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package to his Advisory Board. On the following Tuesday, Stewart received a telegram in Delhi from Jordan saying that the "package" was acceptable subject to compensation details. There was no suggestion then that our offer on growth had been rejected.
5. As you may know, we did not make provision in the agreements with Portugal and India for an annual increase in the quotas for wide sheeting and sheets and it is unthinkable that we should now agree to 6 per cent for Hong Kong instead of the 3 per cent offered. Indeed, there would be a strong case for withdrawing the offer if Hong Kong continued to maintain that it was not accepted at the time it was made. The British industry has not recovered from the blow which it was dealt by imports in 1967/68: production in 1968 was below the low level of 1967, and in the first quarter of this year was down on the same period of last year. In these circumstances we can ill afford even a 3 per cent rate of growth, given that imports from Hong Kong are equal to nearly half of domestic production.
6. You rightly point out that the figures agreed with India and Hong Kong were within our negotiating limits. However, I do not accept that this is a good reason for making further concessions, a year after the event,
particularly if it would further tilt the balance against India. The fact that our negotiating limits were so high was largely due to our skill in holding out against the demands of the domestic industry for a period of nearly two years, obliging them in the face of rapidly increasing imports to raise the ceiling to a level within which we knew we could negotiate. Indeed, Hong Kong's indignation has to be measured against this background. In fact, she got a far better deal than Portugal on wide sheeting and sheets.
/7.
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