other sterling holders on this and aim to indicate our

conclusions in good time before expiry of the present

arrangements.

20. HONG KONG AND THE EEC GENERALISED SCHEME OF

PREFERENCES (GSP) (Brief no. 4)

Our alignment with the Community's GSP scheme on

1 January 1974 means discriminating against Hong Kong's.

textiles and footwear in favour of some of its major

competitors. Since we could not re-negotiate the

terms of entry, we confined ourselves to informing the

Council of Ministers that we would press resolutely for

the elimination of this discrimination during the 1974

annual review. This statement has been published.

21.

Possible Criticisms:

The political damage took

place at the moment of alignment.

Importers also.

place their orders ahead in the light of the actual

and there will be a diviers in of Trache Sorom Mang Kony situation This is a damaging precedent for action by

the United States and Japan.

22.

Line to Take: The undertaking by the Chancellor

of the Duchy in Brussels on 6 November was a major

political effort by HMG on behalf of Hong Kong.

During the entry negotiations in 1971 we fought hard

to get Hong Kong included in the Community's OSP.

They eventually agreed to do so, with the exception

only of textiles and footwear. We have put them on

notice that this discrimination against Hong Kong is

no longer de falde,

i

23.

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