TNAG-0388-FCO40-434-Exports-of-knitwear-from-Hong-Kong-to-the-UK-1973 — Page 18

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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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