270X1493
& 1, 471 50x100-4/68-D64523
360
From: Counsellor for Hong Kong Commercial Affairs, Washington
To : Director of Commerce and Industry
c.c. London, Geneva and Brussels Offices Memorandum No.
184
RESTRICTED OFFICE CIRCULATION ONLY BY REGISTERED AIRMAIL
BRITISH EMBASSY, WASHINGTON, D.C.
10 December, 1970.
Generalized Preferences
You will have had my telegram No. 3645 reporting on a conversation with Ed Cronk.
of 9 December
303)
I hope you approve of my having put forward the proposal, Jin your telegram 762 to the F.C.0.; you had of course long since authorised it, but in the F.C.O.'s telegram No. 2804 to us they had suggested keeping it in reserve while proposing that the U.S. follow the E.E.C.'s eventual formula, and I had not had your comments on that. It seemed best to strike while the iron was hot, especially as correct me if I am wrong - the "telegram 762 proposal" as it stands at present seems to me to favour Hong Kong rather more than the probable E.E.C. formula.
3.
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Cronk seemed to be distinctly interested by the 762 proposal. I still think I was right in maintaining, in our telegram 312) No. 3267, that it was not such a proposal as could by itself convert a negative American policy into a positive one; but now that the American view, at least at Cronk level, has started swinging in the right direction it should have the double advantage of providing him with a possible line of defence against critics while diverting American thoughts from other possible systems of safeguarding against Hong Kong which might prove more unwelcome to us.
4.
Cronk took the point that the 762 proposal was illustrative rather than definitive, and that Hong Kong was willing to discuss ways of overcoming any specific difficulties that existed for the U.S.- indeed he said at one point that they might have to send someone to Hong Kong for talks, or invite a Hong Kong team here, when it became appropriate to get down to details. sure Hong Kong would like nothing better than to engage in
I said I was discussions aimed at finding the formula which best suited both' sides. However, I do not think this is likely to happen until the Administration has finally reached its own decision on Hong Kong and starts preparing draft legislation for Congress.
5.
Turning to the question of legislation, some of the Administration are still talking bravely of presenting draft legislation to the Congress in January. Others, however, are making
no secret of their view, which I share, that there is no prospect at all, until the present mood of Congress changes, of obtaining Congressional approval for the present scheme, with or without Hong Kong in it. The idea that the present Congress would grant duty-free entry to the products of a number of countries which are already more than competitive with U.S. industry over existing tariffs is laughable, in my opinion; the protectionist majority would turn thumbs down at once, and I suspect the liberal minority would be almost equally hostile to a scheme which, despite its good intentions, would in reality give conspicuously more benefit
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