CONFIDENTIAL
- 3-
importance to the UK. The Prime Minister has asked that out- standing issues with Hong Kong should be resolved before his
visit there in January 1974.
6. It is clear that we shall have to try to persuade our
partners to admit Hong Kong to the Community's GSP in respect
of footwear and textiles. The alternatives would be to propose
that they should exclude these categories from the Community's
GSP altogether; or that they should limit the damage by lowering
the butoirs (ie limits within the duty-free quotas which limit
the benefits to any one country) on these categories or that
they should take the whole question of textiles out of the GSP
context and consider it in the wider context of the Community's
textiles policy. The first of these possibilities would be
contrary to the policy laid down by the 1972 European Summit
and inconsistent with the conclusions of the GATT Ministerial
meeting in Tokyo; the second is open to the same objection and
would not meet Hong Kong's political requirements; nor would
the third, which anyway stands very little chance of success
and would not solve the problem of footwear.
7. The difficult question is to decide when we should make the
attempt to persuade our partners to vary the arrangements made in 1971. Hong Kong claim that Mr Rippon's promise (paragraph
3 above) requires us to take action now, ie before our own
GSP is aligned with that of the Community on 1 January 1974,
and that unless changes are made, the political damage to
them will begin the moment we begin to discriminate against
/them
CONFIDENTIAL