there would be advantages for India and Hong Kong: there traditional market share would be frozen to some extent, and Hong Kong would retain her right to administer restraint from her own end. Hong Kong would be more disposed towards co-operation than anyone else since, with an eye to future negotiations with the enlarged Community, she would be concerned to demonstrate her amenability. could be great difficulties with India and Pakistan however. If we offered India a bilateral arrangement based on present quota usage, this would amount to cut- back; if we kept her quota at its present level, we would have no extra yardage on offer as an inducement to others to accept a continuation of quota.
9
There
In terms of international respectability neither of the two alternatives would enhance the UK's reputation. The announcement of a complete reversal of our 1969 tariff policy, bearing in mind that we were already technically in breach of the GATT with our present quota restrictions, would be adduced as further evidence of our disregard for international trading practices. Setting up a global quota system would breach the LTA, and maintaining quotas with the introduction of the CPA tariff would lead to violent protests from suppliers under Part 4 of the GATT. These points would have to be clearly spelt out in the submission to Ministers as the price we would pay for containment.
10
Conclusions
i) If we did not attempt to contain imports, but introduced monitoring
and used our reserved rights under Art 3 of LTA to take crash action where necessary, this would a) not appease Lancashire b) raise great difficulties in imposing restraints by product on particular suppliers. Its advantage was that it gave us time to allow the market to develop, it avoided the necessity of hurried and unpleasant negotiations with a series of recalcitrant countries, and it might put the onus on the Commission to try to get cut-back or even arrange negotiations with the whole range of suppliers for the enlarged Community agreements of 1973.
ii) If Ministers still felt that action was needed, this could only be
done at the expense of our international reputation. The choice would be between a new global system or a continuation (possibly with variations) of the present country/global arrangement. were arguments for both these courses; what tipped the balance in favour of the second was Commonwealth interests. What was now more than ever certain was that without containment in 1972, imports would rise well above projection of normal market trends because of the abnormal situation which now prevailed. Such a concentration of low-cost imports could be damaging even for large firms, and we had a responsibility to the Community not to allow imports to reach unmanageable proportions during the year in which they would be negotiating 1973 restraint arrangements for the enlarged Community.
11 The paper would be redrafted in the light of this discussion and a draft covering minute briefly setting out the options would be circulated with it for comment. If a further meeting was required, this could take place on Wednesday. afternoon, 10 November.
VE WALTERS
CT Division
9 November 1971 ·
Ciroulation:
Those present
Mr Hale
FCO
Mr Gildea
CRE3
Mr Nicoll
CRE5
-3-
Mr Lan
CRE
Mr Barry CRE3
No comments yet.
Private notes are available after approval.