TNAG-0046-FCO40-82-Britain-s-entry-into-EEC-effect-on-trade-with-Hong-Kong-1967 — Page 151

CONFIDENTIAL

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(1)

Hong Kong becoming a Contracting Party in her own right as had been done by other Dependent Territories (e.g. Rhodesia)

(11) Hong Kong having the G.A.T.T, applied to

her de facto by decision of the Contracting Parties.

In the former case, Hong Kong would have full G.A.T.T. rights. In the latter, G.A.T.T. would be applied de facto in trade relations between her and the Contracting Parties; she would have no legal rights and no right to vote, but she would be able to speak. In both cases we should be required, as a preliminary, to devolve to Hong Kong "full autonomy in the conduct of her external commercial relations". The Hong Pong officials doubted whether either of these solutions would be acceptable; they said that the Colony did not have full autonomy in this field, and any proposal to alter the atatus quo in that direction could be construed by China as a move towards granting independence.

(e)

The Hong Kong officials asked what would be the effect of our entry into the E.E.C. in terms of our own trade relations with Hong Kong. They pointed out, and we agreed, that under the terms of Article XXIV (1) of the G.A.T.T. they did not and could not have any G.A.T.T. rights vis-à-vis Britain as the Metropolitan Power. On the other hand there was an Inter-Governmental understanding in relation to cotton textiles, running until 1970. This was contained in Heads of Agreement accepted by both sides, but not in fact signed. Paragraph 14 of this document provided for Hong Kong to withdraw her co-operation in respect of quota restrictions on exports in the event of tariffs being imposed. How would the situation be affected if we began to apply the Common External Tariff to Hong Kong's textile exports? We said that this problem seemed academic. There was no reason to think that, even making optimistic assumptions about the speed of progress on our application, the Common External Tariff would have to be imposed on cotton textiles from Hong Kong as early as 1970. There would in any case have to be a new understanding of some kind with Hong Kong about the period from 1970 onwards; and this could take account of anything which had in the meanwhile been agreed with the Six.

(f)

Finally, the Hong Kong officials asked what would happen if, as and when the enlarged Community reached a full economic union, individual Member States ceased to be separate Contracting Parties to the 0.A.T.T. and the Community became a single Contracting Party. In particular, would this mean that, the U.K. having been absorbed for trading purposes within the enlarged Community, Hong Kong would cease to have any G.A.T.T. rights vis-à-vis the Community as a whole? They were again told that the enquiry seemed academic. The Community would not be obliged by any of the terms of the G.A.T.T. to become a single Contracting Party if it did not wish to do so; and no serious consideration had so far been given to this idea amongst the Six. If and when Britain became a Member of the E.E.C., and such a suggestion were made, we should be in a position to raise the question of the effects on Hong Kong. The E.E.C. would by then be likely to regard the problems of Hong Kong as Community problens; they had never acted harshly towards any Associate or Dependency so far.

CONFIDENTIAL

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