CYPHER/CAT A
PRIORITY TOKYO
CONFIDENTIAL
TO FOREIGN AND COMMONWEALTH OFFICE
TELEGRAM NO.765
16 OCTOBER 1978
260
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CONFIDENTIAL. 1690252. [NEUTRAL]
ADDRESSED TO F C O TELEGRAM NUMBER 765 OF 16 OCTOBER RFI TO HONG KONG, WASHINGTON, UKDEL EEC BRUSSELS AND UKMIS GENEVA.
MY TELEGRAM NUMBER 752 (NOT TO ALL).
HONG KONG AND UNCTAD GENERALISED PREFERENCES.
I TOOK MR. KAN, THE LEADER OF THE HONG KONG TRADE MISSION
TO JAPAN, TO PAY A COURTESY CALL ON THE FOREIGN MINISTER
ON 15 OCTOBER. WE TOCK THIS OPPORTUNITY OF RAISING THE ISSUE
OF HONG KONG'S EXCLUSION FROM THE GENERALISED PREFERENCES
SCHEME. COMPLEMENTING MR. ROYLE'S EMPHASIS ON THE POLITICAL
DANGERS OF EXCLUSION, MR. KAN CONCENTRATED ON THE DAMAGE
WHICH IT MIGHT DO TO JAPAN'S PROSPEROUS TRADE WITH HONG KONG.
TAKING UP A REMARK BY MR, AICHI ABOUT HONG KONG BEING JAPAN'S
THIRD MOST IMPORTANT EXPORT MARKET, MR. KAY EMPHASISED THAT
EXCLUSION FROM THE PREFERENCES SCHEME MIGHT WELL MEAN THAT
HONG KONG'S PURCHASES FROM JAPAN WOULD FALL SHARPLY. WAGES
WERE RISING ALMOST AS FAST IN HONG KONG AS IN JAPAN, IN CONTRAST WITH HONG KONG'S TWO MAIN COMPETITORS, SOUTM KOREA AND TAIWAN. IF ON TOP OF THIS THESE TWO COUNTRIES WERE TO GET
THE BENEFIT OF INCLUSION IN THE PREFERENCES SCHEME WHILE HONG
KONG WAS KEPT OUT, HONG KONG'S TRADING POSITION WAS BOUND TO SUFFER AND THIS IN TURN WOULD INEVITABLY MEAN REDUCED
BUYING OF RAW MATERIALS FROM JAPAN.
2. MR. AICHI REPLIED THAT HE FULLY UNDERSTOOD THE IMPORTANCE
OF THE ISSUE AND SHOVED SOME SYMPATHY FOR HONG KONG'S ATTITUDE,
BUT HE ADDED THAT JAPANESE INDUSTRY WAS VERY CONSERVATIVE IN ITS THINKING AND WAS AFRAID OF BEING OVERWHELMED IN CERTAIN
SECTORS OF THE INTERNAL JAPANESE MARKET IF HONG KONG'S EXPORTS
TO JAPAN WERE TO GET THE ADDITIONAL ADVANTAGE OF GENERALISED
PREFERENCES. MR. KAN AND I BOTH POINTED OUT THAT THERE WAS
SPECIFIC PROVISION IN THE UNCTAD SCHEME FOR DEALING WITH
аккыр
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CONFIDENTIAL