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internal one of production capacity but of finding markets free of restrictions on her exports. The resources also existed for expansion in the ship owning sector but in a competitive and restrictive world market the scope for expansion was again limited by external constraints. Tourism and aircraft servicing were also expanding but they were marginal to the central problem.
CIVIL AVIATION (CA1)
a. LANDING RIGHTS
b.
Ministers were interested in the scope for buying goodwill by conceding landing rights on Hong Kong. 24 airlines including the French, Italians and Germans already had landing rights and a deal with KLM would serve only to reduce the benefits to the other Member States and might encourage the Scandinavians to press for similar treatment.
HONG KONG AIRPORT (CA1)
The Hong Kong Government had asked HMG for financial assistance with the development cf the Colony's airport. The United Kingdom might contribute to the cost as a gesture of goodwill, but this would in no way help to solve the real economic problems. This was true of aid to the transport sector as a whole which was already developing satis- factorily.
7. GENERAL CONCLUSION (CRE 3)
It was agreed that Hong Kong needed access to expanding export markets if she were merely to "stand still" and maintain the present level of employment in an increasing labour market. Her internal stability depnded on this.
The Colony might be able to face a situation where her competitors enjoyed tariff preferences while she did not, but the imposition of a growing number of quantitative restrictions on her exports presented a real threat to the vital expansion of her trade.
Financial aid in itself would not solve this fundamental problem. The Colony had financial resources at its disposal but without access to growing markets she could not maintain even the status quo.
8.
TIMETABLE
Contributions to the paper should be sent to CRE 3(3) if possible by close of play on Friday 10 July. It was hoped that a first draft of the paper might go to WGE by Friday the 17 July.
9.
OTHER FACTORS OUTSIDE THE SCOPE OF THE PAPER
PRESENTATION OF THE PROBLEM TO THE SIX
i.
It would at some stage be necessary to consider how best to present the arguments to the member States showing that their present attitude towards Hong Kong was unjustifiable both in terms of international trade relations and in view of the political arguments for maintaining stability in the Colony. The FCO was already drafting a background Aide Memoire on Hong Kong for presentation to the Six.
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