TNAG-0046-FCO40-82-Britain-s-entry-into-EEC-effect-on-trade-with-Hong-Kong-1967 — Page 20

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period for applying the c.e.t. to imports from the Commonwealth

than for applying it to foreign sources, or for eliminating

tariffs on trade between the U.K. and the Six. The Commission's

port confirms that the Six are likely to object that it would

lead to deflections of trade if they give free entry to imports

from the U.K. while we are not yet applying the full c.e.t. to

imports from the Commonwealth. The price of such an arrangement

might well be some kind of quantitative control which would do

more damage to Hong Kong's interests than the rapid application

of the c.e.t.

To seek special arrangements for Hong Kong for a more favourable rate of application of the common external tariff than the rate generally applied

26.

Hong Kong officials are themselves aware of the danger that

any request to the Six for special arrangements for Hong Kong is

likely to stimulate them to seek protection from Hong Kong

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competition (see paragraph (c) above).

To seek preferential access on a limited scale to the British market

27. As far as the GATT is concerned, we are inclined to believe

that preservation of preferences in part for limited periods

would be consistent with the basic principle that existing

preferences can be continued when a Customs Union is formed. While

limitation of periodic preferences to imports from Hong Kong

might also be permissible, it is probable that on grounds of equity,

if not legality, there would be strong pressure from India and

Pakistan and other Commonwealth countries for similar treatment.

28. The proposal in a sense amounts to a type of Morocco Protocol

treatment. Under current Community practice and the interpretative

note to paragraph 9 of Article XXIV, the full duty, (i.e. the c.e.t.)

if the Hong Kong goods enter duty free, or the difference between

the preferential duty and the full duty would have to be collected

on re-exports of the goods to other members of the E.E.C.

29. In any case to seek access on a limited scale to the British

market is open to the same objection as the course proposed in

paragraph 26 i.e. that it would stimulate the Six to take

protective measures.

Moreover it would plainly be more difficult

/to

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