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In these circumstances it seems not unlikely
that if restraints were imposed on Asian imports
the gap would be filled by imports from other
sources rather than from UK production, which
would damage the UK consumer and the balance
of payments through higher prices without
benefiting UK industry.
I appreciate very much the need to maintain confidence in the
industry if firms are to invest in further improvements in
productivity and in expansion. We would like to discuss with
the industry the scope for encouraging investment (especially,
given the tightness of labour in the East Midlands, in other parts
of the country) with appropriate assistance from Regional
Development Grants, the Industry Act etc in those sectors of
production (of which jumpers, cardigans etc could well be one)
offering prospects of continuing viability under the protection of
the Common External Tariff. Since confidence on industry's part
in such investment could be undermined by fears of disruptive
imports before a new capacity could establish itself I would like
to emphasise again that we would remain very ready to consider
action within the terms of Mr Chataway's letter of 10 August
should such a situation occur.
In examining this as relevant to
disruption we went take into account, aparties the question of
the prospective viability of the sector concerned, such factors as
the extent to which low-priced imports were pre-empting market
growth, whether they threatened existing employment or employment
planned under new projects, and the effect on investing firms'
profitability. We shall also continue to keep a close watch on
imports particularly in the category of knitted outerwear. We
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