2.
6. The objective reasons for America not excluding Hong Kong
from preferences have been put to the State Department on various occasions, so far without avail. They should be put to
Mr. Marshall Green with some force, as a failure to do so would be
inconsistent with previous approaches at official and Ministerial
levels. The economic arguments are:-
(a)
(b)
(c)
American exclusion of Hong Kong from her preferences scheme
is unnecessary, as the textiles and footwear which constitute over 40 per cent of the territory's exports to the US, are
not included in the American preference scheme.
Hong Kong still needs the US preference scheme however for the remaining items of her exports to America, as these constitute 25 per cent of the Colony's total exports. Failure to obtain preference on these items when Hong Kong's
highly competitive Asian rivals obtained them, would be a
sudden and unwarranted form of discrimination, with adverse
results for the territory's economy and stability.
Total American exclusion of Hong Kong would be both unjust and unnecessary as the Colony is willing to examine pragmatic solutions which would safeguard American domestic
industry on sensitive products.
The political arguments are:-
(a) Unlike countries such as Taiwan and South Korea, Hong Kong
cannot fall back on agriculture to provide a subsistance economy for its people in the event that her export trade
should decline.
(b) About 100,000 new jobs will have to be provided each year for school leavers coming into the employment market; to
make this possible, an annual increase of 15 per cent in exports is estimated as the minimum required to give the expansion in industry necessary to provide these additional
jobs.
(c)
Should large-scale unemployment be caused in the Colony as the result of falling exports occasioned by Hong Kong goods being priced out of international markets by being denied Generalised Preferences, civil disturbances might well
/ensue.
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