CONFIDENTIAL

If necessary, similar voluntary control could be offered to the Americans. It should be noted that Hong Kong would not be asked to apply a voluntary control on her total exports but merely on those of them that would enjoy duty-free entry. 19. The Hong Kong officials may ask whether, following entry the quota ceiling for the enlarged Community will be recalculated to provide for the existing volumes of Hong Kong's exports to the UK to retain free entry. They will argue that there should be no reason why we should not continue to give duty free access on existing trade, even when the other members of the Community will be accepting proportionately much less. We should refuse to be drawn on this question, which will have to be tackled only following entry, and the outcome of which will depend on the question whether there will be free circul tion within the Community of goods enjoying UMCT/D preferences This question will be particularly acute in relation to cotton textiles and in relation to the extent to which we shall be prepared to adopt common policy with the six when their markets will continue to be insulated against the volumes of exports we already take

Future Community Policy

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20, Our negotiating objectives (agred by linisters paragraph 10) included reference to our determination to work to guide future Community policy as far as possible in the direction of a liberal regime for Hong Kong products in an erlarged Community, as well as pressing for maximum benefit to long long from the UNCTAD Scheme.

Aid for Hong Kong

21. Hong Kong officials may reise the subject of the UK giving official aid to Hong Kong, in compensation for damage to her economy caused by our entry to the EEC. In general terms, the use of development aid to help a dependency as wealthy as Hong Kong would clearly need special justification. (However, it should be noted that Singapore, an independent country, with a per capita income equivalent to that of Hong Kong, is receiving substantial aid.) So long as Hong Kong's

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CONFIDENTIAL

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