Generalised Tariff Preference Scheme
The Hong Kong aspects of the Generalised Preference Scheme were discussed during a meeting which Mr. Goldsmith had on 25th November with Mr. Jordan from Hong Kong, Mr. D. C. Jones, the Counsellor for Hong Kong affairs at the U.K. Mission in Geneva and Mr. Sellars of the Hong Kong Government office in London. Mr. McKelvie and Mr. Stewart from the FCO, and Mr. Kemmis, Mr. Dunnett and Mr. Morris were also present.
2.
Mr. Goldsmith said that we had reacted strongly against the proposition put to us by the EEC for the grant of preferences to Hong Kong within a ceiling equal to 5 per cent of the value of Hong Kong's exports to the EC, and reports from Tran were more optimistic. We had seen the position on beneficiaries taken up by the EEC in the OECD. It would now be useful to have Hong Kong's views on whether we should continue to keep in contact with Tran and Di Martino or make formal representations to the EEC.
3.
Mr. Jones thought that Tran and Di Martino (who had shown some signs of being favourably disposed towarus the non-discriminatory approach based on competitive need suggested to him) should be given further opportunity to see what they could achieve. There would still have to be a good deal more discussion in OECD, where there was at present a state of some confusion following the new position adopted by the U.S.A. There was a danger that developing countries would get up in UNCTAD and say that they wanted Hong Kong to be excluded from the Scheme but from the point of view of discussions within O2CD there was no reason to press for immediate formal representations to the ELC. The Chairman of the ad hoc Working Group had recognised the need for a fundamental discussion on beneficiary countries. We also had to bear in mind the U.3. attitude to Hong Kong and the possibility of bringing more pressure to bear on them.
11
4.
Mr. Goldsmith said that he himself had doubts whether formal representations to the EEC would have any real effect and there was no threat we could use to back them other than the removal of products or countries from the U.K. offer (which could help Hong Kong only in the U.K. market). He suggested that contact should be maintained with Tran and Di Martino in the hope that they would produce something more attractive to Hong Kong. The problem about approaching the U.S. was that they would simply react by asking what we were prepared to do about reverse preferences.
5. In reply to Mr. McKelvie, who asked about the possibility of any agreement on Hong Kong in the long run in the absence of any signs of a solution at present, Mr. Goldsmith said that the best solution would be that proposed by the Special Group of four, which would mean that the beneficiaries would be roughly the same as in the present Australian scheme. The difficulty was that some countries had never been fully in agreement with these proposals and Belgium and France, for instance, were probably in outright opposition to the inclusion of Hong Kong. There were other problems also for the EEC, such as the inclusion of Portugal, and the latest suggestion was that they might have duty quotas, as distinct from duty free quotas, for some countries. Mr. Jones suggested that all the better-off developing countries might be put in a separate capacity on the basis of competitive need. The LLC had already admitted the possibility of a selective approach based on competitive need. Mr. Goldsmith pointed out that it was difficult for us to advocate this so long as we were supporting the self election principal recommended by the Group of four. Mr. Kemis noted that the dialogue between the U.S. and the EEC was relevant; if the EEC followed the U.S. in excluding textiles and shoes, we could argue that the most difficult sector of Hong Kong's exports was no longer a problem. Mr. Jordan stressed the difficulty in any approach that was based on the assumption that the position was static and made no allowance for future developments. An objective criteria was needed that could be applied to any country where problems arose.
16.