TNAG-0046-FCO40-82-Britain-s-entry-into-EEC-effect-on-trade-with-Hong-Kong-1967 — Page 178

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(b) Hong Kong drew attention to the side-effects on Pakistan

and Canada of the removal of preference for Hong Kong exports in the U.K. market. Because of Commonwealth content requirements, Pakistan at present supplies a high proportion of Hong Kong's requirements of raw cotton

and yarn;

similarly, Canada supplies a high proportion of her plastics. Once Commonwealth content requirements no longer apply, Hong Kong is likely to shop elsewhere.

On (a), Hong Kong officials made clear that their principle concern was about New Zealand, where their preferences are of particular value. They were told that we could see no inherent reason why the gradual abolition of preferential trading arrangements between the U.K. and the rest of the Commonwealth should lead to any change in trading arrangements as between other Commonwealth countries and territories. However, as we should be trying to obtain some very substantial benefits for New Zealand in the context of our negotiations with the Six, we could certainly express the hope to New Zealand that she in turn would not

the benefits she now

gives to Hong Kong. On (b), so long as Hong Kong enjoys any margin of tariff preference on her cotton textile exports to the U.K., she is likely to continue buying Pakistan cotton and Canadian plastics. But, once the common external tariff is applied in full to Hong Kong exports to this country, it seems inevitable that Pakistan and Canada should suffer to some extent. There seems nothing that we could do about this.

CONFIDENTIAL

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