TNAG-0302-FCO40-338-Effects-of-tariffs-on-imports-of-cotton-textiles-to-UK-from--1971 — Page 149

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(11) forestalling, and build up of stocks, could take place in 1972 when it is known that the Government does not intend to seek derogation from the EEC agreements when we join the Common Market;

Comment DTI consider that Ministers (in the debate in

November )may be under pressure to make a statement about

future policy within the EEC and that we shall then

have to say that we shall not seek derogation (if we

do not, argue the DTI, the Commission would doubt our

real intentions on Article 4). Once our policy to the

EEC is announced, DTI consider that there will be

additional buying of imports to beat the restrictions

which will be introduced on 1.1.73.

E.I.D. (1) will no doubt give the FCO view on whether

we need (or should) mention the derogation in November,

although there would be some advantage in keeping this

aspect confidential until we have had a further chance

to discuss with the Commission some of the various

issues which might be involved in a "common problem"

approach. One cannot deny that there might be fore-

stalling once our position on derogation is known, but

not only is this something in the future but also it

should not be exaggerated. Given that the Community

have operated a system of qrs and tariffs for 15 years,

our derogation cannot be said to be a completely new

factor. There is also the more general comment on

that

forestalling/the costs of building up/stocks not inten-

ded for immediate sale provide their own economic brake

on such activities.

(iii) prices of imports in 1972 might be exceptionally

low because of the number of forward contracts already

placed; and because new Asian suppliers would be

8

CONFIDENTIAL

/entering