248
39.
10 (privileged factory treatment), none of which
it will be possible for China to grant. 81r C.
Clementi, on the other hand, insists on these
concessions, or on some others of equal value,
though he has not suggested any. He appears to
have entirely ignored the wider implications of
the agreement, and carried the negotiations to
the point of deadlock without consideration of the
larger interests concerned. The functioning of
the Chinese Customs in Hongkong would serve the
double purpose of removing a legitimate source of
grievance as regards the smuggling, and would
strengthen the value to China of the foreign-
staffed Customs administration, providing a safe-
guard against radical changes in the constitution
of that service. It would in addition confer im
portant benefits on the entrepot and transit trade
of Hongkong. It is therefore eminently undesir-
able to sacrifice the agreement for the sake of
impossible demands, some of which (Article 5), for
reasons of high policy, it is undesirable that
China should grant. Great weight should also be
attached to Sir M, Lampson's opinion about the
undesirability of prematurely raising the naviga-
tion issue. The F.0. do not agree with Mr.Moss'
view that the smuggling is possibly not so serious
as Mr. Maze makes out and refer to reports (see
paragraphs 22 and 31 above) from Amoy and Foochow
as to smuggling from Japan and Formosa to places
along the coast between Canton and Foochow. The
conclusion is reached that the draft of July
last, with the total omission of Articles 5 and
/6