TNAG-0303-FCO40-339-Effects-of-tariffs-on-imports-of-cotton-textiles-to-UK-from--1971 — Page 12

AFFIRMATIVE RESOLUTION ON IMPORT DUTIES (GENERAL) (NO 7)

ORDER 1971

COTTON TEXTILES

1

WHY ARE VE KEEPING QUOTAS?

As yesterday's announcement said, a combination of three or four factors have led to the conclusion that a quota system must be retained in 1972. (Statement is attached)

2. FEC We have known all along that after we joined the Community our textile import system would in time have to be assimilated to that of the enlarged Community. Until very recently, however, it seemed reasonable to expect a longer period than a year between the introduction of the new tariff in January 1972 and the application of the enlarged Community's regine to our cotton textile imports. Following discussions with the Community over the last month or two it has now become clear that to delay adoption by the UK of the Community regime after our formal accession on 1 January 1973 would in present circumstances be neither practicable nor sensible from our own point of view. Given in particular the much higher level of low cost cotton textile imports into the UK than into most markets of the Six, the existence of markedly different systems side by side would make it harder to agree on a fully harmonised system for the longer term. The Community have under the GATT Long Term Arrangement on Cotton Textiles restraint agreements with the more important low cost countries; these run until September 1973. Given the difficult textile situation set out in the announcement we thought it right to accept that as a normal consequence of membership at these agreements (suitably re-negotiated) should apply to cotton textile imports into the UK from 1 January 1973. This means that much of our low-cost cotton textile imports will come under the Community's system of quantitative restraints from 1973 onwards. If we lifted our own quantitative restrictions for only a year, and after it becomes known that restrictions will be re-imposed in 1973, there would be a rush of imports, which the tariff alone could not contain, as suppliers strove to achieve a high performance as a basis for allocation under the Community's quotas. We already have evidence of large quantities in the pipeline. This would create intolerable disruption for Lancashire, besides hurting the trade of

traditional Commonwealth suppliers like Hong Kong and India for the benefit of newer suppliers, including non-Commonwealth countries such as Taiwan and South Korea.

5. Moreover, the recent American restrictions on imports of non-cotton textiles from Hong Kong, Japan, Taiwan and South Korea have created a risk of diversion of these products to Europe, and this threat of diversion adds to the pressure on cotton textiles because the same plant can be used to make either.