TNAG-0303-FCO40-339-Effects-of-tariffs-on-imports-of-cotton-textiles-to-UK-from--1971 — Page 19

CONFIDENTIAL

of imports of woven cotton textiles and man-made fibre textiles oroadly into line. (Knitted cotton textiles from the CPA will still enjoy the benefit of duty free entry.) The levels of the new tariff are related to the existing levels of the most-favoured nation rates. Although to some extent Lancashire already regard them as inadequate and some efficient supplying countries will be in a position to absorb them, further increased tariff protection involving the raising of bound mfn rates would have to be justified in the GATT and would entitle others to demand compensation or to retaliate against our exports.

It would also be illogical to move

out of line with the EEC's level of duties. We would therefore continue to resist suggestions that higher levels of tariff protection are necessary.

NEGOTIATIONS WITH COMMONWEALTH COUNTRIES

21. Before being free to impose the new tariff on imports of cotton textiles from the Commonwealth Preference Area, we had to seek from Canada, Australia, New Zealand, India and South

Africa waivers of their contractual rights to duty free entry into the UK under various trade agreements. These waivers were secured without too much difficulty from Australia, New Zealand and South Africa. Australia and New Zealand have not been subject to quota and will not be affected by the extension; they are not low-cost countries.

22. Negotiations have taken place with Canada, and we can now regard ourselves as free to impose the tariff on her goods.

23. Protracted negotiations this year resulted in the Canadians indicating that they will take compensation in the form of the raising of the British Preferential rate of duty against two tariff items, the most important being a large range of knitted fabrics, garments and made-ups. In our view this represents in trading terms a much higher loss of advantage to us than does our cotton textile tariff to the Canadians and we were not therefore able to agree that it represented a fair settlement of this question. However, Ministers decided that this situation would have to be tacitly accepted. The Canadians have not yet announced their decision as some minor aspects of it still have to be resolved.

24.

In the case of India, we were unable to secure agreement to a waiver and consequently we were forced to give on 30 June 1971 six month's notice of our intention to terminate the Anglo- Indian trade agreement. We said that if India chose to reconsider the refusal to grant a waiver before the end of this year we would then be prepared to agree to withdraw notice of termination, but present indications are that India will not respond. India's opposition to the tariff decision was based on the expectation that she would lose much of her existing trade in conditions of unrestricted competition because of the inefficiency of her own industry; she has already over the last three years

8.