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MINISTERS HAD REPEATEDLY DRAWN ATTENTION TO THE SERIOUS DIFFICULTY
IN WHICH THE UK WAS PLACED BY BEING REQUIRED TO DISCRIMINATE
AGAINST ITS OWN COLONY, WE WERE SURPRISED BY THE DOCTRINE OF
COMMUNITY PREFERENCE BEING INVOKED AND WE WOULD EXPECT THE
COMMISSION TO OPPOSE IT VIGOROUSLY.
IF ENDORSED, IT WOULD MEAN
THAT THERE WOULD BE NO GENERALISED PREFERENCE AT ALL AND NO
TARIFF REDUCTIONS. IN ANY CASE THE COMMISSION'S PROPOSAL, IN
PERSPECTIVE, REPRESENTED ONLY A LIMITED EFFORT BY THE COMMUNITY;
EFFECTIVELY THE 1974 QUOTA WAS BEING FROZEN SUBJECT TO AN
ADDITIONAL 20% BUT WITH HONG KONG ALSO ADDED. OTHER QUOTAS WERE
NOT BEING SO FROZEN. THE FRENCH DELEGATION HAD THOUGHT IT
AN ARGUMENT AGAINST HONG KONG THAT IT WAS ALSO LOSING EXPORTS TO
OTHER MARKETS. WE CONSIDERED THAT THE REASON WAS PRECISELY DISCRIMINATION PRACTISED AGAINST HONG KONG IN THESE OTHER MARKETS AND THAT (FOLLOWING THE COMMUNITY'S PRECEPT) IT WAS REASONABLE FOR HONG KONG TO LOOK TO THE COMMUNITY MARKET FOR A
CERTAIN GROWTH. BUT MUCH OF WHAT HAD BEEN SAID AROUND THE TABLE
ABOUT THE IMPLICATIONS OF HONG KONG EXPORTS WAS MISCONCEIVED.
THE MAIN PROBLEM IN THE BRITISH AS IN OTHER COMMUNITY MARKETS
WAS NOT HONG KONG BUT IMPORTS FROM EASTERN EUROPE AND SPAIN. IMPORTS FROM THE DEVELOPING COUNTRIES ALL ROUND WERE RELATIVELY SMALL.
7.
THE COMMISSION (MALTZAHN) CAME IN TO HELP US ON THIS LAST
POINT. HE SAID THAT THE COMMISSION HAD RECENTLY MET A DEPUTATION
FROM THE EUROPEAN SHOE INDUSTRY. THE WORD HONG KONG HAD NOT BEEN
MENTIONED DURING A THREE-HOUR DISCUSSION. THE INDUSTRY WAS
UNDER THE IMPRESSION THAT THE WHOLE OF COMMUNITY IMPORTS WERE UNDER GSP. IT HAD BEEN POINTED OUT TO THEM THAT THE FIGURE WAS ONLY 6%. THE REAL PROBLEM WAS IMPORTS FROM THE EASTERN BLOC AND SPAIN AND, IN GSP TERMS, FROM BRAZIL. ALTHOUGH THE COMMISSION ACKNOWLEDGED
THE STRUCTURAL CRISIS IN THE NORTHERN PART OF THE COMMUNITY --
GERMANY, BENELUX AND THE UK, (ITALY AND FRANCE NOT BEING SO AFFECTED) THEIR PROPOSAL FOR THE ADMISSION OF HONG KONG TOOK ACCOUNT OF THIS SIGUATION, SHOULD NOT HARM THE INDUSTRY AND SHOULD BE ACCEPTABLE.
8. THE CHAIRMAN SAID THAT ALL DELEGATIONS NEEDED TO REFLECT ON WHAT HAD BEEN SAID AND THAT DISCUSSION WOULD BE RESUMED NEXT WEEK.
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