CO129-521-12 Chinese Customs- proposed agreement with Hong Kong 2-4-1930 - 16-6-1930 — Page 228

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detrimental to Bri ti sh interests if the negotiations

broke down. They think it may be difficult

for the Hong Kong Government to recede from

the position taken up.

The China Association regard the satis-

factory solution of the question as of vital

importance to British interests generally in the

Far East and regret that the matter appears to

have been treated as one affecting merely the

interests of Hong Kong. They have not seen the

revised draft but considered the original draft

desirable for the following reasons: -

(1) It reduces smuggling to a minimum, thus

removing a cause of continual friction.

(2)

It increases the value to the Chinese of

the Customs Organi sation, thus tending

to prolong its existence in its pre sent

form.

(3) The fact that inter-port transhipments are

not to lose status of origin should greatly

increase entrepôt trade.

(4)

Non-acceptance will lead to stringent

preventive cordon round Hong Kong and so

friction and delay in navigation.

They consider that at the limitation of the

privileges under Article V. to Chinese flag-vessels

would remove the danger of "incidents" and the

advantages of this outweigh the danger of any

precedent created.

The Foreign Office, (a) Details of the

revised draft:-

The