CONFIDENTIAL
Council processing (OP) quotas remains open. The
extent of such compensation is meant to be decided by
the January Council. The UK will continue to press for
recognition by the Community of Hong Kong's open
market. We would certainly not accept less favourable
treatment for Hong Kong than for the other dominants
(despite the fact that the territory is by far the
largest of all MFA suppliers).
6. Hong Kong's willingness to negotiate an exchange
of side letters with the Commission which envisages a
"mutually acceptable" bilateral agreement on cutbacks.
proved a key factor in the negotiations on the MFA 3
extension protocol. Macao and South Korea were thereby
persuaded to follow suit (the latter with some
difficulty) and this in turn enabled the Commission to
acquiesce in an opaque formula in the extension
protocol itself which Hong Kong no doubt hope will
avoid demands for corresponding cutbacks from the US.
After the initial attack on the Community by Mr Chau
(which the LPS mentioned to Mr Dorward
Director of Trade, Industry and Customs
-
Hong Kong
when he
called on 2 December) Hong Kong played an exceptionally
constructive and helpful role in the negotiations.
This deserves to be acknowledged.
CONFIDENTIAL