CONFIDENTIAL
(2) our intention, once we are in, to work for
an outward-looking Community;
(3) the fact that Britain will continue to have
worldwide interests, which we shall be able to
promote more effectively as a member of an
enlarged Community.
INTERNATIONAL TRADE QUESTIONS
Hong Kong and the UNCTAD Generalised Preferences
19. The various Japanese Ministries concerned are
divided in their attitude on this subject, although those
advocating the exclusion of Hong Kong from the scheme
seem the stronger side. It might just redress the
balance if the Prime Minister were able to arouse
Mr. Sato's personal interest in the matter by convincing
him of the dangers of excluding Hong Kong.
20. He might say that we hope that Japan will not
exclude Hong Kong from her offer of generalised prefer-
ences. The Japanese argue that Hong Kong is a dependent
territory and therefore our responsibility.
This is
irrelevant in the context of the developing world. We
recognise that Hong Kong is competitive in some products
but this can be overcome by the use of safeguard arrange-
ments. Other developing countries, such as South Korea
and Taiwan, are no less competitive; Hong Kong merely
seeks avoidance of discrimination.
large trade deficit with Japan and is her third largest
Hong Kong has a
customer. A decision by Japan to exclude Hong Kong
which encouraged others to do likewise would have adverse
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