TNAG-0391-FCO40-437-Restriction-on-cotton-textile-exports-from-Hong-Kong-to-the--1973 — Page 88

DRAFT

FUTURE IMPORT RESTRICTIONS ON COTTON YARN

In May 1972, Ministers agreed that we should seek from the Community a derogation from our obligation contained in the EEC Accession Treaty that we should end our system of quantitative restrictions on imports of cotton yarn from low cost sources as from 1 April 1973. We accepted that imports from the Community's Mediterranean associates should be liberalised without delay but were concerned to retain restrictions on other low-cost suppliers, particularly India, Pakistan and Hong Kong. We have secured formal agreement for the retention of our cotton yarn quotas till December 1973.

INDUSTRY VIEWS

To help us in taking a view of longer term needs, we asked the British Textile Confederation in May this year to prepare a paper on future import prospects and, if the industry considered that quotas would be needed after 1973, to develop the arguments for this. The Confederation has now replied in terms which have been endorsed by the textile trade unions as well as employers; summary of their views is attached. Briefly, the industry has asked the Government to negotiate for the retention of the quota system until the end of 1976 for the following reasons:

(a)

(b)

(c)

a

to limit the overall consequences to UK manufacturers of cotton and allied textiles, who expect to be adversely affected by a number of trade harmonisation measures which we have to take as a consequence of joining the Community. These include removal of quotas

and duty reductions for the editerranean associates, alignment with the EEC's generalised preferences scheme,

and better treatment for Eastern Area countries; to limit the increase in market penetration by imported yarns which can he expected;

to provide at least interim protection against what the industry consider to be unfair pricing policies operated by some exporting countries (eg India and Pakistan);