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to another Treaty-port to circulate freely in Hongkong
for a whole year without Chinese Customs supervision,
and then to be re-exported from Hongkong to a Treaty-
port without losing status? And yet, that is virtually
what Article IX, according to the Minister's draft, demands.
(d) Finally, it is equally ridiculous to expect that China
should confer upon Hongkong the privileged duty treatment
accorded to foreign-style factories on Chinese soil, when
she has expressly denied that privilege to Dairen and the
Kwantung leased territory, and this too in spite of the
fact that the Dairen Authorities have granted the Chinese
Customs an incomparably greater measure of control than
Hongkong has done.
The other differences between the July 1929 draft and
the Minister's draft, such as the deletion of the Postal
clause (Article V (g)), the payment by China of the total cost
of Revenue officers engaged by Hongkong, etc. are more or less
minor issues, and could possibly be adjusted; but if the four
major changes, (a), (b), (c), and (d), enumerated above, are
insisted upon, no other interpretation can be placed upon such
action than that Hongkong has deliberately closed the door to
further discussion! I sent this note to Lampson yesterday:-
"Dear Sir Miles,
"I have read the amended draft of the Agreement
"which you were good enough to hand to me informally on
"Monday last, and I regret to state that as regards
"essentials I find it unacceptable.
I am anxious, however,
"to continue the negotiations with the Hongkong Authorities
"on the basis of the July 1929 draft, with Article V.
"entirely deleted; or to discuss any other formula for co-
"operation which Hongkong may present
provided that such
"formula/
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