i.
SECURITY ASSIFICATION
Top Secret.
Secret.
Confidential.
Restricted.
Unclassified.
PRIVACY MARKING
In Confidence
To:-
GENERALISED PREFERENCE SCHEME
Type 1 +
From
Telephone No. & Ext.
Department
HMG have been pressing Japan for nearly a year to include Hong Kong (and other UK dependent terri- tories) in their Generalised Preference Scheme (GP) * We believed we had overcome initial Japanese re- luctance to accept as a beneficiary a territory they inevitably see as a competitor in other markets (not.. bly the U.S.).
2. However, the Ministry of Trade and Industry (MITI), who have been leading the opposition to any worthwhile offer to Hong Kong, have recently counter- proposed the exclusion of all dependencies from the initial implementation of the Japanese GPS (possibly on 1 August 1971), relegating them to a hypothetical second stage (perhaps by April 1972).
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3. This would be most unsatisfactory, mainly be- cause it would almost certainly be sufficient excuse for the USA to avoid including Hong Kong in the American GPS. MITI and Japanese industry would of course welcome this crippling of a competitor in the US market.
4. On May 27, a message from the Brime Minister (text at Annex B) was delivered to Mr Sato, urging t inclusion of Hong Kong and other British dependent territories ab initio in the Japanese GPS. The same day, the Minister of Trade and Industry, Mr Miyazawa leaked to the press MITI's support for two-stage in- plementation, and the exclusion meanwhile of depend- ent territories such as Hong Kong. The wrangling over Hong Kong within the Japanese machinery (MYFA have consistently expressed sympathy with Hong Kong) is almost certainly not yet over, but it will clear- Ау
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