COTTON YARN
4.
The terms of the Treaty of Accession to SEC required that the UK should, by 1 April 1973, remove import restrictions on products liberalised by the EEC(6) which appear on the "Common Liberalisation List" (Regulation 1025/70). This list includes cotton yarn.
5. The UK liberalised imports of cotton yarn from the Community's Mediterranean associates on 1 April 1973. But we secured a derogation allowing us to maintain until 31 December 1973 quantitative restrictions on imports from all other low-cost sources'. And on
21 March 1974, the EEC Council of Ministers' approved a further derogation enabling us to maintain import restrictions till 31 December 1974.
6.
In going for the further derogation, we were proposing to treat yarn as an item on which restrictions would be phased out over three years,
with substantial increases in quotas (eg 25% in 1974 on 1973 quotas) over the three years (GATT MFA principles). Hong Kong Telegram 387 asks what we are going to do. The short answer to this is we do not yet know. We have to seek Ministers' approval for increases in 1974 and a continuation in 1975/76 of the policy of liberalisation. Hong Kong are not very excited by all this; naturally they want anything that might be going but yarn is not among their top priorities.
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