CONFIDENTIAL
CYPHER/CAT A
PRIORITY FOREIGN AND COMMONWEALTH OFFICE
TELEGRAM NUMBER 730
TO HONG KONG
28 OCTOBER 1970 (MT)
318
CONFIDENTIAL, 281700Z.
NEUTRAL.
ADDRESSED TO HONG KONG TELEGRAM NO. 730 OF 28 OCTOBER REPEATED FOR
INFORMATION TO TOKYO, WASHINGTON, UKDEL BRUSSELS AND UKMIS GENEVA.
YOUR TEL. 729: PREFERENCES,
270
THE PRIME MINISTER RAISED THE QUESTION OF HONG KONG WITH MR. SATO
AT THEIR MEETING IN NEW YORK ON 21 OCTOBER. THE RECORD OF THE MEET-
ING REPORTS MR. SATO AS REPLYING THAT THIS WAS QUOTE A VERY DIFFICULT
MATTER FOR THEM LARGELY BECAUSE OF HONG KONG'S TARIFF ARRANGEMENTS
UNQUOTE. HE ALSO MENTIONED
(A) THAT THE JAPANESE YEN WAS FREELY USED IN HONG KONG AND THE YEN CONVERSION RATE IN HONG KONG AFFECTED JAP..
ANESE TRADE: AND
(B) THAT THERE WERE CASES WHERE JAPANESE PRODUCTS WERE SOLD IN THIRD MARKETS DISGUISED AS HONG KONG GOODS, WHICH QUOTE COULD BE TO JAPAN'S DISADVANTAGE WHEN THEY WERE CALCULATED AGAINST THE TOTAL PERMITTED LEVEL OF JAPAN-
ESE IMPORTS UNQUOTE.
2. WE ARE NOT SURE WHAT IS MEANT BY MR. SATO'S REFERENCE TO QUOTE HONG KONG'S TARIFF ARRANGEMENTS UNQUOTE. THIS MAY REFER TO THE COMMONWEALTH PREFERENCE ON FIRST YEAR CAR REGISTRATION FEES OR POSSIBLY TO LEGISLATIVE PROVISIONS REQUIRING BUS COMPANIES TO BUY BRITISH VEHICLES, BUT THESE ARE HARDLY TARIFF ARRANGEMENTS. THE OTHER REASONS ADDUCED BY MR. SATO ALSO SEEM VERY DUBIOUS. WE FAIL TO SEE HOW THE USE OF THE YEN IN HONG KONG COULD HAVE A SIGNIFICANT EFFECT ON JAPANESE TRADE. THE STATEMENT ABOUT JAPANESE GOODS BEING SOLD AS HONG KONG PRODUCTS IS ALSO PUZZLING IN VIEW
/OF
CONFIDENTIAL