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CONFIDENTIAL
on 23 July Hong Kong officials reminded us of the undertakings and asked for them to be fulfilled. The Governor has since reported his anxieties
in his telegram No 827 of 28 July, saying inter alia: "I am particularly worried about the likely shortterm political impact of a situation in which the UK is discriminating against Hong Kong, and Hong Kong only, in respect of textiles and footwear. It is just the
sort of issue likely to raise emotive hackles
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He has also set out statistically the effects which Hong Kong's exclusion will have on llong Kong's export
performance.
6.
In addition to pointing to past predictions and
promises the Hong Kong Government argue that
They are
discrimination against them within both the Community and Britain will divert trade away from ilong Kong.
They claim that this is already happening. afraid that the precedent will be used by the United States, Canada and Japan as an excuse
for their discriminating also against Hong Kong, not
only in textiles or footwear, but in other exports
such as electronics. They maintain further, that
the EEC's GSP for textiles is not the same as it was
in 1971; it has been improved for other beneficifaries as regards the sizes of quotas and the numbers of
beneficiaries involved. These now include most of
Hong Kong's principal competitors, eg Yugoslavia,
Brazil, South Korea and Singapore; not however, Taiwan, which is not included in the ECC's GSP. With effect from 1 January 1974 Hong Kong will also lose
some Commonwealth Preference: this will further
aggravate the situation in relation to her non-
Com onwealth competitors.
CAFIDENTIAL
16.