CONFIDENTIAL
WE HAVE DEEN AWARE FOR SOME TWO YEARS THAT HONG KONG HAS
DEEN EXCLUDED FROM THE EUROPEAN ECONOMIC COMMUNITY SUMEDAL PREA
ERENCE SCHEME IN RESPECT OF TEXTILES AND FOOTWEAR, WE APPRIOLATE THAT THE HONG KONG GOVERNMENT HAS REPEATEDLY MADE REPRESENTATIONS ON
THIS MATTER BUT TO-DATE WITHOUT SUCCESS, HOWEVER, IT NOW
APPEARS EVEN MORE IMPERATIVE THAT THESE REPRESENTATIONS NOT ONLY
BE REPEATED BUT WITH GREATER FORCE.
THIS URGENT REQUEST STEMS FROM THE FACT THAT IT IS NOW THE
STATED INTENTION OF HER MAJESTY'S GOVERNMENT THAT WITH EFFECT FROM
1ST JANUARY, 1974, THE UNITED KINGDOM GENERAL PREFERENCE SCHEME
SHOULD BE HARMONIZED WITH THE SYSTEM CURRENTLY OBTAINING IN THE
COMMON MARKET.
THE DAMAGING EFFECT UPON HONG KONG'S TEXTILE AND FOOTWEAR
INDUSTRY OF SUCH CONTINUED AND INCREASED DISCRIMINATION, PARTICULARLY BY THE UNITED KINGDOM, WOULD PLACE THESE LOCAL INDUSTRIES AT A
GRAVE ECONOMIC DISADVANTAGE IN RELATION TO SIMILAR EXPORTS FROM
SUCH CLOSE COMPETITORS AS SOUTH KOREA, PAKISTAN, INDIA, THAILAND, YUGOSLAVIA AND THE PHILIPPINES.
THE DAMAGE TO THESE TWO INDUSTRIES HAS ALREADY BEEN EXPER-
TENCED IN THAT DURING THE LAST TWO YEARS ORDERS FOR THESE SPECIFIC
COMMODITIES TO THE EUROPEAN ECONOMIC COMMUNITY (THE SIX) HAVE BEEN
DIVERTED FROM HONG KONG TO THE ADOVE NAMED COUNTRIES,
MANY FOREIGN BUYERS HAVE RECENTLY COMMENTED TO THEIR OLD AND
ESTABLISHED HONG KONG PARTNERS THAT THE EXCLUSION OF HONG KONG FROM THE EUROPEAN ECONOMIC COMMUNITY GENERAL PREFERENCE SCHEME HAS RESULTA
ONLY IN THE IMPORTER BENEFITTING SINCE THE EFFECT OF THE GENERAL
PREFERENCE SYSTEM AS LONG AS HONG KONG IS EXCLUDED IS TO MAKE IT
MORE ATTRACTIVE TO: THE IMPORTER TO BUY FROM ANY COUNTRY WHICH IS
INCLUDED IN THE SCHEME.
WE CONSIDER THAT WITH THE INTENTION OF HER MAJESTY'S GOVERNMENT
TO HARMONIZE THEIR GENERAL PREFERENCE SCHEME IN THE NEW YEAR AND
AT THE SAME TIME REDUCE THE BENEFITS UNDER THE COMMONWEALTH PREFERENCE SCHEME, THE EFFECT REFERRED TO ABOVE COULD HAVE ALMOST DISASTROUS EFFECTS FOR HONG KONG IN THE FUTURE. THIS WILL OCCUR IN SPITE OF ASSURANCES IN THE PAST THAT THE UNITED KINGDOM WOULD
ASSIST IN EVERY WAY IT COULD TO AVOID ANY DAMAGE TO HONG KONG'S
INTERESTS.
-2- CONFIDENTIAL
/IN FACT