TNAG-0301-FCO40-337-Effects-of-tariffs-on-imports-of-cotton-textiles-to-UK-from--1971 — Page 91

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MINISTER FOR TRADE

COTTON TEXTILES:

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TRANSITION FROM QUOTAS TO TARIFFS

In his letter of 20 April, the Chancellor of the Exchequer said that he could not find room in the Finance Bill for a provision to give tariff relief to imports of cotton textiles from the Commonwealth preference area which were shipped under quota before the end of 1971 and arrived in this country after 1 January 1972 (when quotas will be replaced by a tariff on CPA textiles). You proposed this relief as one of two measures to secure orderly phasing of shipments.

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I have discussed the Chancellor's letter with CT Division, CRE and Customs. You may feel that we have no choice but to accept relief will not now be possible, and it is very urgent to let! verseas suppliers and importers know what the transition Bungements will be. But CT Division still believe that it will be necessary to apply the other transitional measure.

This for which no additional powers are needed is to enforce the existing quotas until the very end of 1971. It would mean retaining import licensing and certification by exporting countries for the first 3 months of 1972 so as to ensure that goods arriving early next year were not shipped in 1971 in excess of the quotas (which refer to the date of shipment, not or arrival). No import licence would be given for such goods shipped in excess of quotas, and the goods would be seized by Customs.

3. CT Division consider that without such a measure, the quotas (which HMG have said would remain in force until the end of 1971) would effectively break down from about mid-October onwards, because so long as goods did not arrive before the new year there would be no check on whether they were covered by quota or not. There will anyway be considerable bunching of imports later this year because, without tariff relief, Commonwealth suppliers will have every incentive to ship the whole of their quota entitlement to arrive in 1971 before the tariff comes on, instead of carrying over some shipments - as is normal into the early months of the following year. Unless the quotas are enforced, there will be a further bunching in the early months of 1972 as a result of the arrival from the very beginning of that year of goods shipped outside the quota in 1971 by suppliers previously held down by the quotas and scrambling for bigger market shares in the new unrestricted conditions. Quota enforcement would spread the impact on the market.

20 The upsurge which is feared in 1972 might be offset to some

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extent by a lower than average rate of shipment from some Commonwealth countries because of the tariff and the bunching of their shipments in 1972. However, it is important to spread the bunching as much as. possible. CT Division consider that unchecked bunching could mean arrivals of up to 18 months normal supplies in little over 12 months,

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