TNAG-0045-FCO40-81-Britain-s-entry-into-EEC-effect-on-trade-with-Hong-Kong-1967 — Page 166

CONFIDENTIAL

BRIEF NO. G.1 EUROPEAN ECONOMIC COMMUNITY

PART III

BACKGROUND NOTES

HONG KONG

BO VEIGARRETT DEM PERASTO

Hong Kong lives almost entirely by trading, much of which

involves transactions with neighbouring countries.

The se

would not be significantly affected by British entry into the

Community Hong Kong also exports locally produced manufactured

goods, mostly textiles and clothing. In 1965, Hong Kong's

exports to Britain, worth about £57m. made up some 14% of the

total.

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If Britain joined the Community, Hong Kong's exports of

manufactured goods would, in the absence of special arrangements,

lose duty free entry into Britain and become subject to the

common external tariff of the Community, while manufacturers

within the Six of similar goods would obtain a reverse

preference against Hong Kong. There is also a risk that, after

entry, Britain might be required, as part of the establishment

of the Community's common commercial policy, to adopt strict

quantitative limitations on imports of 'low cost manufactures,

mainly, though not necessarily exclusively, on cotton textiles.

In 1965, rather less than 40% of our consumption of cotton

textiles was imported, while the corresponding figure

for the E.E.C. as a whole was about 10%. (As yet, the only

Community protection against imports of manufactured goods is

by the common external tariff, Additional quantitative

controls are a matter for individual members, some of whom are

more restrictive than others. But the Treaty of Rome

provides for the eventual establishment of a common commercial

policy in this and a number of other fields, and it would be

prudent to assume that, if we entered the Community we woulda

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/before

CONFIDENTIAL