TNAG-0241-FCO40-277-Agreements-under-GATT-long-term-arrangements-for-exporting-o-1970 — Page 26

CONFIDENTIAL

announced in the House of Commons HMG's intention with effect

from 1 January, 1972 to discontinue the present quota system on

imports of cotton textiles from the developing countries and tɔ

introduce instead a tariff on Commonwealth cotton textiles at

the rate of 85% of the most-favoured-nation duties.

The Tariff

will not be applied to EFTA countries. The announcement did not

exclude the possibility of recourse to quotas on particular

products if total imports of cotton textiles rose significantly

above the present level and caused market disruption in those

particular products. The President made it clear that the

decisions then to be given effect would be subject to any

modifications that might be required if we joined the EEC.

10. The effect of the switch from quantitative restrictions to

reliance on a tariff alone should be to reduce imports of cotton

textiles from the developed countries; the developing countries

of the Commonwealth generally (with the possible exception of

India) should not be adversely affected. Hong Kong in particular

should be able to maintain the volume of her trade, but Shere

could be significant changes cf pattern, with trade in fabrics

de creasing and in garments and other made-up articles increasing.

But Hong Kong maintain that the return on exports to this

country will be less and are apprehensive about the reverse

preference given to their Portuguese competitors under the

EFTA arrangements.

11. The "Heads of Agreement" will need to be renegotiated

before its expiry at the end of the year to cover the period

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