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be applied on a non-discriminatory basis. It was understood that the Community intended to apply the Yaounde rules of origin to its
Generalised Preference Scheme, but had not yet worked out the modalities, It would therefore be necessary to have contacts with the Community about the details of the application of the rules of origin and to ensure their non-discriminatory application.
(c) Hong Kong was particularly concerned about the remaining discriminatory
aspects of the Community scheme. Any scheme which adversely affected Hong Kong's competitive position in favour of Taiwan and South Korea would be very ill received domestically in the Colony, particularly since it could involve those countries enjoying preferences on textiles and shoes in the UK market after enlargement while Hong Kong was denied them. It could also have serious repercussions in the Chinese People's Republic. While there seemed to be scope for disagreement about the degree of potential risk to Hong Kong of competition from Taiwan and South Korea, the UK side considered that it could not object to this aspect in principle without putting the whole of the package into jeopardy, but it was necessary to have regard to the tactical situation. The Community itself had not yet worked out how its offer would be applied to recipient countries, including Taiwan and South Korea, Neither the Community nor the UK had yet got down to the question of the modalities of the application of the Community scheme to the enlarged Community. It seemed prima facie unlikely that textile and other manufacturing lobbies in the enlarged Community would remain indifferent to excessive low cost competition from Taiwan and South Korea, In the UK side's view the best hope of modifying the discriminatory nature of the Community's proposals was as a member of the enlarged Community.
(d) The Hong Kong side expressed their concern lest the terms of acceptance of
the Community's proposals about GPS should carry with it the implication that no other matters concerning Hong Kong could be considered in the context of the accession negotiations. The UK side pointed out that the Community's proposals for generalised preference arose as a response to the request originally made for associate status under the Treaty of Rome for dependent territories including Hong Kong. Insofar as the UK was concerned, the proposals made by the Community on 12 January only covered the case which had been raised by the UK. Any other points (eg financial or constitutional) would have to be dealt with as they arose.
It was agreed that a draft of a UK statement about the Community proposals should be telegraphed to Hong Kong with the object of having a text cleared for transmission to the Community at the Ministerial meeting on 2 February. It was agreed that the UK statement in Brussels should contain an explicit reference to HMG's concern to avoid discrimination against Hong Kong in favour of her main competitors.
Hong Kong representatives indicated that in addition the Hong Kong Government might wish to secure a statement from the UK Government of its commitment to the avoidance of discrimination against Hong Kong in favour of her competitors in the Far East.
The Hong Kong Government might also wish to ask for an undertaking from the Community that they would not discriminate against Hong Kong in favour of other suppliers.
The UK representative stated that they could not believe that this last request would serve Hong Kong interests at all; the best hope for securing Hong Kong's objectives would be to work steadily within the enlarged Community for the eventual removal and avoidance of discrimination.
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