TNAG-0046-FCO40-82-Britain-s-entry-into-EEC-effect-on-trade-with-Hong-Kong-1967 — Page 21

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to sell to the Six. If faced with a proposal for preferenti al access for new products generally, they would be sure to argue that they were being asked to sign a blank cheque; to the extent that we tried to specify the new products for which preferences were requested we should run into obvious practical difficulties. 30. In our next round of consultations with Hong Kong officials, it would seem best to begin by probing carefully the validity of their argument that a preferential duty-free market in the U.K. is necessary for the launching of new products. Our under- standing is that many new products have in fact been launched in the highly competitive United States market. further evidence, it is difficult to accept that success in a duty-free U.K. market will necessarily lead to, or even increase, the chances of success in other, non-preferential, markets. None of the non-textile exports mentioned by Hong Kong officials last time seemed to provide supporting evidence for their general argument on this point. Indeed, the success of stainless steel cutlery exports to the U.K. was shown to be due, not so much to preferential tariffs, as to a voluntary agreement which limited the import of competing Japanese cutlery. The development of Hong Kong exports of electric motors was shown to have begun in other markets, and to have spread to the U.K. market only at a later stage.

31. It could also be put to the Hong Kong Delegation, as was done at the last round of talks, that they could hope in due course to benefit from the proposals on which both 0.E.C.D. and U.N.C.T.A.D. have been working for the establishment of & system of generalised preferences for less developed countries. This might provide Hong Kong with just the same kind of benefits for new products as the suggested continuation of limited duty-free access to the U.K. market is meant to give. We can add, in confidence, that the O.E.C.D. Special Group on Trade with the Developing Countries made good progress at its recent meeting in working towards a common policy on preferences. In a report to the

/Member

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