TO SECRET
11.
third countries are subject to quantitativa
limits; moreover oven in general conditions
of full employment t. e U.K. textile industry
can be expected in the foreseeable future to
have some surplus capacity so that increased
domestic output could reasonably rapidly be
substituted for some part of our imports from
Hong Kong (the remainder - subject to (111)
replaced by
below
K
would no doubt be imports from other
"high cost" countries);
(111) while the loss of imports of Hong Kong clothing
and textiles would generate pressure for
increased access to our market from other
controlled low cost suppliers, there would be
countervailing pressures from domestic
producers, and in any case the scale of "low
cost" imports is a matter within H.M.G's control,
so that it is reasonable to assume that
increased supplies from low cost producers
would be permitted only in return for counter-
vailing commercial (or other economic)
advantages.
The most reasonable broad conclusion would seem to
be that as compared with 1966, the net balance of
payments affects of the los of on ̧ Kong would be small
if not negligible. The same is robably true of incore
effects, even taking account of some increase in praJUJ
aricin, i7om the lo... of supplies of low cost dorg Kung
Lanufactures.
II.
Effects MIL Li
conse ent
12.
how
ecunoly ari...ing from changes cr in econoile relations
In this section, an attempt is de to al es. firstly
tuere fo
A be
notur
5
*.chages ii.
level of
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