CONFIDENTIAL
DISCUSSION OF THIS MATTER ASIDE TEMPORARILY AND WE EXAMINED E E C
IMPORT AND HONG KONG EXPORT STATISTICS FOR THESE ITEMS AND
STATISTICS RELATING TO SHIPMENTS COVERED BY PREFERENCE CERTIFICATES.
SCHOFFER EXPRESSED SURPRISE THAT HONG KONG HAD NO TRADE WITH
THE E E C IN SEVERAL OF ITEMS UNDER DISCUSSION AND THAT
HONG KONG DID NOT EXPORT SOME OF ITEMS TO ANY COUNTRY. HE HAD
NOT BEEN AWARE OF THIS. IN REPLY TO MY QUESTION AS TO THE
JUSTIFICATION FOR THE EXCLUSIONS, SCHOFFER SAID THAT HE WAS NOT
COMPETENT TO GIVE SUCH A JUSTIFICATION AND THE COMMISSION OFFICIAL
WHO WOULD BE IN A POSITION TO DO THIS HAD UNAVOIDABLY BEEN PREVENTED
FROM ATTENDING THE MEETING. HE ASSUMED, HOWEVER, THAT THE ITEMS
WERE PRODUCTS ABOUT WHICH THE DOMESTIC INDUSTRIES OF THE MEMBER
STATES WERE WORRIED AND THAT WHERE THERE WAS NO TRADE THIS REFLECTED
A CONCERN THAT HONG KONG MIGHT DEVELOP INTO THESE AREAS. I POINTED
OUT THAT I UNDERSTOOD THIS TO BE ONE OF THE PURPOSES OF THE G.P.S.
3. I THEN SPOKE AT SOME LENGTH OF HONG KONG'S OBJECTIONS
TO DISCRIMINATORY TREATMENT IN FAVOUR OF OUR COMPETITORS AND
SAID THAT FOR THE TWO REASONS (A) THAT THERE WAS NO JUSTIFIC-
ATION FOR THE EXCLUSIONS AND (B) THAT HONG KONG COULD NOT
VOLUNTARILY AGREE TO BE DISCRIMINATED AGAINST, A GENTLEMEN'S
AGREEMENT BETWEEN HONG KONG AND THE EE.C. WAS IMPOSSIBLE.
4. I THEN SUGGESTED THREE METHODS WHEREBY THE E.E.C. MIGHT
SECURE THE PROTECTION IT SOUGHT AND WHICH I WOULD BE PREPARED
TO RECOMMEND FOR ACCEPTANCE TO THE HONG KONG GOVERNMENT.
THESE WERE:-
(A) THE EXCLUSION OF THE 12 ITEMS FROM THE G.P.S. FOR ALL
BENEFICIARIES, OR
(B) THE PLACING OF THE 11 NON SENSITIVE ITEMS ON THE SENSITIVE
LIST WITH BUTOIRS PITCHED AT A LEVEL WHICH WOULD EFFECTIVELY
INHIBIT DUTY FREE IMPORTS, OR
(C) A FURTHER TIGHTENING OF THE ORIGIN RULES FOR THESE ITEMS.
5. SCHOFFER SAID THAT THESE THREE METHODS HAD BEEN CONSIDERED BUT DISCARDED FOR POLITICAL, ECONOMIC AND ADMINISTRATIVE
REASONS. HE EXPRESSED HIMSELF AS, SYMPATHETIC WITH THE HONG KONG
POSITION IN VIEW OF THE FACT THAT FOR SEVERAL ITEMS THERE WAS
NO TRADE, AND ENQUIRED WHETHER THE HONG KONG GOVERNMENT WOULD /CONSIDER
"
2 CONFIDENTIAL,
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