TNAG-0301-FCO40-337-Effects-of-tariffs-on-imports-of-cotton-textiles-to-UK-from--1971 — Page 131

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restriction.

The tariff that we are imposing will still incorporate some

element of Commonwealth Preference, and, with the removal of categorised

quota ceilings, we believe that developing countries, and in particular

one with the competitive enterprise of Hong Kong, will enjoy greater

opportunities for diversification of their trade in textiles with this

country. As you know, sections of our own industry are claiming that

the substitution of tariffs for quotas will leave them with too little

protection.

4. In (a) and (b) of your paragraph 7 you make the point that much of the

time since the announcement was made in mid-1969 has been taken up by the

completion of the survey and that an insufficient interval now remains for

the necessary adjustment by the Hong Kong industry to be carried out without

severe disruption. We were and are equally concerned, of course, that our

own industry should bring about the necessary changes in its operations as

smoothly and rapidly as possible in order to meet the changed conditions

of trade effectively. But the early announcement of the date of the change

in policy was intended to stimulate our own industry into rationalising

its operations and those firms which have increased their rate of re-

equipment and other investments on the strength of the impending change in

import policy may reasonably expect to derive some advantage over any of

their competitors which have not. A postponement of the change would amount

to a breach of faith on the part of HMG towards such firms and reintroduce

uncertainties about future policy on cotton textiles which the 1969 announce-

ment was intended to remove. The advance notice of the change was the same

for our overseas suppliers as for our domestic industry and we would not

agree that it placed any section of either at an especial disadvantage in

respect of timing which would justify any postponement. Furthermore, I

must repeat that we would not regard a continuation of the existing quota

restrictions beyond the end of this year as a course which would have a

neutral effect as between the competing interests involved since it would

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