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10. Probably the best course of action in the above circumstances would
be to give the French the opportunity to escape from what could be an
embarrassing confrontation in open GATT forum by adopting a more
reasonable attitude than hitherto in private discussions. This would
preferably be in the context of the regular annual bilateral talks between
Hong Kong and French officials mentioned in paragraph 6 above. These
talks have hitherto not yielded a great deal in terms of liberalisation,
but it would be possible this year, provided the talks take place before
any GATT discussions, to explain to the French that we can hardly avoid
making an issue of these restrictions in the GATT unless they were at
least to remove, or appropriately modify, all those restrictions where
Hong Kong is treated less favourably than other developing countries or
Japan or the Sino-Soviet blocs. Alternatively, if the French showed
themselves not disposed to make any significant further concessions in
this context, we could put them under notice that we would wish to consult
with them on the whole issue within the framework of Article XXII(1) of
the GATT and make a formal notification to the GATT in this sense. We
could then announce this in any group studying residual restrictions and
thus avoid an open confrontation at that stage. Either or both of these
courses of action could serve to keep up the pressure; and I think it is
important that he French should be left under no illusions as to the
seriousness with which we view their actions in this field, and that they
should not Le made to feel that they can quietly go on with their present
policy without any danger of adverse reactions from our side.
11. Clearly, none of these issues are simple; and, taken together, they
raise important economic and political considerations both for Hong Kong
and, indirectly, for Britain.
However, before taking any further action,
it is equally clear that both this Mission in general, and myself in
particular, are in urgent need of instructions
<data
and instructions, I feel.
which will need to be agreed between Hong Kong and London.
whatever
/instructions
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