TNAG-0300-FCO40-336-Entitlement-of-Hong-Kong-to-generalized-tariffs-preferences--1971 — Page 123

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This is for two main reasons, short term and medium term.

The easier question is the medium term one -

i

how we adapt

, to the Community's Generalised Preference Scheme on 1

January 1974 (on the assumption that this date is agreed). The difficulty is that the Community's (pretty small) duty free quotas are related to their past level of imports (limited under the Long Term Textile Arrangement) from certain countries (India, Pakistan, the UAR, South Korea, Colombia, Mexico and Jamaica). But our imports from India and Pakistan in particular have been substantially larger. If therefore we were to align to the Community's system of duty free quotas on the basis on which they are at present calculated the enlarged EEC would have to accept a volume of duty free imports based on imports into the Ten and

·

therefore proportionately much greater than the Six at

present accept.

This would be most unwelcome to EEC

industry. In the negotiations which would be necessary

to resolve this situation weight well have to accept a

venight

higher share of the Community duty-free quota than we

should like. This would mean that UK industry would once

more have to face sizeable duty free imports;

the stimulus

to competitiveness within the industry provided by an absence of quantitative restraints would be removed; and the industry would argue that the basis on which they had been encouraged to restructure and invest by successive Governments would be destroyed. At the same time the EEC's textile industry would continue to be sheltered by

comparison with the UK.

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