CO129-521-13 Chinese Customs- proposed agreement with Hong Kong 27-8-1930 - 16-10-1930 — Page 249

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