74
TALE
Comments on Mr. Tran's proposals for the accommodation of Kong Kong in the EKC Preferences scheme for developing countries.
We have always been somewhat unclear about what the Community are including as sensitive and semi-sensitive products. For instance, we have had a sensitive list and a "Hong Kong" sensitive list which only coincides with the former in about two or three products. I have seen nothing as yet en semi-sensitive products. Furthermore, an analysis of the Hong Kong sensitive list shows that it contains hardly anything of real importance in trade; Tran's latest list of imports from Hong Kong in 1966 shows that clothing glone accounted for well over half of the total (88 million out of 157 million) and yet m KKP and woollen clothing have not appeared on either of the sensitive lists I have seen so far. In other words, what we want is for Tran to give us as definitive lists as possible on sensitive and semi-sensitive products so that we can get down to cases,
2. The first object would therefore be to get the Commission to provide a clear list of products which would be considered sensitive in relation to Hong Kong. We could then go over these one by one on the basis of available statistics. Tran puts forward four hypotheses for the inclusion of Hong Kong in "sensitive" quotas, 1.0., that she might receive 5%, 10%, 15% or 20% of a given quota. Our view is that for most of the products likely to be involved anything less than 20% of a queta would be pretty derisory. After all, even in the case of sensitive products other developing countries, including very competitive omes such as South Korea and Taiwan, would be permitted to fill up to 50% of a quota before their entitlement was frozen at that level.
3. We are assuming that the special limitation on Hong Kong would only apply to a given list of sensitive products and that in the case of all other products Hong Kong would be treated in the same way as other participants in the scheme, 1.0., she would be entitled to fill up to 50% of a quota,
4. Whatever provisions were adopted to limit Hong Kong's share in certain quotas we would probably prefer, for administrative reasons, to have this limitation imposed by the Community on a cut-off basis. It would really be rather difficult to administer a preference quota system from Hong Kong on a large number of items as internal politics would probably require the allocation system to be over-complicated.
5. It may well be that for some products Hong Kong would prefer to be excluded from preference altogether rather than to be given only a small percentage of the quota. If she were exoluded altogether it is assumed that Hong Kong's expert figures in these products would be included in "imports from other sources", only 5% of which would cours in calculating the quotas. On the other hand, if Kong Kong were included but limited, the question is what proportion of her trade would be included in the quota. If it were 100% and Hong Kong's figures were relatively large compared with other LDCs her limitation could well bring additional advantage to her competitors through the increase in the size of the quota. Perhaps Tran could clarify what the position would be in these cases.