CAB129-35 — Page 152

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engineering industry. The relaxations would apply to a rango of goods of all classes covering a large part of our trade on private account from soft currency countries.

6.

AS has repeatedly been explained to manufacturers and producers, quantitative control of imports, though it has an adventitious protective effect, can be justified only if necessary to safeguard our balance of payments: thus, when we justify the removal of these import controls, as we shall have to do, as no longer required on balance of payments grounds, wo shall have to have an answer to those who enquire whether they may present a case for increased tariff protection.

The object of this proposal is to get a general liberalisation of trade. If there are any cases of particular hardship we must be prepared to consider what measures should be taken to meet their special difficulties, e.. by the adjustment of tariffs.

7.

Apart from the pressure we are under from the United States Government to liberalise trade within Europe, there are the following further very powerful reasons in the interests of our own economy for going as far as we can in this direction:-

(a)

8.

A reduction of licensing controls, by increasing competition, will reduce costs and improve the quality of our own products and so stimulate our competitive power in world markets.

(b) The net effect of freer competition within Europe and the sterling area should be to reduce prices to the

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consumer.

(c) The burden of administrative work on the Civil

Service and on industry will be reduced.

(a)

The rigidities and distortions which are the result of

present bilateralism in international trade will bo reduced.

We should propose to take the load in introducing import relaxations without bargaining for similar relaxations in our favour, though we should make it clear that we could not continue them on the initial scale unless other countries agreed to act similarly except in so far as thoir balance of payments position prevented it. Our import controls will not be dis- mantled and the adjustment or re-imosition of controls on particular goods or in respect of particular countries will be able to be made if circumstances warrant.

9.

Por all these reasons there is a strong case for relaxing import controls over as wide a front in terms of commodities as we can reasonably justify on grounds of domestic policy, and there is therefore much to be said for proceeding at once on the sort of scale (subject to adjustment” on particular items) recommended in the official Working Party's report. do not, moreover, think that anything substantially less than relaxations on this scale would enable us to answer American criticisms on our European trade and payments policy, and indeed it is by no means certain that these will suffice.

9.

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