00 UKREP BRUSSELS
GRS 750
CYPHER/CAT A
FM FCO 051920Z
CONFIDENTIAL
HKK 613.
TO IMMEDIATE UK REP BRUSSELS TEL NO 1320 OF 5 NOVEMBER
FOLLOWING TELEGRAM NOW REPEATED TO YOU AT REQUEST OF DEPARTMENT WAS RECEIVED FROM GOV HONG KONG TELEGRAM NO 1262 OF 5 NOVEMBER.
EEC - GSP.
THANK YOU FOR YOUR TELEGRAM NUMBER 1095.
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WILE I AM GRATEFUL FOR THE EFFORTS YOU HAVE MADE, AND FOR
THE AGREEMENT TO PRESS HONG KONG'S CASE HARD IN 1974. APPRECIATE THE EXTENT OF THIS ACHIEVEMENT IN WHITEHALL TERMS, AND AM RELIEVED THAT THE DECISION WAS NOT TO REFUSE TO TAKE UP THE ISSUE AT ALL, WHICH WOULD HAVE BEEN THE WORST CASE AND WOULD HAVE BEEN VERY BADLY RECE! VED HERE. HOWEVER THIS WOULD BE REGARDED HERE ONLY AS THE LEAST WHICH H.M.G. COULD HAVE DONE, AND THERE WILL BE SOME DISAPPOINTMENT ABOUT THE PRESENT AND SCEPTICISM ABOUT THE FUTURE.
THOUGH THERE MAY BE FAVOURABLE REACTION TO FIRST REPORTS
THAT THE U.K. HAS AGREED TO RAISE THE HONG KONG QUESTION AT THE
HI GHEST COMMUNITY LEVEL, I FEAR IT WILL BE FOLLOWED BY DISILLU- SIONMENT WHEN IT IS REALISED THAT YOU INTEND TO PRESS IT ONLY IN NEXT YEAR'S REVIEW.
THE DELAY SINCE THE UK/HK DISCUSSIONS IN JULY AND THE DESPATCH OF THE INDUSTRY'S PETITION IN AUGUST HAVE RAISED HOPES THAT SOMETHING WOULD BE DONE, EVEN IF IT WERE ONLY POSTPONEMENT OF THE UK'S ALIGNMENT WITH THE SIX'S SCHEME.
AFTER ALL, IT WAS ONLY ON 17 OCTOBER THAT MR. DAVIES SAID IN PARLIAMENT, QUOTE THE UK WILL ALIGN TO THE EEC'S GSP ON 1 JANUARY 1974. THIS SCHEME 13 AT PRESENT UNDER DISCUSSION IN BRUSSELS. WE ARE SEEKING AND CHALL CONTINUE TO SEEK TO IMPROVE IT IN ACCORDANCE WITH THE PARIS SUMMIT COMMUNIQUE. IN THESE DISCUSSIONS WE SHALL CONTINUE TO DO ALL WE CAN TO SAFEGUARD HONG KONG'S INTERESTS. UNQUOTE THESE DISCUSSIONS IN BRUSSELS APPEARED TO PROVIDE THE APPROPRIATE TIME AND PLACE TO REVIEW THE SCHEME FOR 1974 AND IT IS KNOWN THAT SOME CHANGES ARE GOING TO BE MADE. HONG KONG PEOPLE ARE THEREFORE GOING TO FIND IT VERY DIFFICULT TO UNDERSTAND WHY YOU HAVE DECIDED TO CONCENTRATE THE SUBSTANTIVE DEMAND FOR A CHANGE ON THE ANNUAL REVIEW NEXT YEAR AND WE SHALL NEED TO BE ABLE TO EXPLAIN WHY. IT IWLL NOT BE ENOUGH TO SAY THAT IT IS NOW TOO LATE.
I THINK IT WOULD BE DANGEROUS TO PUT ANYTHING OUT #NATTRIBUTABLY RECAUSE AS YOU SUGGEST IT WOULD RAISE FALSE HOPES.
IF WE ARE TO BRIEF THE PRESS AFTER THE COUNCIL MEETING WE SHALL NEED TO BE FULLY INFORMED ABOUT THE IMPROVEMENTS THAT YOU HAVE BEEN ABLE TO GET, AND I SHOULD ADD THAT UNLESS THEY CAN BE CLEARLY SHOWN TO BENEFIT HONG KONG I THINK IT WOULD BE COUNTER-PRODUCTIVE TO LAY TOO MUCH WEIGHT ON THEM. ATTENTION MERE IS FOCUSSED
ON TEXTILES AND FOOTWEAR, AND THERE 13 OF COURSE HERE AS ELSEWHERE A LOT OF SCEPTICISM ABOUT THE BENEFITS TO
EXPORTING COUNTRIES UNDER THE TARIFF-QUOTA-AND-BUTOIR SYSTEM.
THE COMMERCIAL BENEFITS GO TO THE IMPORTER RATHER THAN THE EXPORTER.
IT MAY SEEM TO THE COMMUNITY UNREASONABLE AND INDEED UNGRATEFUL BUT THE FACT OF THE MATTER IS THAT INCLUSION IN SUCH A SCHEME IS BELIEVED TO CONFER LITTLE BENEFIT - BUT EXCLUSION CAN BE POSITIVELY DAMAGING.
FROM OUR POINT OF VIEW IT IS IMPORTANT THAT THE INITIAL ANNOUNCEMENT SHOULD COME FROM HMG AND THAT THIS SHOULD SHOW THAT HMG HAS PRESSED OUR CASE STRONGLY. THEREAFTER, IF YOU WILL GIVE US ALL THE FACTS WE WILL DO OUR BEST TO PRESENT THEM IN AS FAVOUABLE A LIGHT AS WE CAN (WE CAN'T AFFORD TO OVERDO THIS OR WE WILL DAMACE OUR CREDIBILITY WITH PEOPLE HERE).
CLEARLY, HMG'S CREDIBILITY WILL DEPEND VERY MUCH ON WHAT THE
PRIME MINISTER HAS TO SAY WHEN HE IS HERE AND HE WILL BE CLOSELY
QUESTIONED ON THIS SUBJECT.
IT WOULD CERTAINLY HELP US TO UNDERSTAND IF YOU COULD EXPLAIN
WHY THE LINE PROPOSED IN HONG KONG TELNG 282 TO THE HONG KONG (98, COMM1351ONER (WHICH I ENDORSED IN MY TELNO 1865) WAS REJECTED.
YOU WILL APPRECIATE THE NEED FOR A REPLY TO BE GIVEN TO THE
INDUSTRY'S PETITION AS SOON AS POSSIBLE. WE SHOULD REALLY
BE IN A POSITION TO GIVE IT TO THE ASSOCIATIONS CONCERNED AT THE
SAME TIME AS WE BRIEF THE PRESS.
DOUGL45-HOME
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GRPS 725
IMMEDIATE
CYPHER/CAT A.