TNAG-0301-FCO40-337-Effects-of-tariffs-on-imports-of-cotton-textiles-to-UK-from--1971 — Page 130

increased trade opportunities, particularly in the made-ups sector,

following liberalisation.

Our view has always been that the new policy

would lead to some changes in the pattern of our imports of cotton textiles

exfect

in which Hong Kong could reasonably anticipate gains in some sectors to

balance and may be outweigh - losses in others. For this reason we

believe that calculations of future profitability based on present patterns

of trade may be misleading. Equally, we would not be entirely confident

that a comparison of present landed prices was an accurate guide to future

performance, particularly as we note that this part of the survey does

not cover cotton garments.

3.

In paragraph 7 of your Saving Despatch you set out your reasons for

believing that a postponement of the introduction of the tariff would be

justified. Before replying to the points you make, I feel bound to say

that whilst we remained mindful of Hong Kong's trading interests in the

considerations leading up to the tariff decision, we had also to give due

weight to our other legitimate interests, in particular those of the UK

domestic cotton textile industry. One of the chief conclusions of the

Report of the Textile Council published in March 1969 was that the

existing system of quantitative restrictions had failed to provide a

framework of stable and predictable conditions in the UK market within

which the UK industry could operate and plan confidently for the future.

We know of no changed circumstance which has invalidated this central and

widely accepted finding and we cannot therefore view favourably suggestions

that the existing system of quota restrictions should be extended beyond

the end of this year. In deciding to rely thereafter solely on the

protection afforded by a moderate tariff, HMG believed and still believes

that it will be pursuing a policy which is basically more liberal and

more in the interests of the developing countries among our suppliers

than our present system combining both a quota and (for some) a tariff

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