TNAG-0302-FCO40-338-Effects-of-tariffs-on-imports-of-cotton-textiles-to-UK-from--1971 — Page 134

that was not possible under the categorised quotas) into more highly

finished products.

India's

29. Hong Kong is likely, in conditions of unrestricted trade, to

export less cloth and more garments and other made-ups (the more profitable end of the trade). She strongly resented the tariff decision and (given the many assurances that have been made to her about liberalisation) would react violently to any suggestion that quota

controls should continue once the tariff is imposed. We could not count

on her co-operation in maintaining her export restraint.

attitude would probably be more ambivalent. In reality, the

continuation of the present pattern of quotas would be in her

interests, since her large bilateral quota absolves her inefficient industry from the need to compete directly with other low-cost suppliers.

She would however almost certainly feel impelled to set up an outcry

against the double burden of tariff and quota, and many other developing

countries would join with her in denouncing our behaviour at the GATT

Cotton Textiles Committee. Pakistan (which has long been aggrieved that she was included in the global arrangement, unlike India) would almost

certainly refuse to exercise restraint; she is one of the countries

which stands to benefit most under liberalisation. It is also open to

doubt whether the smaller Commonwealth restricted countries

or indeed

the non-Commonwealth restricted countries (like S Korea and Taiwan

which have been held down to very low levels under the quota controls)

would be prepared to continue to limit their exports. Even if we tried

coercion (eg by threatening to impose a global restriction on all low- cost imports, failing agreement to continue export restraint) we could

hardly hope to reach a settlement with all the many countries involved by 1 January 1972. On practical grounds therefore, and in the interests

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