}
3 The Commission, in response to criticism of these proposals by.
Member States, is working on a modification of them, which preserves
the main elements of their original scheme, but discriminates rather
more overtly against Yugoslavia.
Hong Kong Views
사
Hong Kong has protested vigorously against the Commission prop-
osals. She would prefer a continuation of the original scheme with
enlargement of quotas. She objects to the 1975 proposals on 3 grounds
i
Her preferences will be reduced.
ii
Trade diversion will arise from the special butoirs.
also considers the proposals discriminatory in effect
(whatever their form) because Hong Kong, having a restricted
industrial base, does not nave the same opportunity to
diversify her production as do her competitors.
She
iii
The change is unnecessary the smaller developing countries
already have enough scope in GSP as the fact that no quota
has been filled in the existence of the scheme demonstrates.
5
We would respond as follows:
i Loss of Freference
It is clear that the concept of a 15% butoir will mean in bino a relative
/loss in the opportunities of the scheme. But in 1975 liong Kong
will have the same entitlement to preference as in 1974. (If
the 1974 scheme had been continued into 1975 on the same basis,
Hong Kong's preferences would have been about 3-4 million ua
greater).
Hong Kong has quoted a loss of reference to her in
1975 of about 40 willion wa we think the basis of this calculation
2