RECALL UTAM
of persuading the member states and their industries to grant preferences to Hong Kong on the same basis as developing countries in the Group of 77. However for various reasons, such as those given in the document which I received from Tran in London, the Community as a whole are prepared to give special consideration to Hong Kong because of the political arguments they face with us, because they still subscribe in principle to self-election for developing countries and because creating any preferences against Hong Kong could harm her economy. On virtually all Hong Kong's exports to the E.E.C. (in 1967 % 105 million out of 109 million) a small- duty free quota for Hong Kong will be granted and will be controlled by import licensing. The value of the quota.which will be calculated separately for cach product will be 5 per cent of Hong Kong's existing exports to the Community 1.e. about Z 6 milli annually. When split up between all the products involved, this duty free quota will be of negligible value on many items.
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9 The philosophy behind this proposal is that the 5 per cent of existing exports represents virtuall a guaranteed cash payment which will be or some value to traders and will give Hong Kong some compensation for exclusion from the main schome. Decause tho quotas are so small in relation to the B.B.0. market, political and industrial complications can be overcome and they hope that the United Kingdom and Hong Kong will be prepared to accept this as the best that can be achieved. Di Martino explained very carefully that he could not hope to obtain anything better and that if the whole issue were reopened in public, opinion in the Six would probably be to have even these minimal offers withdrawn.
10:
Incidentally these proposals, with precisely the same formula that will apply to Hong Kong, will
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