TNAG-0300-FCO40-336-Entitlement-of-Hong-Kong-to-generalized-tariffs-preferences--1971 — Page 44

CONFIDENTIAL

The tariff on Commonwealth cotton textiles was set at about

the level of the Common External Tariff and of the existing

UK tariffs on man-made fibres. The Government did not accept

the Council's recommendation to phase out quotas after the

tariff's introduction, mainly to help sell the new tariff to

the Commonwealth and to avoid double protection.

But we

retained the right under the GATT Long Term Cotton Textile

Arrangement to re-impose q Tas the LTA allows) imports of

particular products disrupted the market, with the additional condition (not required by the LTA) that total imports would

also have to increase significantly; this was because wo did

the not seek to preserva every sector of industry in its existing

form or to retard the shift of resources to more effective

forms of production.

The Government also made available

•

if

£10 million for re-equipment through the IRC, facilities

which were disappointingly under-used and were terminated

earlier this year.

WHAT HAS HAPPENED?

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Since the forecasts in the Study UK consumption of cotton

and allied products, home and imported (which for present

purposes I am taking as spun man-made fibre and cotton yarn

and woven man-made fibre and cotton cloth), fell marginally

in 1969 and 1970, recovering in the case of cloth in the Cirot

half of 1971. UK production, which the Textile Council foresaw

as gently rising from 1968 onwards, also fell in 1970, but has

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