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· CONFIDENTIAL
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GENERALISED PREFERENCES
1.
I called on Mr. Otaka, 'Head of the Second Economic Co-operation Division of the Economic Affairs Division of the Gaimusho this afternoon, to discuss three items in the light of FCO telegrams numbers 26 of 20 January, 66' to Hong Kong of 22 January (which was addressed to Mr. Bottomley), and 42 of 25 January (addressed to Mr. Bottomley here). The three subjects were:- the EEC decision to include Hong Kong subject to the exclusion of textiles and footwear, the problem of Hong Kong and the question of the dependent territories.
2. On the EEC decision Mr. Otaka said that he was grateful for this information. He did not probe about additional qualifications to the EEC offer and I did not volunteer any details.
·3. On Hong Kong Mr. Otaka said that there was now a concensus in the Japanese Government that Hong Kong would: be included in the Japanese offer, but on certain conditions. He added that MITI had not yet prepared the list of items for which they would wish Hong Kong to be excluded but Mr. Otaka warned that when it did emerge it would almost certainly be lengthy. He added that it would certainly not be more liberal than the offer by the DEC.
Somewhat surprisingly he asked whether Hong Kong would wish to be included in the Japanese offer even if virtually all of the eligible Hong Kong export items were excluded. I said that this was a hypothetical question since we had no idea of the questions which the Japanese might impose on Hong Kong, but speaking personally I thought that Hong Kong would nevertheless wish to be included whatever the circumstances. Otaka said that he hoped that Hong Kong would take this line and he then moved on to the fears of certain sectors of Japanese industry about the effect of the inclusion of Hong Kong in the US offer. There was a school of thought which was very anxious that Japan should do nothing which would persuade the Americans to include Hong Kong. (We have been concerned about this aspect for some time; it is à point which we shall need to be able to answer while Mr. Bottomley is here).
Mr.
4. On dependent territories I told Mr. Otaka that we seemed to be going round in circles. On 30 November Mr. Endo in London had told Mr. Kemmis of the DIT that "other than Hong Kong, Japan will include all those for which
: "beneficiary status has so far been claimed. This includes all the other UK dependent territories (including Gibralter, the West Indian Associated States and those in the Middle East which were listed at the last session of the UNCTAD Special Committee".
But on
25 January Mr. Endo confirmed to the FCO and the DTI that dependent'territories would be excluded in principle
CONFIDENTIAL
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