CO129-558-11 Mission of Sir F. Leith-Ross to China- proposals for a Hong Kong - China customs... 29-9-1936 - 30-12-1936 — Page 13

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of their ultimate destination.

decide eventually to send them

They may

anle

China

to Siam or to Japan, and they would probably

prefer in the first place to make use of free

port facilities for the greater part of Hong Kong's

imports countries other than China. On the

other hand, the difficulty of controlling the

free port area obviously increases contigue voly

with its size, and if it was necessary to supply

ample facilities of that kind the result might

be to have a Customs barrier through the middle

of Hong Kong itself. This is of course precisely

the kind of question which only local experience

can deal with.

(b) Mr. Young's point about the burden of

import duties on Hong Kong consumers being offset

by the reduced taxes in other forms has some

theoretical applicability, but there are two

difficulties.

First, the people who lose by

Jen

newtaxes are not really quite the same as the

people who gain by the remission of old ones.

Secondly, what was chiefly in mind in the

not

Colonial Office meat was the burden of protective

nor

duties

revenue duties.

The Chine tariff is

becoming increasingly protective, and a tariff

proposed for the protection of some Chinese

industry might very well have most unpleasant

effects in putting up the price of some raw

material of importance to Hong Kong.

(c) Mr. Young rather suggests that the Chinese

coastal trading is not worth troubling much

hait

about. If so, then the case for a Customs

union vanishes.

We, however, are inclined to

think