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what its precise effect has been and whether it extends to all goods. It would be better to have the matter regularised in a formal agreement. There were also provisions regarding salt, Chinese coastal traffic and navigation of Chinese inland waters which are not immediately important.
15. An Agreement on the 1930 lines would not prejudice the position of Hong Kong as a free port and might be expected to benefit both the Colony and China (the latter principally through the resultant discouragement of smuggling). A semi-official enquiry has recently been received by the Hong Kong Government from Sir Frederick Maze, the Inspector-General of the Chinese Maritime Customs, regarding the willingness of the former to reopen negotiations for a Customs Agreement on the lines of the 1930 draft; and a favourable reply was sent to him with the approval of His Majesty's Government. It is thought that it would be better to aim at such an Agreement as an objective rather than at a Customs Union which would probably prove extremely difficult to bring about and would involve a serious breach with the tradition and development of Hong Kong as a free port and a commercial and financial centre, endangering the great economic advantages of that status without assurance of adequate return.
W. O. G.
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