CONFIDENTIAL

5. Although China stands to derive substantial economic

benefit from the maintenance of the constitutional status quo

of the Colony, there is no reason to suppose that the local

communists in Hong Kong will not continue indefinitely in their

efforts to undermine the authority of the Hong Kong Government

and to win over the general public to their own side.

6.

We expect that our improved relations with China culminating

in the exchange of Ambassadors will be of benefit to Hong Kong.

FRENCH IMPORT RESTRICTIONS ON GOODS IMPORTED FROM HONG KONG

7.

Hong Kong maintains an open-door policy for imports of

French as well as other foreign products. Hong Kong take the

view that the French quota restrictions cannot be subject to

negotiation (because this would give them an air of legality).

France maintains, unilaterally, restrictions contrary to the

provisions of the GATT on imports of certain goods from Hong

Kong and also restricts goods from a wider range of sources.

8. The French Journal Official of 6 September 1970 published

a summary of all goods subject to quantitative restrictions

when imported into France from all sources. The up-dated

list notes restrictions on the following types of goods from

the group of countries which includes Great Britain and her

dependencies (eg Hong Kong):

Certain live animals, animal and vegetable products, prepared foodstuffs

Certain mineral products and products of the chemical and allied industries

3.

CONFIDENTIAL

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