CCNIDEFTIAL
Reference.
This would in fact be neuningless in the terms of trade since Hong Kong produced no raw materials. But it could be one way of holding open the Part IV option for the more distant future.
(iii) Tran thought that one of the most difficult questions which would come up during the Community's current consideration of including liong Kong in their Unctad Freference scheme would be the nature of the arrangements to be made when the enlarged Community came into being and the Community's preference scheme had to be adjusted to take account of this. There were many anxieties on the Community side that the automatic expansion in the size of the Community's tariff quotas on sensitive items that would follow from enlargement would, if Hong kong were included even under the limited formula he proposed, lead to a very large increase in duty free exports from Hong Kong to the Community. It would be useful if we could do something to calm these fears by indicating a willing- ness to accept in the UK a substantial proportion of the increased duty free quota which Hong Kong would have in an enlarged Community. for us to do so would be no sacrifice since we were already giving duty free access to Hong Kong in these products.
Shumay
(D.H.A. Hannay)
6 November, 1970.
CONFIDENT IAL
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