Reference....
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GPS and Hong Kong
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Agreement has now been reached in UNCTAD between the developed (donor) and developing (beneficiary) tries on most aspects of a Generalised Preference Scheme for probable implementation in 1971.
2. One major unresolved question however is the pre- cise list of developing countries to benefit from the preference offers of the various donors. For varying political or economic reasons, a dozen or so countries are regarded as "problem" cases, and face exclusion from one or more donor schemes. Though by no means the most developed of developing countries, Hong Kong's competitiveness has earned her a place on this unpublish- ed blacklist.
3. Donor countries generally operate a principle of "burden-sharing", which means that a beneficiary exclud- ed by one major donor is almost certain to be excluded by the others. We are thus disturbed to learn unofficial- ly that the American position has been determined by a Presidential directive that Hong Kong will be excluded unless other major donors include her. This would al- most certainly decide Hong Kong's fate unfavourably. We would therefore press that the very minimum American position should be that of "including Hong Kong unless other donors exclude her."
4. Furthermore, this condition should not require a contribution from the Japanese, whose attitude is wholly negative for no good reason (Japan runs a large trade surplus with Hong Kong). The condition merely tempts the Japanese to exclude Hong Kong from their preferences offer in order to see the U.S. follow suit. This conven- iently damage a rival in the American market.
5. If American exclusion of Hong Kong forced the EEC to follow suit, the UK would be forced to seek a solut- ion for Hong Kong in the context of the EEC enlargement negotiations. As demandeur, the UK would be in a weaker position to resist whatever package the EEC (with French inspiration) proposed. The result could hardly contribute towards the economically outward-looking enlarged EEC that American would like to see.
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 ir Marshall Green with some force, as a failure to do so would be inconsistent with previous approaches at official and Ministerial levels.
The eco- nomic arguments are:-
a) American exclusion of Hong Kong from her prefer- ences scheme is unnecessary, as the textiles and footwear which constitute over 40 of the territory exports to the U.S., Got benefit from the Ameri- can preference scheme.
b) Hong Kong still needs the U.S. preference scheme however for the remaining items of her exports to America, as these constitute 25% of the colony's total exports. Failure to obtain preference on