penetration on a volume basis by imports from low-cost rources alone rose in 1976 to 66% in the case of men's woven shirts, 6 for vomen's blouses and 231 for men's ruits. Although the situation was particularly serious in the clothing sector similar problems were apparent with regard to textiles where large increase of imports from low-cost sources had been experienced in sectors such as cotton yam. Furthermore it was clear that ultimately the textiles scolor in the UK was bound to be seriously affected by the decline of the clothire industry.
Although Hr Ridley agreed with Hr Tien that UI exports had indeed been vicing, he reid that this increase was from a low base and that it was insufficient to offset losses to increases in imports.
It was therefore the policy of Her Majesty's Government to temper the rate of increase of imports in order, firstly, to provide an assurance of continuing viability and the confidence essential to new investment in the industry in the UK and, secondly, to avert further massive increases in unemployment. The Uk would therefore be supporting the agreed Community line in the Geneva talks on the renegotiation of the IFA.
In particular the Community would seek to reduce the rate of growth of imports, which has in the past few years considerably exceeded the growth in consumption, and would seek a solution to the problem of cumulative disruption of the Community's market by imports from a large number of low-cost suppliers. The method of coping with cumula- tive disruption at present envisaged ained to provide some room on the Community market for newcomers within import ceilings for certain highly sensitive products, while preserving the bilateral approach of negotiation with individual supplying countries.
Nevertheless it was clear that equity in a time of recession would rean sharing pain and not prosperity. Eitherto nost of the deleterious effects of the recession in the Community's market had been bome by domestic producers. In the coming years we would need to seek a balance that offered moze security to the domestic industry while preserving the advantages to consumers of a maximum degree of access to low-cost suppliers that was compatible with the interests of the domestic industry and employ-
ment.
Kr Ridley hoped that this was sufficient clarification of UK textile policy. With regard to r Tien's other two objectives namely an assurance that Hong Kong's interest would not be overlooked and that no policies would be pursued that were detrimental to Hong Kong, Hr Ridley said that the UK Government was well aware of Hong Kong's interest in the renegotiation of the FA. However no assurance could be given that Hong Kong could escape its share of the pain inherent in reaching a solution to the conduct of textile trade relations in a time of recession. The interests of the domestic industries in importing countries, of the established exporting suppliers and of newcomers to the Community's market were irponflict and a balance would have
to be reached.
CT1b
30 June 1977
2