TNAG-0302-FCO40-338-Effects-of-tariffs-on-imports-of-cotton-textiles-to-UK-from--1971 — Page 36

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BRITISH TEXTILE POLICY BACKGROUND NOTE

TEXTILE COUNCIL STUDY

HMG's present textile policy is based largely on the recomm-

endations of the Textile Council's Productivity and Efficiency

Study which was undoubtedly the most comprehensive and self-critical

examination of its problems that the industry has undertaken.

The

Study suggested that a viable, though much more compact, industry

could develop by 1975 if the Government would establish more stable

market conditions (notably by ending duty-free entry for Common-

wealth cotton textiles in place of the existing quotas, which in

the Council's view would not in the long term give the industry the

confidence or the incentive to undertake the investment needed to

make itself more competitive) and would provide additional incent-

ives to re-equipment; and if the industry would improve its effic-

iency by modernisation, more multi-shift working and vertical

integration. At the same time it forecast (Graph A attached) that

employment would fall from 125,000 in 1968 to 75,000 in 1975, and

that the number of mills (Graph B attached) would fall from 715 to

some 300. The recommendations were endorsed by most of the industry's

forward-looking leaders.

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THE 1969 POLICY

2. In accepting most of these recommendations the Labour Govern-

ment made it clear that its purpose was to foster an industry ableto

stand on its feet in an international environment. The tariff on

Commonwealth cotton textiles was set at about the level of the Common

External Tariff and of the existing UK tariffs on man-made fibres.

The Government did not accept the Council's recommendation to phase out

quotas after the tariff's introduction, mainly to help sell the new

1.

CONFIDENTIAL

/tariff