Pl. Enton
RECORD OF A MEETING HELD IN ROOM 320 1 VICTORIA STREET ON WEDNESDAY 16 OCTOBER 1974
Present: Mr C W Roberts
Mr J B Ingram
CRE2 CRET
161
RECEIVE
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21007194
Miss E Lowne
Mr A Stuart
Mr K Hanna
Mr R Hart
Mr N Bowo
Mr P Diston
Miss C H Welch )
CT Dept of Industry ) HKIOD FCO
EID FCO
TRED FCO
Tariffs
Mr J Cohen ) CREZ
Mr DJ Burbridge)
Lick 6/598/1
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The meeting was held to discuss preparations for the visit of Mr Jordan, Hong Kong Director of Commerce, in the coming week.
2 Mr Roberts drew the meeting's attention to the main problem: The line the UK should adopt towards Hong Kong's airs in trade negotiations with the Community, in the context of the Community's GSP proposals for 1975, and the bilateral negotiations on textiles between the Community and the main low-cost suppliers, including Hong Kong. Mr Jordan had suggested that Hong Kong might obtain Concessions in the GSP by holding out the threat of reduced cooperation in the bilateral textile negotiations. Mr Roberts hoped the meeting could decide on the approach Mr Preston should be advised to take on this point in his talks with Mr Jordan.
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3 Mr Ingram gave an assessment of the GSP prospects for Hong Kong. Before the summer break there had seemed to be a good chance of concessions to Hong Kong in both textiles and footwear, but more recently the tide had been running strongly for protectionism. Hong Kong was now unlikely to obtain any substantial improvements. Our Ministers would still want to do their best on Hong Kong's behalf when the matter came to the Council in November, but it would be well to advise Mr Jordan of the limited prospects. As to the proposal to link progress on the GSP to cooperation in the bilateral talks, he did not feel this was a viable threat.
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Miss Lowne agreed with this last point, and stressed that Mr Jordan's proposal might rebound to Hong Kong's disadvantage. His idea was that Hong Kong might insist on negotiating an agreement under Article 3 rather than Article 4 of the Multi-Fibre Arrangement, no product being included unless it fully met the market disruption criteria. But this was not as serious a threat as it seemed. Under Article 3 the Community could, failing a negotiated settlement, impose import restrictions unilaterally, whereas it was decidedly to Hong Kong's advantage to be able to continue to operate the controls herself. Hong Kong's position would also be weakened by its recent Article 4 agreement with the USA, in which Hong Kong had accepted comprehensive restraints without any pretence of product-by-product justification. A hard line with the Community would play into the hands of those within the Community who had little sympathy for Hong Kong, and who had already been strengthened by Hong Kong's attitude in taking unilaterally in 1974 the full 6 per cent growth rate provided for in the MFA.
Mr Stuart thought the crucial question was whether we should now resign ourselves to a situation where we could only aim at limiting the damage to Hong Kong, or whether by an exercise of political will we could still achieve positive improvements. If it was the former then we should take Mr Jordan into our confidence go that he could begin to prepare Hong Kong opinion for the outcome, But we would have to present him with a convincing case. There was a discussion of this point, in which the general view was that no substantial improvements in the CSP field were likely. There was agreement that the idea of linking GSP with the bilateral talks should be firmly discouraged. The point was that in practical terms the tcxtile agroemcut was more important to Hong Kong than the GSP, and that it would be most unwise for Hong Kong to jopardize the former for the sake of the latter.
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