Further Note on Hong Kong in relation to a Generalised
System of Preferences (G.S.P.)
It seems probable that Hong Kong's position in relation to the
Generalised System of Preferences is not sufficiently understood in
Community circles and that, because of this, her case could go by default.
The purpose of this note is to try to demonstrate that it would not only
be in Hong Kong's interest, but in the Community's as well, for Hong Kong
to be included as a beneficiary in the EEC's preferences scheme. (General
background information and arguments in favour of Hong Kong being considered
"developing" were given in an earlier paper "Apercu sur Hong-Kong". These
arguments will not be repeated here).
2. The first point to bear in mind is that in 1969 as much as 42% of Hong
Kong's total domestic exports were sold in the United States, as compared with
about 11.5% in the present Community and about 11.6% in the United Kingdom.
Of the 42% going to the United States approximately 25% consisted of non-
textile, non-footwear products which fall within the scope of the U.S.
preferences offer. On the other hand, only about 3% of Hong Kong's total
exports are accounted for by non-textile, non-footwear products sold in the
Community, and about the same percentage in the United Kingdom. Roughly
speaking, therefore, the United States' market for products on which the
U.S. is considering granting preferences is over three times as important for
Hong Kong than is the market of even the enlarged Community for the same
products.
3. The second point is the effect of discrimination against Hong Kong and
in favour of her closest competitors, if this were to happen. Already,
under a system of MFN tariffs, Hong Kong is facing strong and growing
competition across the whole range of her exports to the United States from,
especially, Taiwan, South Korea, Singapore and Mexico. If Hong Kong were to
be denied preferences in the U.S. market and these competitor countries were
granted preferences, Hong Kong would continue to face tariffs of between 10
and.40%. while her competitors would receive duty free entry. Furthermore,
the effective tariff on the value added, as compared with the nominal tariff,
would be considerably greater, probably on average as much as twice these
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