£
CONFDENTIAL
as our economic interests are concerned, would lose us investments of some
£80m (direct and portfolio), interest from profits and dividends of the order
of £10m a year, and a valuable communications centre in the Far East.
9. What this adds up to is that while the treatment of Hong Kong does not
seem likely, to qualify as a breaking point in the negotiations there are cogent
reasons for doing what is reasonably possible to ensure that the interests of
LL...
Hong Kong are damaged as little as possible.
PROBLEMS ARISING FROM OUR ENTRY
10. The general problem is thus (paragraphs 5 and 6 above) restrictions on
¡access. In practice this means either tariffs or quantitative restrictions.
TARIFFS
11 In' the 1961-63 negotiations the Six rejected the original British
'proposal' that Hong Kong should be associated with the enlarged Community under
Part IV of the Treaty of Rome (and thus given duty free access to the enlarged
Community)'.' They were willing to concede association for our other dependent
territories (apart from Gibraltar) (as they granted their own dependent
territories in 1957) but did not consider that association was appropriate for
"a dependent territory with well developed manufacturing industries.
$12.
There is no evidence that the Six have changed or are likely to change
..their view on this. In its revised opinion of October 1969 the Commission
merely observed that imports from Hong Kong posed a special problemt. The
Commission take the view that a detailed study is needed to find a solution
for Hong Kong taking into account its econòmic structure in order to avoid
compromising the unity of the market of the enlarged Community. It seems
virtually certain that no form of association will be forthcoming and that
(subject to what`is said below on the, UNCTAD scheme) we shall be obliged to
J
apply the CET in full at the end of the transitional period. This would
L
mean Hong Kong not only losing its duty free entry into the United Kingdom
and her preference in our market against all non-Commonwealth competitors
but also facing reverse preferences in favour of full members of the Community
4
CONFIDENTIAL