TNAG-0173-FCO40-209-United-Kingdom-Productivity-and-Efficiency-Study-effect-on-H-1969 — Page 80

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G.F. 323

CONFIDENTIAL

2

Sector

1968

Exports to Britain as percentage of total exports in each sector

(by volume or

value)

1968

Exports to Britain in each sector as percentage of total cotton textile exports to Britain (by value)

1968 Overall exports in each sector as

percentage of total overall cotton textile exports

(by value)

ams

25.9% (volume)

3.3%

3.3%

rey piecegoods

27.0% (volume)

19.7%

16.1%

inished piecegoods

16.4% (volume)

10.3%

14.0%

ade-up goods

34.9% (value)

12.2%

9.3%

arments

25.7% (value)

54.5%

57.3%

otal woven cotton

textiles

26.2% (value)

87.1%

89.4%

nitted goods (cotton)

32.6% (value)

12.9%

10.6%

otal all cotton

textiles

26.8% (value)

100.0%

100.0%

Yarn

5.

The present limitation on exports of cotton yarn to the U.K. is 6.49 million lbs. However, in the past few years this quotas has not been fully utilised. A reduction of costs in the U.K. industry, the removal of quotas on other low cost suppliers and the imposition of a 15% tariff with continued duty free entry for Portugal would all tend to reduce the prices (net of tariff) that could be realised for Hong Kong yarn in the U.K. market. Unless this lower price level could be met, either within existing Hong Kong costs or by a reduction in costs, a decline in the quantity (and even more in the value) of Hong Kong's exports of yarn to the U.K. would seem likely. A further factor to take into account is that the value added in spinning over the cost of the raw cotton is not great, whereas the tariff would be imposed on the total c.i.f. price and thus would be a much higher percentage of value added in spinning.

6.

In this connection it should be noted that Pakistan yarn is known to have the advantage of certain exchange control privileges which have virtually the same effects as a direct subsidy. In a market with no quantitative restrictions, and where price is the only major consideration, yarn from this source would be a serious competitor for Hong Kong. This situation may, of course, be rectified to some extent by the imposition of countervailing duties by the British Government to offset the subsidisation, which the Report recommends should be done. But the Pakistani authorities could be expected to argue that their practices do not amount to subsidisation.

/7. The High

...

CONFIDENTIAL