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period for applying the c.e.t. to imports from the Commonwealth
than for applying it to foreign sources, or for eliminating
tariffs on trade between the U.K. and the Six. The Commission's
port confirms that the Six are likely to object that it would
lead to deflections of trade if they give free entry to imports
from the U.K. while we are not yet applying the full c.e.t. to
imports from the Commonwealth. The price of such an arrangement
might well be some kind of quantitative control which would do
more damage to Hong Kong's interests than the rapid application
of the c.e.t.
To seek special arrangements for Hong Kong for a more favourable rate of application of the common external tariff than the rate generally applied
26.
Hong Kong officials are themselves aware of the danger that
any request to the Six for special arrangements for Hong Kong is
likely to stimulate them to seek protection from Hong Kong
11
competition (see paragraph (c) above).
To seek preferential access on a limited scale to the British market
27. As far as the GATT is concerned, we are inclined to believe
that preservation of preferences in part for limited periods
would be consistent with the basic principle that existing
preferences can be continued when a Customs Union is formed. While
limitation of periodic preferences to imports from Hong Kong
might also be permissible, it is probable that on grounds of equity,
if not legality, there would be strong pressure from India and
Pakistan and other Commonwealth countries for similar treatment.
28. The proposal in a sense amounts to a type of Morocco Protocol
treatment. Under current Community practice and the interpretative
note to paragraph 9 of Article XXIV, the full duty, (i.e. the c.e.t.)
if the Hong Kong goods enter duty free, or the difference between
the preferential duty and the full duty would have to be collected
on re-exports of the goods to other members of the E.E.C.
29. In any case to seek access on a limited scale to the British
market is open to the same objection as the course proposed in
paragraph 26 i.e. that it would stimulate the Six to take
protective measures.
Moreover it would plainly be more difficult
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