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amounts involved and that it would be possible to reach agreement provided it was understood that it was on an ad hoc basis and was exceptional. Again DTI fears that this would be used in the future is taken from the fact that the Hong Kong Government announced their intention multilaterally and without reference to the DTI in clear contradiction of our current agreements. Miss Lowne did in fact use the words that she would not automatically rule out the more flexible arrangement on an ad hoc basis.
4.
we
Subsequently Mr Sellers rang me to say that DC & I were up in arms over this and were thinking of appealing to Ministers. It is of course unfortunate that this coincides with the announcement on the EEC GSP. I encouraged Mr Sellers to persuade DC & I to play it down. I suggested that a more appropriate reply at this stage would be for Mr Mills to reply pointing out the practical difficulties that the DTI letter poses, and that this was a purely ad hoc step on art and asking for re- consideration. I hinted that an approach at top level would probably harden the DTI line. Hong Kong should also
bear in mind that we are in the midst of both EEC and GATT negotiations and the DTI position in respect of Hong Kong in this context might be used to the disadvantage in the wider negotiations.
5. I think no further action is required until the Hong Kong Government's re-action is known.
and fallend.
M A Goodfellow
14 November 1973
TRED ila Hagle.
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