TNAG-0303-FCO40-339-Effects-of-tariffs-on-imports-of-cotton-textiles-to-UK-from--1971 — Page 21

CONFIDENTIAL

HANDLOOM COTTON TEXTILES

29. Traditional handloom cotton textiles at present enter this country quota free; CPA goods are also duty free. We intend to make special provision, in accordance with the terms of the 1971 Finance Act, for duty free entry for such products from any developing country, subject to the negotiation of satisfactory arrangements with the government concerned. We shall be pursuing this question separately with the major suppliers (India and Pakistan).

PORTUGAL

30. The DTI is setting up a joint body with representatives of the cotton and allied textiles industry to keep a watch over the situation in Lancashire. In monitoring the import statistics, they will obviously pay particular attention to the level of imports of cotton textiles from Portugal, the only low- cost supplier to enjoy duty-free and quota-free entry to this market.

31. It will be difficult to take restrictive action against an EFTA partner. However, Portugal has twice secretly agreed in the past to restrict her exports of cotton textiles to the UK. The most recent agreement, negotiated in spring 1967, was unilaterally abrogated by the Portuguese in December 1968, following the introduction of our import deposit scheme. Imports, of cotton textiles from Portugal have risen considerably in the last year, and a further increase is probable next year, when the developing Commonwealth comes under the double penalty of quotas and tariffs. It may therefore be necessary to make a further approach to Portugal to ask her to reintroduce restraint arrangements. We would hope that, given that the import deposit scheme has long since ended, and given that Portugal will be in a newly-favoured position vis-a-vis our other major suppliers of cotton textiles next year, she might be willing to co-operate again. The possibility of an approach to the Portuguese should not however be mentioned in the House.

IMPORTS OF COTTON TEXTILES FROM IRISH REPUBLIC

32. The imposition of a tariff on the Commonwealth Preference Area other than the Irish Republic necessitates agreeing some new arrangements for trade with the Irish Republic to ensure that the Irish right of duty-free entry does not provide a back-door whereby the tariff on CPA cotton textiles could be circumvented. Discussions have been taking place with the Government of the Irish Republic and an announcement of the outcome of these may be expected shortly. The new arrangements to be made will not be affected by the latest dovelopments.

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