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arise in relation to Hong Kong's imports of Canadian plastics.
STERLING
12. On sterling, Mr. Haddon-Cave asked about the implications
of British nembership as they were important to Hong Kong which
was the second largest holder of sterling. Mr. Ryrie said that
as far as could be seen British membership of the Community was
no obstacle to retaining sterling as a reserve currency. The
question had never been seriously raised during the 1961/1963
negotiations. Nevertheless the Chancellor of the Exchequer had
said repeatedly that he was prepared to discuss the question.
Once Britain entered the E.E.C. there might be some chances of
a move towards a European currency; but from the point of view
of the sterling holder, this was nothing to be afraid of.
Mr
Sedgwick asked whether Hong Kong's free market status would be
affected by British membership. Mr. Ryrie replied in the negative;
the Six had adopted a liberal policy on monetary matters and
there would be no pressure to impose exchange controls.
PASSIVE ATTITUDE
A
13. Mr. Audland recalled Mr. Haddon-Cave's reference to the
possibility of adopting a "passive attitude" on Hong Kong in
the context of the negotiations. Hong Kong feared that if
we sought special arrangements for her, the E.E.C. would demand
"safeguard" measures in return; that might well be so.
"passive attitude" might be considered as either the strategic
answer to this or as a tactical gambit. If Britain said nothing
to the Six about Hong Kong, the Six would almost certainly raise
the question themselves. It should then be possible to
manoeuvre them into the position of demandeurs which would
give Britain a tactical advantage. Mr. Haddon-Cave took note
of this. Sir A. Snelling commented that such a course of
action would be likely to end up at the same point, but by
a different route.
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