→(8)L 31-7406
NOTHING TO BE WRITTEN IN THIS MARGIN
4.
CONFIDENTIAL
(ii) a number of countries generally
accepted as developing have per
capita income equal to or higher
than Hong Kong.
(c) Hong Kong is "competitive"
(i) Hong Kong is not seeking assist-
ance in becoming competitive, but
the avoidance of discrimination.
(ii) the total exclusion of a country
on grounds of competitiveness was
rejected by the OECD in 1967.
(iii) A safeguard system will be
operated under the preference
scheme and this could be applied
to any products on which Hong Kong
is considered to be competitive.
In recent years Japan has been running a large and rapidly mounting trade surplus with
Hong Kong. (US $295 million in 1967;
US $413 million in 1968 and US $546 million
-in 1969). In 1969 Japan only absorbed 3.4%
of Hong Kong's total exports whereas the US took 42% and the EEC 10%. Japan is an
important source of raw materials for Hong Kong,
She is Japan's third largest buyer and her exclusion could adversely affect Japan's
export potential. Hong Kong's.trade deficit
with Japan is greater than her surplus with the USA which means that the USA is virtually financing Hong Kong's deficit with Japan. A Japanese decision to exclude Hong Kong
which encouraged the USA and others to do likewise would clearly have adverse effects
on the territory's economy and thus on
Japanese exports to Hong Kong.
15.