CODE 18-77
Mr Richmond ECD (E)
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Reference....
FROM: A McNess (Miss) Atlantic Region
Research Department
DATE: 20 February 1985
CC:
Miss Wilmshurst Legal Advisers
THE STATUS OF HONG KONG UNDER THE GSP
1.
Please refer to your minute of 7 February to Miss Wilmshurst, copied to me, in which you asked about Hong Kong's claim that there is a "contractual element" in its beneficiary status under the Community's Generalised Scheme of Preferences (GSP). The background to Hong Kong's inclusion is described in paras 2-7 below.
2. During the first UK accession negotiations in 1961-3, the Six rejected a British proposal that Hong Kong should be associated with the enlarged Community under Part IV of the Treaty of Rome (and thus given duty-free access to the enlarged Community). They were willing to concede association for all other dependent territories, apart from Gibraltar, but did not consider that association was appropriate for a dependent territory with well-developed manufacturing industries. They did not suggest any other arrangements to mitigate the effect of UK accession on Hong Kong's trade.
3.
Nonetheless, in
When the final, successful, UK accession negotiations began in June 1970, there was no reason to believe that the Six's position had changed. Hong Kong exports to the Community, particularly to France, were strictly controlled, largely by national measures. September 1970, the UK included Hong Kong in a list of territories for which it sought associate status under Part IV of the Rome Treaty. In October, the expected reply came back from the Community that it could not grant Hong Kong associate status, adding that it was a special problem that Because 40% would be considered later in the negotiations.
of its exports went to the USA (compared with only 15% to the UK and 10% to the Six) and because its economy was very resilient, Hong Kong was not overly concerned about the prospect of facing the Common External Tariff of the enlarged Community. This had in any case recently been lowered overall by the GATT Kennedy Round.
4.
A far more serious problem from Hong Kong's point of view was that, because Hong Kong was so competitive, the Community, in particular France, did not wish to include Hong Kong in its GSP which was just then being formulated,
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