TNAG-0303-FCO40-339-Effects-of-tariffs-on-imports-of-cotton-textiles-to-UK-from--1971 — Page 16

NFIDENTIAL

For 1972, the quotas will be increased by 1 per cent, as in earlier years.

The arrangements for the unlimited licensing of cotton for process and re-export will continue.

1112.

The continuation of existing quotas will as far as possible be alone the same lines as now, provided that the necessary co-operation of India, Hong Kong and the 34 major Global Quota countries can be secured, and provided that some special arrangement: are made to cover irrevocable contracts already entered into by iwnorvers which could not otherwise be accommodated within existing quotas. We shall aim to minimise dislocation of trade without allowing the quota levels to be exceeded by large amounts, but it will not be possible to avoid all difficulties and complaints on this score.

ALIGNMENT TO EEC

13. Retention of quantitative restrictions does not constitute harmonisation with EEC arrangements in advance of entry, but it will make that harmonisation simpler when the time comes. The EEC regime is basically one of tariffs (very similar to our own CPA rate) plus quotas. The Commission has negotiated restraint agreements with India, Pakistan, Hong Kong, South Korea, Taiwan, the UAR and Japan, and in addition individual EBC countries have restrictions on imports from other developing suppliers.

The 7 agreements negotiated by the Commission will need to be renegotiated for the enlarged Community, to co-incide with the realities of that enlarge Community.

14.

We cannot yet say with certainty just how the Community's present agreements would be applied to the UK. It is unlikely ONFIDENTIAL | however that any cut-back in imports from the countries affected

would be involved.

15. Beyond September 1973 the regime to be adopted, including any possible application of the Community's present system of limited duty-free quotas for developing countries, have to be worked out by the enlarged Community, in the light of whatever may be agreed internationally on the future of thw GATT LTA, which expires then.

WHAT DOES THE NEW TARIFF INVOLVE?

THE NEW CPA. TARIFF

16. The new CPA tariff will apply to three unrestricted countries Canada, Australia and New Zealand as well as to the Commonwealth countries (and South Africa) which will now continue to be subject to quotas. The rates of duty which will apply are as a rough guide 6 per cent on cotton yarns (mfn rate 73%); 15% on woven cotton cloth (afn rate 173%), and 17% on most woven cotton garments (mfn rate 20%). Full details of the proposed rates of duty were published in Trade and Industry on 30 June. Knitted cotton cloth and knitted cotton made up articles will remain free of duty from the Commonwealth Preference Area.

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