TNAG-0365-FCO40-411-Relations-between-Hong-Kong-and-international-organisations-1973 — Page 103

CONFIDENTIAL

ANNEX C

Negotiations on jute and coir

Several factors, of which the most important is synthetic competition, are operating to reduce the export market for jute and jute goods. This has serious implications for the major exporters, India and especially Bangladesh. Since independence, nearly 90% of Bangladesh exports to foreign countries consisted of raw jute and jute products. The tariff on raw jute is zero both in the UK and the EEC and at present India and Bangladesh enjoy a zero tariff on processed goods in the UK market by virtue of Commonwealth preferences and GSP although the types of jute goods still produced by the UK industry are subject to quotas. The EEC currently has no common policy. Imports of jute goods are subject to quantitative restric- tions at member state level to protect local industries. In addition jute goods face a CET ranging from 8% to 22%. The EEC/GSP included jute products, subject to agreement with producing countries which has yet to be reached. In any case, a movement towards liberalisation of over-all quantitative restrictions and agreement to reduce the CET is likely to be more important to India and Bangladesh, than limited duty-free concessions.

The UK consistently followed a liberal line on tariffs in the Community preparations for agrements on jute with Bangladesh and India, and like Denmark, we have supported the Indian request (which some member states may oppose) that zero tariffs on jute goods in the acceding states be maintained. There has been considerable disagreement among the Six on the terms of the Community offer. Broadly the Germans are fairly liberal on tariffs and quotas. Benelux is liberal on quotas but not tariffs and France and Italy are restrictive. Nevertheless, after two rounds of negotiations with India a reasonable package is emerging, although arrangements have yet to be finalised. In the meantime jute goods from India and Bangladesh continue to enter under the old arrangements. (The Six have duplicated the Pakistan Agreement to accommodate Bangali exports of jute goods. The UK continues to use existing quotas.)

CONFIDENTIAL