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Mr Male
PS/Lord Goronwy-Roberts
N
HKK 6/598/
974
HONG KONG AND BRITAIN'S EEC MEMBERSHIP
1.
Britain's accession to the EEC undoubtedly complicated
the relationship with Hong Kong over a wide area of trading policies, particularly textiles and clothing, and further complications may arise in future.
2.
!
The main reason was the refusal of our European negotiating partners at the time of the British accession, to concede associate status to Hong Kong. Successive British Governments have committed themselves to seeking improvements for Hong Kong in the enlarged EEC but only a limited advance has so far been possible.
3.
Lord Goronwy-Roberts may like to have an indication of the areas in which further complications may occur over the next six months. The purpose of this submission is to try to identify them and to summarise briefly the implications in each case.
THE GENERALISED PREFERENCE SCHEME (GOP)
Though Hong Kong was admitted to benefit under most of the Community's GSP (and, in terms of total duty remitted, is in fact exceeded as a beneficiary only by Yugoslavia) she was excluded from benefit on textile goods and footwear on the ground that her exports constituted a formidable threat. The direct effect of this exclusion on Hong Kong's exports of these items should not be overstated. Despite the exclusion, Hong Kong increased their worldwide footwear exports by 17% in quantity terms in the second quarter of 1974 (and of course by much more in money terms), while textile fabric exports increased by 10%. In difficult trading conditions this is an outstanding performance. Nevertheless, Hong Kong claim that their exclusion has had the effect of diverting other potential orders to competitors who are full GSP beneficiaries (e.g. the Philippines, South Korea, Thailand and Yugoslavia). Hong Kong also claim that selective exclusion from the EEC's GSP has led to their being similarly discriminated against in the
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CONFIDENTIAL