CONFIDENTIAL
b.
The Generalised Preferences Scheme
21. One of the outstanding problems still to be settled before
22.
the scheme can be implemented is the definition of
beneficiaries. We have always supported the principle of
"self-election" under which all the countries claiming
developing status would on certain conditions be included
in the arrangements. This principle was broadly endorsed
by the OECD in 1967 because of the impossibility of finding
any economic criteria likely to be internationally accepted,
on the basis of which developing countries could be defined
as a Group. However, the EEC (and other donor countries
also) are very unlikely to adhere to the principle.
The EEC propose that no one developing country should be
allowed to supply more than one half of the yearly quota
ceiling for any product. They have been considering
adopting a lower figure for certain competitive developing
countries, such as Yugoslavia, but have been reluctant to
accept even this arrangement as comprising Hong Kong. We
can urge them to consider this way out further and to
apply it to any highly competitive goods from certain
developing countries.
23. If Hong Kong is excluded, her main interest is whether
other developing countries equally competitive in certain
products as Hong Kong will be excluded also. If we had to
accept as unavoidable that Hong Kong will be excluded from
the benefits of the generalised preferences scheme we might
make it clear from the stert that on grounds both of the
burden on cur own industries and our responsibility for
Hong Kong we would have to retaliate as far as we could by
/ourselves