CONFIDENTIAL
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112/24/11
111) You will see at Folio 39 en savosament by
the Economists Department of the extent to which llong Kong trade would be diverted to the U.K, if we adopted » generaliced preference scheme in the U.K. and liong Long were to be discriminated against in the FFC and other markets. I have no reason to doubt that discrimination against Hong Kong by the ECC or the U.D. is likely to divert existing trade from these ereas to this country.
iv) There is little doubt that the volume of
Hong Kong trade in the EC would ba
affected by being excluded from a duty- quota ayatem of generalised preferences. Ono has to bear in mind, however, that preferential treatzant would only extended to any one of Hong Kong's competitors within theproposed 50% ceiling and to this extent the degree to which her trade would ultimately be affected would st least be limited. The fact that textiles will probably not be included in the
preference scheme will be to Hong Kong's advantage.
Flage 609) ▼ You will see from the recent exchanges
and H
Plag
(n)
between Mr. Coldanith end Nr. Jones that the question of a compromise selation with the LC has been informally discussed. Hong Kong Department accept that there are many difficulties in the way of the inclusion of dong Kong in the preference scheme and although we must support the self-election principle i am sure that in the fizal analysis we may ultimately have to content ourselves with some sort of special treatment for Hong Long. The alternative proposal mooted by Mr. Jones at Folio 43 (enclosure) seems to be a step in the right direction and I think that we are taking the right line in allowing Mr. Jones to proceed with informal soundings of this nature and to discuss all possible moves with him. I would be cautious of using the phrase "competitive need" mentioned in para. 6 of Mr. Carter's minute because this approach advocates the total exclusion from