CONFIDENTIAL
officials at about six-monthly intervals.
2. Mr. Royle said that II.M.G. were concerned about the trading position of Hong Kong, in relation to the proposed UNCTAD general preference scheme. This was a dependent territory of 4 million people without natural resources and therefore totally dependent on the export of manufactures. If Hong Kong were to be excluded from the preference scheme she would be at a serious disadvantage vis-à-vis her competitors in this field, and this could have grave effects on her prosperity and consequently also on her security. This would surely not be in the interests of Japan as a major exporter of raw materials to Hong Kong, nor would it be in the interest of the large number of Japanese companies which we were glad to see registered in Hong Kong. He hoped the Japanese Government would therefore support the inclusion of Hong Kong among the developing countries to benefit from the UNCTAD scene. Mr. Takeuchi replied that there were difficulties & bout this. Some quarters of the Japanese Government held the view that Hong Kong as an established producer of manufactures did not qualify as a developing country. But the issue was still under consideration and no decision had yet been taken. He noted what Mr. Role had said and undertook to transmit it to the relevant
/authorities.
2