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advantage of the Government's investment-incentive scheme. However, these firms were small in number and he remained firmly convinced that, unless imports could be curbed, the British industry would contract even further. He did not feel that the major suppliers under restraint, i.e. Hong Kong, India and Portugal, need worry that their share in the market would be significantly affected by increased imports from global quota countries; total imports from the latter could not exceed 31 million square yards a year, and this figure could only be achieved in the highly unlikely event that all their cloth quota was used for wide sheeting. In the circumstances, Hong Kong would understand why H.M.G. naturally turned to the major suppliers for assistance.
27.
In reply to a question from Mr. Jordan, Mr. Stewart said that both the raised and flat sectors of the industry had been adversely. affected; in other words, a situation of market disruption existed in the wide sheeting sector as a whole. About 90% of British wide sheeting production was converted into sheets and this gave a fair indication of the extent of the problem presented by imports. He confirmed that the bulk of British production was concentrated in raised fabrics, although he could not say exactly what proportion of all wide sheeting imports was taken up by raised sheeting; he thought the proportion might be of the order of 10%. Regardless of the precise breakdown, he felt obliged to point out that imports of all wide sheeting and sheets had increased from 62 million square yards in 1966 to 77 million square yards in 1967, and this movement was not insignificant. He added that Hong Kong should not be worried about imports from Canada as these were relatively unimportant and were mainly of a special type, viz. fitted under-sheets.
28.
Mr. Stewart continued by saying that a situation of market disruption was clearly indicated by the increasing share which imports had taken up over the past three years of domestic consumption of all sheeting and sheets; the figures had risen from 28% in 1966 to 37% in 1967 and 44% in the first half of 1968. The relevant figures for imports of flat sheeting were even more spectacular; imports as a share of domestic consumption had risen from 52% in 1966 to 63% in 1967 and 69% in the first half of 1968. In such a situation, H.M.G. was obliged to take positive steps to protect the British industry.
29.
Mr. Jordan was surprised that large firms such as Courtaulds were re-equipping when prospects were so gloomy. Mr. Stewart retorted that Courtaulds were more interested in the dress cloth market, their intention being to use their new wide looms to weave fabrics of varying widths. He reiterated that the British request had no connection with Courtaulds'recent installation of wide looms.
30.
Reverting to the question of market disruption, Mr. Stewart again asked whether Hong Kong considered that a situation of market disruption existed. It was his contention that such a situation did exist, and he felt that the statistics produced adequately demonstrated this.
H.M.G. had hoped that the limitation on Portugal negotiated in March 1967 would have been sufficient to remedy the situation. Unfortunately, there had been no amelioration, and this explained Britain's present approach to both India and Hong Kong. As he had already said, the danger of a surge in imports from sources other than India and Hong Kong was not serious, and the 3.0.T. believed that the situation could be contained if India and Hong Kong were prepared to accept the request.
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