London had gone about its cancellation of quota arrangements was a sorry performance.'
BY OUR OWN CORRESPONDENT
THE BRITISH Government's decision to end the quota system for cotton textiles, imported from the Commonwealth preference arca, has shocked Hong Kong Government officials and textile interests.
seven
Last week-end,
Hong Kong textile organisations cabled Mr. Crosland protesting against Britain's intention to implement
the main recommendations of the
Textile Council's Report. But the
British Government is understood to have made clear that its mind
was made up, and politely indi- cated that further protests and representations were pointless,
Shares drop
The Far Eastern Economic Re view, which publishes details of the British decision in its current issue, comments that "the shot-gun
taken
are more
British market
The Review says the share of the now taken by Commonwealth exporters will be over by Britain's EFTA partners, whose textile industries, despite high wages. eficient than those of Lancashire. Commonwealth suppliers will be forced to cut their prices in order to remain competitive, thus putting more strain on the British textile industry.
At present 43 per cent, of all Hong Kong's exports to Britain consist of cotton textiles, but this trade accounts for only 7 per cent. of Hong Kong's total exports. It should make the necessary is probably better that Hong Kong adjustments now, while in middle of a presently running at 25 per cent. boom (exports are above last year's record figures), than to wait for the end of cotton
re-
the
tariff preferences when Britain
finally enters the EEC.
Moreover, Hong Kong textile manufacturers often impose a 15 per cent. surcharge on their own costs by purchasing surplus U.K. textile quota rights on the unofficial local market in this commodity.
While the impact on Hong Kong's textile industry might there- fore prove to be significantly less than feared at present, prices of
HONG KONG, July 22.
Hong Kong textile shares on the local exchange have slumped badly, as has the prestige of the
mother country."
Our Geneva Correspondent writes: The announced change in future British import policies for cotton textiles will have few direct repercussions on the exports of EFTA suppliers, it is believed-here. An official of the Furopean Free Trade Association noted that total EFTA exports of cotton textiles to Britain had Iveen growing steadily over the past few years and it seemed likely that this trend would continue, particularly as all intra-l:FTA industrial tariffs have already been abolished.
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Discussions on the long-term Cotton Textile Agreement scheduled to be held within GATT at the beginning of September. The talks concern the renewal of the
lapse in autumn, 1970. agreement, which would otherwise
Portugal pleased
Our Lisbon Correspondent adds: Mr. Crosland's announcement is expected to come as welcome news to the Portuguese industry
I suffering as it is from the ellects of an agreement to limit exports to Britain.
Sources within the industry here said it was geared to step up pro- duction almost immediately.
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