TNAG-0345-FCO40-381-UK-and-Hong-Kong-talks-on-cotton-textiles-1972 — Page 63

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Separate Copies to:-

Heads of:-

HKD

EESD

Far Eastern Department Latin America Department South Asia Department

Southern European Department

SWPD

TPD

Mr Wilford (for information)

informed

KECEIVED IN

REGISTRY No. 51

16FEB 1972

HKK 6/548/1

55

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NOT 8/2.

COTTON TEXTILE QUOTAS

1.

I attach a copy of a self explanatory draft submission which the DTI intends submitting shortly to their Ministers. Before they do so, they have asked for an indication of FCO views so that inter-Ministerial discussion in the EPC or otherwise can be avoided.

2.

Paragraph 5 of the draft submission sets out the policy options and concludes that the only course is to enforce the decision taken by Ministers in November that the 1971 import levels should not significantly be exceeded.

3. Although such a decision will be unpalatable to our overseas suppliers, it is in fact in line with the original decision to have tariffs and quotas in 1972. In transmitting all the aide-mémoires conveying this decision we requested Governments to regard as a first charge against the quotas orders made before the date of the announcement in Parliament and confirmed by irrevocable letter of credit. We added that if such orders exceeded quotas in any category, Governments should inform the British Government of the excess, but we made it clear (and for many we have repeated this warning twice) that the British Government could not undertake to admit imports in excess of quotas.

4. Given the scale of excess orders (paragraph 3 of the submission) it is clear that we cannot permit orders of this magnitude to be filled without completely negating the reasons for the original decision. It might be argued, however, that the FCO should suggest to the DTI an alternative position between giving nothing and giving all. However, as the submission points out, such a compromise would on the one hand still create a row with Lancashire, which Ministers undoubtedly would wish to avoid, and, on the other, not make any friends for Britain amongst our overseas suppliers.

Any such compromise would have to work on the principle of equitable treatment to countries working within the global quota/country system. It would thus benefit a number, eg India, who are unlikely to be affected by excess ordering because of their under utilisation of the quotas. Those affected by excess orders have committed themselves so much that any compromise below meeting all the orders would for

/them

CONFIDENTIAL