CONFIDENTIAL
BRIEF
HONG KONG AND THE EEC'S GSP
BACKGROUND
1.
Hong Kong is excluded from GSP preferences on textiles, unlike independent developing countries in S E Asia such as South Korea. Hong Kong resents her exclusion which she claims has led to diversion
of trade to her competitors. Since our accession to the EEC we have sought to end this discrimination though so far without success.
2. Hong Kong is concerned to be treated on the same basis as other beneficiaries and would probably be as well satisfied if all the more advanced countries were excluded from GSP as by her own
inclusion. The former, however, is not a practical possibility at present although in the long term it may become an EEC objective.
THE COMMISSION'S PROPOSALS
3. The Commission has proposed that Hong Kong should be included as a GSP beneficiary for textiles from 1977. This is part of an overall revision of the textile's GSP under which the most advanced
countries would obtain very limited preferences, and the poorest, more generous ones. The proposals are being discussed in Brussels and are due to come before the Council of Ministers in mid-November. Ministers have accepted the Commission proposals, though they are concerned about the risk of adverse reactions from British textile interests and, for this reason, have decided that we should not publicize our support for Hong Kong's case (as the Hong Kong Government would have wished).
4.
So far all Member States except the Germans have accepted the principle of Hong Kong's inclusion in next year's cost scheme. This represents a change of position for France, Italy and the Netherlands who may now have a greater understanding of the question as a result of a visit by a group of EEC experts to Hong Kong in the spring of this year.
CONFIDENTIAL
t reason: toimprove the UK's image in Hang
Kong;
which might impure the climate for HK purchase have the UK ;
PM.
generally thanger in HK to be the day-in-the-mayer
we are
The
тетрам