6.
(c) the ELC preferences scheme, based on duty free quotas and a 50% cut
off point, will probably not be as attractive to those other countries
as the U.S. scheme - although as time goes on they will begin to take
increasing advantage of the Community scheme
In view of all these factors, it could well happen that, if Hong Kong were
to be excluded from the G.S.P. altogether, the paradoxical situation would
arise where
7.
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(i) the build-up of manufacturing capacity for export in especially
Taiwan, South Korea, Singapore and Mexico would, when added to Hong
Kong's existing capacity, be greater than if Hong Kong were included
in the G.S.P. and
(ii) the pressure on Hong Kong to export to the Community, whether enlarged
or not, would be greater than if she were receiving preferences all
round.
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In such a situation, also the United Kingdom Government - and, if the U.K.
were by then in the Community, to some extent the Community as such as well
could not abdicate its responsibility for the well-being of the people of
Hong Kong. If the Colony's economic situation deteriorated, remedial steps
of one sort or another would need to be taken. But in that sort of situation
the cost and consequences of these steps would be likely to fall more heavily
on Europe than would be the case if the United States had played her part from
the outset by including Hong Kong in the G.3.P.
8. As against this, if Hong Kong were to be included as a beneficiary in the
G.S.P. by all donor countries, but above all by the United States and the EEC,
the "burden" of Hong Kong exports would be spread more evenly, with the U.S.
continuing to take the greater proportion. At the same time, the overall
burden of exports from all beneficiary countries would probably in the end be
no greater than if Hong Kɔng were excluded (because the build-up of
manufacturing capacity in competitor countries would be unlikely to be as
rapid).
9. The conclusion is, therefore, that the problem of Hong Kong for the
Community and especially the enlarged Community would be less if Hong Kong were included in the G.3.P. by all major donor countries than if she were to
be excluded. In this connection, it should be noted that the United States
/will
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