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to the 6.6p a lb common customs tariff, may capture a larger share of the UK market. We think this unlikely, since East African tobacco is dearer than Indian tobacco, and the duty differential is only a few pence on total duties of over £5 a lb).
46. Indian cotton textile exports to the UK are subject to quota, but the ceilings are set well above the export performance India has been able to achieve in recent years.
Indian cotton textiles are
at present subject to a UK duty of 85% of the mfn rate but will gain a measure of duty-free entry when the UK adopts the EEC's generalised preference scheme at the beginning of next year. Exports in excess of the duty free quota will however suffer from the loss (and vis-a- vis some competing suppliers the reversal) of preferences.
A note on jute textiles and coir is at Annex 0. The UK hopes to retain its nil tariff while the cct is being reduced.
47. Oilseed cakes will continue to have duty-free access; and until the end of 1974 Indian sugar will be covered by the provisions of the Commonwealth Sugar Agreement.
48. In recent years the Indian economy, suffering as always from acute foreign exchange shortage, has performed well in the agricul- tural sector (Monsoon failure excepted), less so in manufacturing. Diversification of the industrial base is nevertheless proceeding and increased emphasis is being given to manufactured exports, particularly engineering goods. Although these will not mainly be aimed at the EEC market the GPS should help to foster new export products. The Indians have themselves been persistent in their representations to the Community and, before enlargement, to the UK, and have presented well-argued Aide Memoires on the effects of our accession.
49. The first Indian Aide Memoire was presented to the Community in 1970. Although there have been several rounds of talks, in London, Brussels and New Delhi, between the three parties, it was only in last December that the Council of Ministers agreed in principle to conclude a trade agreement with India. Discussions in a Council Working Group have resulted in a draft mandate for negotiations which has been considered by the Committee of Permanent Representatives; we hope that this will be endorsed by the Council in the near future.
50. The latest Indian note, of 29 January 1973, whilst appreciating the positive response on the request for an agreement, regrets the slow pace of progress and stresses that the Mixed Commission, which will administer the agreement, should provide "a juridical basis for all-round development of economic and commercial cooperation between India and the EEC". Throughout discussions, the UK has supported the establishment of a Mixed Commission with real powers, but some other Community Members have shown deep suspicion towards an institu- tion which they feel could provide a continuous, and irksome, forum for negotistion. Indian trade with the members of the enlarged Community has shown a steady decline in absolute terms since the early 1960's.
Bangladesh trade
51.
Bangladesh has virtually a one-crop economy; her export earnings depend very heavily on jute and her main concern will be the treatment
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