249
40.
Minister sugresta he should discuss ith 1.0. of Cus- toms
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 Exporta' scheme for Hongkong to do the work).
42. The latest position at the time of writing is that the C.O. 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.
Page 250Page 251