CONFIDENTIAL
complete breach of faith; one that goes back on earlier undertakings
by the British Government and clear proof that we ignore our
responsibilities to the Colony.
4.
Against this background, we offered to discuss the change in policy with Hong Kong officials before the decision was announced.
Talks took place on 6 and 7 December.
prepare an agenda for further talks.
The main activity was to
However the Hong Kong Delegation
emphasised that their trade had taken decisions on the basis of tariff only and consequently in some cases orders had been taken on by non-
quota holders. They therefore wanted additional quota to cover such orders; some transfer ability between categories and groups in the quotas and an assurance that Hong Kong would not suffer further as a result of duty-free competition from EFTA countries. While we accepted these subjects for discussion at a further meeting, we made it clear that all these requests would raise very real difficulties for us. 5. At the further meetings in January (14 to 18), Hong Kong pressed strongly for "hardship" yardage to cover orders held both by exporters who did not enjoy a big enough quota allocation under the system
operated by the Hong Kong Government and by non-quota holders. We
reminded Hong Kong of our request to all supplying countries at the time of our quota decision to treat pre-existing contracts as a first call on the 1972 quotas. We argued that many orders placed with other
countries would not be accommodated. Nevertheless we said that if
HMG decided that in principle we could allow any excess licensing for
pre-existing orders, we would give sympathetic consideration to
Hong Kong's claims.
6. We said we were also prepared to discuss with British industry and the EEC, and thereafter to submit for Ministerial approval, certain
2
CONFIDENTIAL
/amendments