TNAG-0173-FCO40-209-United-Kingdom-Productivity-and-Efficiency-Study-effect-on-H-1969 — Page 28

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Mr. Carter

Mr. Godden

3019.

CONFIDENTIAL

U. K. Textile Tariff

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Following upon the recommendations of the Textile Council's Report on cotton and allied textiles, Mr. Crosland announced to the House of Commons on 22 July that the Government had accepted

its main conclusions. His statement included the following

passage:-

"The Government have decided that the right course is

to introduce, as from 1 January, 1972, a tariff on

imports from the Commonwealth preference area on the lines proposed by the Textile Council. From that date, the existing general quota system will be

terminated; and the Government would consider the

use of quotas only on particular products under the

Long Term Cotton Arrangement of the GATT, and only

if total imports of cotton textiles rose significantly

above the present level and caused disruption to the

market in those particular products. These decisions

would, of course, be subject to any modifications that might be required if we joined the EEC."

2. Mr. Tang, during his recent talk with the Minister, raised the matter of the implied possible reimposition of the quota, and this has been taken up with the Board of Trade. So far we have not received clarification of Mr. Crosland's meaning, but a preliminary interpretation suggests that there has got to be an overall increase in textile imports before quotas are used to protect a particular sector of the U.K. industry.

3.

Prior to the statement to the House, Hong Kong gave an

assessment of the probable effects of a U.K. tariff on its trade. Their main criticism was that, although a dependent territory, they would have to overcome a tariff barrier while EFTA producers, e.g. Portugal, would not. Also, increased competition from the really low-cost producers (e.g. Taiwan or Korea) would cut into Hong Kong's share of the British market,

CONFIDENTIAL

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