ᄂ
Li
3.
Foreign and Commonwealth Office London SW1
35)
JB Ingram Esq
CRE1
DTI
1 Victoria Street London SW1
Telephone 01-
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27 March 1974
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Sean John.
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1.
I have read Commission document 1/99/74-E of 19 March entitled "Preparation of GSP Scheme for 1975 - Re-adjustment of advantages granted in respect of industrial products". The ideas set out in this working document have of course already been kicked around by the Commission in recent weeks. Doubtless they will be further discussed during the GSP discussions in Brussels this week, which I believe you are attending, and I look forward to hearing their outcome.
2. The idea of reducing the number of products on the "sensitive" and "semi-sensitive" lists is of course highly laudable and it is to be hoped that much can be achieved in this direction. The Commission's ideas for a two-tier butoir system is of course much more controversial.
3.
I have looked at the illustrations attached to the Commission document and if one thing is clear it is that Hong Kong would stand to be particularly hard hit if a special 10% butoir were to be introduced for highly competitive countries. It also seems to me, but I may be wrong here, that in many cases Hong Kong would not be compensated by the fact that her principal competitors were also subject to a lower butoir. Jordan's recent telegram from Hong Kong indicated, by implication that he would find unacceptable restrictive arrangements of this kind.
4. I wonder however if it would not be possible to use the basic idea of a two-tier butoir system to work towards something which is a little less unattractive to Hong Kong but which at the same time would increase opportunities for the less competitive countries to take advantage of the tariff quotas. If the normal butoir for a product were, say, 50%, it would hit Hong Kong hard if her butoir were only 10%. But a butoir of 25% or 30% would not be nearly as bad. Similarly there could be a smaller differential if the main butoirs were 20% or 30%. Furthermore countries like Hong Kong could be further compensated if there were a substantial increase in the total overall quotas. I see that this is a point raised in Alan
/Russell's
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