127
40.
Minister suggests he should discuss with 1.G.of Cus- toma.
6 (Article 10 granting privileged factory treatment
was not in July draft) should form the basis of
negotiation. It does not appear that the grant
of the desired privileges to the Chinese Customs in
Hongkong demands any sacrifice for which compensa-
tion can fairly be demanded.
Considerations of
high policy must rule where no sacrifice of local
interests is involved. The F.0. went on to sug-
gest that the whole question should be re-considered
in the light of these observations and that Sir
C. Clementi should be instructed to communicate the
revised draft to the I.G. of Customs to obtain his
views on the Hongkong amendments, particularly the
deletion of Article 2 (Salt) and the re-draft of
Article 9 (transit privileges and bonded warehouses).
It was also suggested that Sir M. Lampson should be
instructed to discuss the matter with Mr. Maze. A
letter was enclosed from the China Association in
London showing that the Association had adopted
the F.0. view as to the wider interests involved,
and had wired to the Hongkong Chamber of Commerce
in this sense early in December. The Hongkong
Chamber replied at the end of December disagreeing,
and stressing the Hongkong point of view, but say-
ing that if China were not prepared to accept the
agreement, the Hongkong government would put up
constructive proposals on different lines (see
paragraph 35 above Superintendent of Imports and
Exports' scheme for Hongkong to do the work).
42. The latest position at the time of writing is
that the C.0. have instructed Hongkong, as sug-
gested by the F.0., to send the agreement informal-
ly to Mr. Maze, but to be very non-committal about
/it.