6
POINTS ARISING IN DISCUSSION
(1) Tho possibility of scrapping the Crosland decision altogether was
raised briefly. It was suggested that we could maintain the status quo (including duty free imports from the Commonwealth) on the grounds that this would facilitate alignment with EEC, and avoid difficultios with India. On the other hand, the introduction of CPA tariff was designed to raise price levels in the UK market, in contrast to the instability under the quota system. ir Pownall pointed out that tho relationship between quotas and prices depended largely on the extent to which the quota was in demand, and its pize in relation to the total market (cf. the Hong Kong quota premium). There was no real comparison to be made with the EC's duty-free GPS quotas since they were so recently established and so small that pent-up demand within the Community had artificially stimulated usage of them to the point that some exporting countries had exhausted their share of them within a short period.
(ii) The possibility was briefly considered, but rejected, of maintaining
the present quotas with tighter categorisation and without the commonwealth tariff. This would not satisfy Lancashire which was looking for protection additional to the tariff. Remodelling the categories would also be a difficult exercise given that an artificial situation had built up over the past five years under the present system of categorisation.
(iii) The question of dispensing with q.r. in 1972 and then re-imposing it
in 1973 if we joined the EEC was likely to come under fire both in the House and within DTI, and would inevitably cause importors to forestall.. Ministerial warnings that futuro quota levels would be based on past import performance might not necessarily work to protect the Lancashire industry. The question of compensation would also arise in this
context.
(iv) We were obviously heading into a high import situation but could expect
to see some measure of stabilisation by the end of 1972. We need not therefore assume that any disruptive trend was long term, because it was necessarily governed by the willingness of importers to tie up capital in stocks. It was however unfortunate that when the up-tura in the textile cycle came, imports responded rapidly but domestic producers were comparatively slow to react.
(v) Whatever action was taken during 1972 would
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inevitably be in the naturo of a stop-gap arrangement. This should be clearly brought out in the submission to Ministers. We could decide to take the initiativo and formulate a "common problem" approach with the EC. This would be don ́ in three ways: by making restraint arrangements during 1972 with selected low-cost supplies in preparation for alignment to the EEC's Art 4 agreements; by making a joint public approach with the EEC to renegotiate their article 4 agreements and to extend them to non-cottons; or by pressing for a GATT study to be set up very quickly in concert with the EEC to consider the whole question of international trade on a pan-
textile basis. There were dangers in this approach: if we bocano the front runners we oould attract odium all round.
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