TNAG-0301-FCO40-337-Effects-of-tariffs-on-imports-of-cotton-textiles-to-UK-from--1971 — Page 192

G.F. 326

CONFIDENTIAL

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Some 294 of these companies were manufacturers, 169 of whom depended for over 70% of their business on Britain; and 60 of these for more than 90%. The 294 factories employ some 62,000 workers (31% of the work force in the textile industry as a whole) some 27,000 of whom are nemployed on work for Britain. All these manufacturers and their workers will be affected adversely to a greater or lesser extent by the decision to institute a tariff. Although exact figures are difficult to establish because of the variety and range of textile products, the survey indicated that whereas average profit margins in 1968 (the period covered by the survey) on goods entering duty free ranged from over 10% for yarns to around 5% for finished piecegoods, the application of the tariff, assuming the same 1968 costs and prices, would mean that the cotton spinning sector could continue to make a slight profit of about 2.5%. The cotton weaving, made-ups and woven garments sectors could be expected to lose this trade altogether, since they could continue only at a loss.

4.

These are of course average figures, but they have been calculated on the basis that the cheapest (in some cases non-Commonwealth) raw materials would be used.

5.

Comparisons were also made between Hong Kong landed prices in Britain (with Commonwealth Preference) and landed prices for E.F.T.A. suppliers and our competitors in Asia. It was not possible to obtain information on cotton garments for 1968 but in respect of :

6.

(a) Yarns

Portuguese landed prices were lower than Hong Kong's as were those for our Asian competitors except Japan.

(b) Grey piecegoods

(c)

Hong Kong prices were lower than Portugal's (principal E.F.T.A. supplier) but not sufficiently so to absorb the tariff; Japan's and South Korea's prices were slightly higher than Hong Kong's, but the tariff would also push our prices higher than those of Japan and South Korea.

Finished piecegoods

Hong Kong prices were lower than Portugal's but insufficiently so to absorb the tariff; our prices were higher than all other Asian suppliers except Japan.

This survey has shown how vulnerable is the sector of the trade that has for many years concentrated on the British market which, in a large number of cases, accounts for some three-quarters of their trade.

CONFIDENTIAL