CONFIDENTIAL
FCO TELNO 840 TO DELHI
3.
C
THE QUOTA SYSTEM WERE RETAINED, ALTHOUGH WITH SOME
RE-DISTRIBUTION BETWEEN SUPPLYING COUNTRIES. WE ARE, IN EFFECT REPLACING ONE METHOD OF PROTECTION WITH ANOTHER,
PARAGRAPH 6 OF THE STATEMENT IMPLIES THAT IN CERTAIN CIRCUMSTANCES, WE ARE PREPARED IN EFFECT TO CONSIDER ASSISTANCE TO INDIA AGAINST THE POSSIBLE LOSS OF COTTON TEXTILE EXPORTS TO THE U,K. AS THE RESULT OF THE IMPOSITION OF A TARIFF. WE BELIEVE THAT INDIA IS PECULIARLY VULNERABLE TO THE EFFECTS OF THE RE-DISTRIBUTION OF TRADE AND THERE IS NO PROSPECT OF OUR AGREEING TO DO THE SAME FOR ANY OTHER
COUNTRY,
D) THE PROPOSED RATES OF DUTY ARE ABOUT 6 AND A HALF PER CENT
FOR YARN, 15 PER CENT FOR CLOTH, AND 17 PER CENT FOR MOST KINDS OF GARMENTS. THESE RATES ARE NOT FAR OUT OF LINE WITH THOSE OF THE E.E.C. AND MOST OTHER DEVELOPED COUNTRIES. (E) WE INTEND TO ABOLISH OUR QUOTA SYSTEM WHEN THE TARIFF IS
INTRODUCED, RESERVING THE RIGHT TO REIMPOSE QUOTAS ON PARTICULAR PRODUCTS FROM INDIVIDUAL COUNTRIES ONLY IF THE LEVEL OF IMPORTS OF COTTON TEXTILES OVERALL INCREASES ABOVE PRESENT LEVELS, CAUSING DISRUPTION TO OUR MARKET ON THOSE PRODUCTS. ON THE OTHER HAND, ASSUMING THAT THE L.T.A. OR SOME SIMILAR SYSTEM IS IN FORCE IN 1972, THE PROSPECT IS THAT OTHER DEVELOPED COUNTRIES WILL CONTINUE TO PROTECT THEIR MARKETS WITH QUOTAS AS WELL AS TARIFFS, AS YOU KNOW, ALL OF THEM IMPORT A FAR SMALLER PROPORTION OF THEIR CONSUMPTION FROM THE DEVELOPING COUNTRIES THAN WE DO.
(F) THE U.K. QUOTA SYSTEM HAS BEEN STRONGLY CRITICISED BY MANY
OF THE DEVELOPING COUNTRIES, INCLUDING A NUMBER OF COUNTRIES IN THE C.P.A., MAINLY BECAUSE IT DISCRIMINATES AGAINST COUNTRIES WHICH HAD NOT FULLY ESTABLISHED THEMSELVES IN THE
CONFIDENTIAL
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