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It is of course also possible that Japan
would in any case wish to exclude Hong
Kong from her preference scheme simply
to ensure that the Americans did the
same. This would effectively damage a
trading rival in the US market. In view
of this, our approaches to the Americans
should emphasise that it would be unreas-
onable of them to insist on a Japanese
contribution as a pre-requisite for the
grant of American preferences to Hong
Kong. The only faint possibility of
shifting the Japanese lies with a pos-
sible exclusion of Hong Kong textiles,
with
but, the colony's inclusion for other
items (to whatever extent may prove
mutually acceptable).
(Defensive) Contingency plan
3. If the worst happens, and Hong Kong does
not secure inclusion in any donor preference
scheme, there will obviously be pressure on
HMG to compensate Hong Kong within the con-
text of the UK GPS (at least until such time
as we enter the EEC, and have to merge our
scheme with theirs). The Hong Kong officials
are likely to press that HMG give firm under-
takings to eliminate some of her main rivals
as beneficiaries under our scheme, and pos-
sibly also to eliminate certain products in
the scheme of major interest to Hong Kong.
4. Ministers have agreed to the proposal in
EC (70) 13 (paragraph 10, (c)) that we might,
if necessary, warn other major donors that if
they excluded Hong Kong, the Uk would have to
exclude her major competitors, Taiwan and