CONFIDENTIAL
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Mr Butler (European Integration Department)
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THE COMMUNITY'S GSP AND HONG KONG
1. At a meeting of the Cabinet's GEN Committee on Hong Kong yesterday, Mr Edwards of the DTI said there had been agreement at official level,. including the FCO, on the DTI paper to be put to the Ministerial Committee on Europe next week. He said it had been agreed that Ministers should take a rather different line from that suggested in the Foreign Office paper. They would concentrate on getting general improvements to the GSP scheme from which Hong Kong would benefit, but would take a rather less hard line on the specific question of Hong Kong's exclusion from the Community's GSP on footwear and textiles.
2. He argued that the practical benefits to Hong Kong of improvements to the whole scheme and of a reduction in quantitative restrictions, would be greater than from the inclusion of Hong Kong in the Community's GSF for footwear and textiles, even if we could get this.
3. I have since spoken again to Mr Edwards who has confirmed that this is the DTI view of the conclusions of the GEN 131 Committee, in which the FCO concurred. The DTI were drafting accordingly and assumed FCO support. I have also now seen the minutes of the GEN 131, 17th meeting which your department kindly sent us. This gives some colour to Mr Edwards' account in that there is no reference to the special political importance to Hong Kong of the GSP on textiles and footwear. I realise that all this was in the context of a discussion of the GSP as a whole; but we cannot, without varying the line agreed by FCO Ministers, abandon the theme that the exclusion of Hong Kong from the GSP on these items and the consequent discrimination against them by the UK is of special political importance and will not be offset by concessions on other items. hope that Mr Amery will be briefed to say at the ministerial meeting that the formula set out in the FCO paper is an irreducible minimum, and that the political need will not be met, as suggested in the GEN 131 minutes, by a general statement that we would be pressing for further improvements in the 1975 scheme.
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4. I think that, in accordance with the compromise agreed by the Secretary of State, what we must aim for is a statement to the Council of Ministers on the following lines: "Hong Kong is a British dependency. During the enlargement negotiations the Community agreed to admit Hong Kong to its GSP subject to the exclusion of textiles and footwear. We accept that our partners
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CONFIDENTIAL