CONFIDENTIAL
of our negotiations.
But the possibility of any success
in action on Hong Kong's behalf depends on how far the
political attitude towards Hong Kong in particular and
low cost competition in general can be changed. We must
try to persuade the Six and the United States that it is
in their interest to import cheap efficiently-produced
goods and concentrate their resources in the more
technologically advanced sectors. A system of
protectionism against all the manufactures which
developing countries can produce competitively is as
much contrary to the interest of the developed countries
as that of the developing countries themselves.
To put
this broad philosophical thesis over so as to influence
attitudes both in Europe and America would require a
sustained diplomatic effort. We must, however,
recognise that in practice our chances of ensuring
fair treatment for Hong Kong's exports are not very great.
V
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Possible Retaliation
30. If Hong Kong's exports to the United States and the
enlarged Community were to suffer in the next few years,
at about the time we join the Community, the United Kingdom
will inevitably attract a good deal of the blame. The first
effect would be the anger of the "Establishment" of leading
Chinese citizens who provide the unofficial members of the
Executive and Legislative Councils and the Advisory
Committees on which the smooth Government of Hong Kong
largely depends, and relations between the Hong Kong
Government and the United Kingdom Government would
deteriorate. If the damage to the trade was such as to
result in an increase in unemployment, there would be a
/threat