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Mr. Cowperthwaite agreed that this was important too, but said
that there must be some adverse effect on Hong Kong's exports
resulting from Britain's adoption of the c.e.t.
even if this
was only a lower growth rate than would otherwise have taken
place. The prospect of free entry into Britain was one of the
major incentives to businessmen to start new industries in Hong
Kong and there were already signs that uncertainty about how
long this would continue was having its effect. Moreover Hong
Kong's experience was that when new industries were started,
the firms concerned brought their markets with them. Mr. Audland
commented that if this was indeed a significant factor, it
tended to weaken the argument that preferential access to
markets was important to the establishment of new industries.
Sir A. Snelling said in conclusion that he felt it would be
difficult to make out a case to the Six for limited preferential
access to the enlarged Community for Hong Kong's new products.
The Financial Implications of British Entry into E.E.C.
9. Mr. Cowperthwaite said that Hong Kong was the largest or
second largest holder of sterling. As a Dependent Territory
she did not have the opportunity to diversify her foreign
exchange holdings. He was finding it more difficult to say in
public that no question arose over the implications of Britain's
entry into the Community for Hong Kong's sterling reserves. He
asked the British Delegation for its views on the Six's likely
attitude to the question of sterling.
10. Mr. Jordan-Moss said that there was nothing in the Treaty
of Rome which prohibited the maintenance of a reserve currency
by a Member State. The French franc was a reserve currency,
though in a smaller way than the pound. We had said that we
would be very interested to hear any ideas the French might
have as to how the status of sterling might be changed, but so
far we had received no response. It was not clear whether they
distinguished betwen the trading and reserve roles of sterling.
Nor did we know if they were thinking on the lines of creating
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