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5.
These arrangements had included 1% growth based on an estimate that consumption in Britain would expand at this rate. In fact, production- had declined. The year 1967 had brought with it a radical transformation in the Lanchashire scene. Over 100 mills had been closed (as compared with 50 in 1966) and fabric production had declined by some 27%. The result in terms of employment was a 25% reduction in the size of the textile labour force. While the area affected was relatively small, the political repercussions were widespread. Although it was true that the remaining mills were doing good business and that order books were long, this was largely due to their being able to profit from orders which would have gone to those companies which had closed down. Even so their capacity to expand production was very much limited.
6.
H.M.G. were under severe pressure to cut back textile quotas so as to protect the domestic industry's share of the market and, at the same time, to impose spacing arrangements to prevent the bunching and concentration of imports at particular times during the year. In this context, Britain's present balance of payments position was relevant; the abnormally high level of textile imports during the first few months of 1968 had contributed to the pressure on sterling. In all these circumstances, Hong Kong and India should consider themselves very fortunate since steps to curb their imports had not been taken earlier; in the case of Portugal her imports had been cut back since 1967. While he appreciated Hong Kong's own problems, he felt that due recognition should be given to Britain's tolerance in permitting imports to take such a large share of domestic consumption. No other major importing country had been so generous, and the Hong Kong textile industry should not ignore this fact. Imports of cotton textiles had accounted for 43% of consumption in 1966, 48% in 1967, 54.7% in the first quarter of 1968 and 58% in the second quarter. He expected the 1968 proportion to drop provided no anticipated yardage landed in Britain before 1969.
7.
8.
and
Turning to the agenda, Mr. Stewart asked that it include
(a) publicity,
(b) timing of working sessions,
(c) quota premia,
(d) evasion of controls,
(e) sheeting and sheets.
On the question of publicity, Mr. Stewart was anxious that the Hong Kong press should not launch into an unjustifiable tirade against H.M.G. He was most concerned lest there should be any repetition of the irresponsible journalism which had followed the consultations with the Swedish Government. He referred particularly to an article in The Far Eastern Economic Review. Mr. Sorby replied that he intended to make no statement whatsoever until the conclusion of the talks, and until the results of the B.O.T.'s approach to the Indians were known. Regarding press reaction in Hong Kong after the consultations with Sweden, he had personally made every effort to correct any possible misunderstanding and to ensure that there would be no recurrence of such attacks. He assured Mr. Stewart that, provided an amicable solution could be reached, he was confident there would be no untoward publicity. He was satisfied that during the course of the discussions there would be no breach of security; members of the C.A.B.' were fully aware of the confidential nature of the consultations.
9.
Mr. Sorby invited Mr. Jordan to proceed with the consultations. on Hong Kong's behalf.
/10.
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